The CHART Exchange July 2018

TABLE OF CONTENTS

6

Glenn W. Clark, CPCU, Publisher CHART Exchange Earliest Adopter

6

Some Retail Brokers Still Reluctant On Lloyd’s

9

Lithium-Ion Batteries: Fire In The Sky

16

FTC Sues To Stop Two Operations Responsible For Making Billions Of Illegal Robocalls

19

Lloyd’s News Roundup: A Review

20

Man-Made Risks Forecast To Cost World’s Cities $320BN Each Year

23 24

Listeria Hysteria!

26

What’s Up With All The Acronyms In Business?

29

Lloyd’s CEO Inga Beale To Step Down In 2019

30

LLoyd’s Predicts France Will Win The 2018 FIFA World Cup

34

Three Benefits Of Offering Product Performance Guarantees

TOMS - The London Market Target Operating Model

11

5 Key Considerations For Any Merger Or Acquisition Transaction

36

Warranty Offerings: Checked Box Or Revenue Driver?

12

Rockets Are Risky - Japan Loses Another One

41

15

Copyright Is No Monkey Business Rules The Ninth Circuit Court

The Sky Is Falling! Part 3 of a 3-Part Article For SIAA Members

43

Lloyd’s Lab Begins Global Search For Tech Talent

By Matierefocale [CC BY 3.0 (https://creativecommons.org/licenses/by/3.0)], from Wikimedia Commons

SPECIAL REPORT:

PG 26 WHAT’S UP WITH ALL THE ACRONYMS IN BUSINESS?

JULY 2018 VOLUME 3 - ISSUE 6

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

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Message from the earliest adopter

SOME RETAIL BROKERS STILL RELUCTANT ON LLOYD’S DISPITE OVERWHELMING E&S SUCCESSES Glenn W. Clark, CPCU Publisher & Earliest Adopter

L Image: Colin Creative Commons Attribution-Share Alike 4.0 International license.

loyd’s of London has been a major force in the American insurance industry for over a century. During that time, it has become the largest surplus lines insurer in the United States and largest non-domestic reinsurer in the country. We account for more than 40% of Lloyd’s global business.

Despite this pedigree, some within the retail agent community are still reluctant to place risks with the market.

Ask these producers why, and the vast majority of responses will touch on two common themes – use of non-admitted paper and concerns over financial stability.

Let’s try and assuage these apprehensions.

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SURPLUS LINES PAPER It is true that the vast majority of U.S. business generated through Lloyd’s of London is written on a surplus lines basis (Lloyd’s is a licensed insurer in Illinois, Kentucky, and the U.S. Virgin Islands). There is a definite benefit to using this type of “paper”; it affords the flexibility to react quickly to the dynamic nature of the marketplace.

Instituting changes on an admitted form – with the requirement of individual state filings/approvals – often proves to be a much more timeconsuming process.

So why the worry about the security of non-admitted paper? There is a misconception that surplus lines writers are not regulated. In fact, every insurance company must receive the approval of the individual state insurance departments before

www.chart-exchange.com

they can write business in that jurisdiction. Admitted carriers are licensed by the states; non-admitted insurers are “white-listed”. In order to be included on the “white list”, carriers must meet certain financial and regulatory criteria mandated by each jurisdiction. These requirements usually include the establishment of substantial premium reserves and/or demonstration of adequate reinsurance.

FINANCIAL STABILITY There are several nationally-recognized organizations that assign grades based on the financial strength and claimspaying ability of insurance entities. Syndicates operating within Lloyd’s enjoy the benefit of a single market rating given by these independent agencies. Lloyd’s is rated A (Excellent) by A.M. Best, A+ (Strong) by Standard & Poor’s, and AA- (Very Strong) by Fitch Ratings.

Some agents are wary of Lloyd’s and the non-admitted market because their policies are not protected by the various state Guaranty Funds. This is technically true. With that said, remember that these funds were established to serve as a “safety net” in the event of carrier insolvency.

The protections provided through a Guaranty Fund can be extremely limited. Recompense may not be available to insureds that exceed certain revenue thresholds. Further, the coverage afforded is usually a fraction of the limits provided on the insured’s actual policy.

Now consider the capital structure established by Lloyd’s of London. This unique multi-layered approach – often referred to as the Chain of Security – provides excellent financial security to policyholders. There are three “links” within the Chain: • • •

Syndicate level assets Member funds at Lloyd’s Central Assets

The first and second links are held in trust, primarily for the benefit of policyholders whose contracts are underwritten by the relevant member. Members underwrite their own account and are not liable for other members’ losses. The third link contains mutual assets held by the Corporation which serves as an additional safety net to meet any member’s insurance liabilities.

Have any questions about the London market and how it can benefit your agency? We can help! Direct your inquiries to info@chart-exchange.com for response.

Glenn W. Clark , CPCU CHART’S Earliest Adopter

www.chart-exchange.com

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JULY 2018

7

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JULY 2018

ANALYSIS - Wilson Elser

LITHIUM-ION BATTERIES: FIRE IN THE SKY?

By Gregg A. Tatarka

E

very commercial airline flight carries scores of lithium-ion powered batteries in phones, tablets, computers, activity trackers, cameras, headphones and other devices. Consumers need to respect the risks that are associated with these products if not used, stored or charged correctly. Battery manufacturers and the manufacturers of products containing them must be ready to respond to all claimed incidents.

At nearly every airport gate I have entered over the past two years, there inevitably has been an announcement made that the flight is full, overhead space is running out and there is a need for volunteers to check their

Every commercial airline flight carries scores of lithium-ion powered batteries

baggage. The gate agents would then advise flyers to take keys, medications and valuables out of checked bags.

While they would also warn flyers to take spare lithium-ion batteries out of checked bags, this announcement always seemed to get drowned out by airport noise.

In fact, it is a Federal Aviation Administration (FAA) regulation that spare lithium-ion batteries for consumer products must be removed from checked baggage and kept with the passenger in the aircraft cabin See Fire In The Sky Page 46

A

bout the author: Gregg Tatarka focuses on managing national counsel coordinating programs for products liability, with a particular specialization in fire litigation. Generally, he represents manufacturers of consumer electronic products and appliances, such as microwave ovens, air conditioners and clothes dryers. Gregg also represents manufacturers of gas-fired appliances and has represented manufacturers of flexible gas piping relating to fire cases and defended manufacturers, distributors and retailers of products in litigation and arbitration hearings. Gregg has defended a number of clients regarding alleged failures of lithium ion batteries causing fires, property damage or bodily injury. In addition, Gregg investigates claims and participates in alternative dispute resolution on behalf of clients. He is presently representing a client in a class action pending in British Columbia, Canada. Gregg is a tenacious advocate with the ability to drill down on details and pick up on technical issues. Prior to joining Wilson Elser, Gregg worked for the U.S. Department of Defense for three years. He is a volunteer coach of his son’s little league baseball team and a Cub Scout den leader. 914.872.7294 • gregg.tatarka@wilsonelser.

www.chart-exchange.com

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JULY 2018

9

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ANALYSIS - M&A Services

5 KEY CONSIDERATIONS FOR ANY MERGER OR ACQUISITION TRANSACTION

By Christopher M. Huges

T

here are many aspects in every insurance merger or acquisition to consider, but here are five key focus points that should not never be overlooked:

1.

Know your Buyer and Seller. The foremost key to any business transaction is trust and understanding of the party you are transacting with. For each party to the transaction, there are several avenues to get to know the other party. The Buyer and Seller should at a minimum do the following: a. b.

c.

Run Credit checks where appropriate; d.

Ask for and follow up with at least three references (current clients, trading partners, etc…) e.

“Trust but verify”, Ronald Reagan, December 1987.

2.

Know the Product lines and Carriers. Any Buyer or Seller of an insurance distribution firm should know and understand in detail the products and carriers that the firm distributes. What are the product commissions?

What do the last five years of contingent commissions and profit share commissions look like? What do the top 10 carriers’ loss ratios look like for the past three years? What is the historical performance of the product lines? What is the market and carrier’s future performance and appetite

In person meetings to get to know the other party; Run background checks where appropriate;

See Five Key Considerations Page 12

A

bout the author: Christopher 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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ANALYSIS - M&A Services Continued From Page 11

5 KEY CONSIDERATIONS FOR ANY MERGER OR ACQUISITION TRANSACTION for these product lines? These are all inquiries that the Buyer and Seller will want to explore in detail to determine if the transaction is an appropriate fit.

3.

Know your Customer. Banks are required to “KYC” Know Your Customer before entering into any significant transaction. In doing an M&A transaction, it is very important for the Buyer and Seller to understand the other parties’ customer base and distribution platforms. If there is a client concentration, then client calls or interviews may be appropriate. If there is a churn of clients, why, and, is that above or below expectations.

Does distribution overlap? If so, is this redundant or a synergy opportunity?

4.

Understand and Diligence the Financials and Use of Debt.

Each party should conduct a level of financial diligence on the other party.

For the Buyer, it is key to know the types of, and sources of, the financials being provided. In most transactions, M&A advisors and accountants are retained to conduct “Quality of Earnings” (QofE) analysis on the acquisition’s financials. For Sellers, it is important to understand the Buyer’s

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amount and use of debt, and how that may impact the structure of the deal.

Further, if the buyer is not a known entity, the Seller should perform a level of financial diligence to ensure that the Buyer has the financial wherewithal to consummate a transaction.

ROCKETS ARE RISKY...

H

okkaido, Japan - For the second time in 11 months, a private Japanese rocket by Interstellar Technologies failed to launch, although the first attempt did last for 70 seconds before crashing in the ocean. The most recent attempt barely left the launch pad before loosing thrust and settling back to Earth resulting in a tremendous explosion. Click on video.

5.

Risk Sharing Deal Structures.

Lastly, based on an analysis of the above considerations, the Buyer and Seller will be able to create a deal that shares various elements of risk.

Commonly used structures include: earn-out terms, escrow or hold-back amounts, seller equity positions, and seller notes. Each of these terms may be increased or decreased in percentage terms to shift risk from one party to another. In a 100% all cash transaction, the entire risk is being assumed by the Buyer. In a deal with 20% held in escrow for one year, and 40% of the purchase price being paid on a performance based earn-out, with the seller retaining a 10% equity stake, a large amount of risk/reward is being shifted to the Seller.

These are five of the most important considerations in any insurance distribution firm transaction.

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Had the June 30th test launch of the Momo rocket been successful, it would have set the stage for future low-Earth, low-cost satellite delivery launches. The rocket was only about 33 feet tall and weighed a mere 1 ton. In comparison, the SpaceX Falcon 9 rises 7 times taller and weighs an enormous 540 tons.

The company founded in 2003 has plans to launch satellites by 2020, yet this launch failure was a setback.

Takafumi Horie, founder of Interstellar Technologies, “We are thinking about what we can do to maintain some tie to the next step even as the future remains barely visible.” www.chart-exchange.com

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ANALYSIS - wilson elser

By Jana A. Slavina Farmer

lawsuit, the Ninth Circuit made several rulings of interest:

O

n April 13, 2018, the Ninth Circuit Court of Appeals affirmed the dismissal of a copyright infringement lawsuit brought on behalf of a very dexterous monkey, Naruto, that managed to take selfies with an unattended camera belonging to wildlife photographer David Slater.

Mr. Slater published the monkey selfies in his book, identifying himself as the copyright owner while admitting that Naruto took the photographs. People for the Ethical Treatment of Animals (PETA) sued Mr.

Slater for copyright infringement on behalf of Naruto as its “next friend.”

Naruto v. Slater, No. 16-15469, D.C. No. 3:15-cv-04324-WHO. In affirming the dismissal of the

•

• PETA did not have standing to sue as Naruto’s “next friend” because they did not claim to have a relationship with Naruto that was “any more significant than its relationship with any other animal” and because the court declined to recognize the right of next friends to bring suits on behalf of animals.

• The Ninth Circuit, in its discretion, chose to proceed with the appeal after PETA advised the court that the case “settled” – although Naruto was See Monkey Business Page 39

A

bout the author: Jana Slavina Farmer represents client interests in connection with design professional matters and architects’ copyright; intellectual property matters involving copyright, sale and transfer of rights in artwork; protection of valuable creative assets; and general commercial disputes. In addition to handling cases before New York state courts, she defends clients in federal courts and in arbitrations and employs mediation to facilitate the cost-effective resolution of disputes. Jana also has experience conducting e-discovery and cross-border discovery in complex cases with large volumes of electronic evidence. Her clientele includes architects and engineers in design professional liability matters, participants in all stages of the creation and transfer of ownership in works of art, and business owners in other intellectual property and general business matters.

www.chart-exchange.com

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Image:Attribution 2.0 Generic (CC by 2.0) Masterbutler

COPYRIGHT IS NO MONKEY BUSINESS, RULES THE NINTH CIRCUIT

NEWS

FTC SUES TO STOP TWO OPERATIONS RESPONSIBLE FOR MAKING BILLIONS OF ILLEGAL ROBOCALLS Technology companies and owner knowingly facilitated neighbor-spoofed robocalls.

T

he Federal Trade Andrew Smith. “We will go after not Commission has filed a only robocallers, but also companies complaint in federal district -- like these -- who give robocallers court seeking to stop two the platform and tools to deceive the related operations and their principals public and violate the law.” who allegedly facilitated billions of illegal robocalls to consumers According to the Commission, James nationwide, pitching “Jamie” Christiano everything from auto This operation and the companies warranties to home he controls includes security systems and hundreds of thousands operate “TelWeb,” supposed debt-relief a computer-based of illegal calls that services. telephone dialing resulted in consumers platform that can being transferred to Illegal telemarketing be used to blast a World Connection conduced using out a large volume call center. At least 64 of telephone the TelWeb Dialing PlatformThe million of these calls calls—especially FTC charged the used a technique called robocalls—in a defendants with “neighbor spoofing,” short time. violating the agency’s which fakes caller ID Telemarketing Sales For many years, and makes it appear that Rule (TSR). Virtually all Christiano had telemarketing robocalls calls are coming from a a business to consumers are illegal consumer’s local area.” relationship with under the TSR. Aaron Michael Jones, a recidivist robocaller who has “This case shows that the FTC will been named in FTC lawsuits brought keep using every tool it has to in 2017 and 2018. Access to TelWeb fight illegal robocalls,” said Bureau for most, if not all, telemarketing of Consumer Protection Director calls made using the platform flowed

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through Jones and his business partners -- including Andrew “Andy” Salisbury -- as resellers.

Redflags for the Teleweb Dialing PlatformTwo of Christiano’s companies are named in the complaint. NetDotSolutions, Inc. licensed software to Jones and his clients that allowed them to place autodialed robocalls. TeraMESH Networks, Inc. leased computer server rack space to Jones that enabled him to host, maintain, and update the TelWeb software.

The FTC alleges that from June 2013 to May 2016, NetDotSolutions had only one dialing client—a shell company called Dial Soft Technologies, owned by Jones— which accessed the TelWeb system and resold it to other telemarketers.

TelWeb allowed users to make billions of robocalls, including calls to phone numbers on the National Do Not Call (DNC) Registry and calls with fake, or “spoofed,” caller IDs. TelWeb also allowed telemarketers to See Continued Page 38 www.chart-exchange.com

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News

LLOYD’S NEWS ROUNDUP LLOYDS NEWS ROUNDUP LLOYD’S CHAIRMAN BRUCE CARNEGIE-BROWN RINGS THE CHANGES ON A BRAVE NEW ERA IN LIME STREET, EVENING STANDARD Since stepping into the shoes of predecessor John Nelson a year ago, Lloyd’s chairman Bruce CarnegieBrown has been banging the drum for Lloyd’s to change and save itself from extinction, fast giving him a reputation as something of a modernizer.

His big push at Lloyd’s — aside from Brexit and the plan to set up a subsidiary in Brussels — is to make the 325-year-old institution more digital.

“It’s better than being seen as the alternative,” he laughs when asked about the moniker. “I don’t want to be seen as a dinosaur of the market.”

Lloyd’s, which made a £2 billion loss in 2017 because of hurricane hits, is set for nothing short of a minor revolution this year under Carnegie-Brown, ending centuries of tradition by scrapping paper-based trading in favour of digital deal making.

LLOYD’S LAB BEGINS GLOBAL SEARCH FOR TECH TALENT, LLOYDS PRESS RELEASE Lloyd’s Lab, the global insurance market’s new innovation accelerator, www.chart-exchange.com

is launching a global search for tech talent to partner with the Lloyd’s market and develop solutions for its unique and rapidly changing needs, in a fast-track, fast-fail environment.

For the first time in its 330-year history, Lloyd’s is opening its doors to the global tech start-up and entrepreneur community, giving unparalleled access to the world’s largest market for specialist insurance and reinsurance, in support of its digital evolution.

Over ten weeks, selected start-ups will be given the unique opportunity to work with Lloyd’s market experts to shape the next big innovation. Start-ups will be given access to a state-of-the-art co-working space located in the Lloyd’s building in London, potential funding and the chance to develop products, platforms and processes that will help transform Lloyd’s into an increasingly technology-driven market.

Lloyd’s Head of Innovation, Trevor Maynard, said: “We’re looking for solutions that can create true commercial value for the Lloyd’s market.

Whether by reducing costs, helping make better underwriting decisions, making operations more efficient or improving the policyholder experience, we want to see ideas that make a real impact on market performance.”

Applications for the chance to win TABLE OF CONTENTS

a place in the first cohort of the Lloyd’s Lab close on 22 July 2018.

The most compelling applications will be put forward to pitch to Lloyd’s senior leadership and market representatives on 3 September, with the inaugural Lloyd’s Lab cohort starting on 8 October. Interested startups, entrepreneurs and businesses interested in applying for the Lloyd’s Lab should visit www.lloydslab.com.

LLOYD’S BRUSSELS: OUR BASE IN THE HEART OF EUROPE, LLOYDS PRESS RELEASE On 22 May 2018, Lloyd’s was honoured to receive regulatory approval from the National Bank of Belgium to establish an insurance company in Brussels.

This milestone moves us closer to our objective of being fully operational in Brussels by 1 January 2019 to ensure we can continue to work closely with our EU27 partners post-Brexit.

Having an insurance company in Brussels offers many advantages for our EU27 partners and provides us with a tremendous opportunity to grow.

As Lloyd’s accelerates its own digital transformation, our subsidiary will be at the forefront of our modernisation drive to deliver the most innovative services to our EU27 clients.

See Lloyd’s News Rounduup Page 50 JULY 2018

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news

MAN-MADE RISKS FORECAST TO COST WORLD’S CITIES $320BN EACH YEAR ON AVERAGE

Man-made risks like cyber-crime, interstate conflicts or market crashes are a bigger threat to economic output than natural disasters such as hurricanes, floods, earthquakes and volcanoes, putting an estimated $320.1 billion of global GDP at risk on average each year, according to Lloyd’s, the world’s specialist insurance and reinsurance market.

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he Lloyd’s City Risk Index, built in collaboration with Cambridge University, is a unique study measuring the impact of 22 threats on 279 cities’ projected economic output.

The index reveals that 279 cities across the world – the key engines of global economic growth with a combined gross domestic product (GDP) of $35.4 trillion – risk losing on average $546.5bn in economic output annually (GDP@Risk) from all 22 threats. This comprises $320.1bn to man-made risks and $226.4bn to natural catastrophes.

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The key trends identified by the index are: •

Man-made threats are on the rise: Man-made threats account for 59% of all global GDP@Risk. Financial market crash is identified as the biggest threat to the global economy, putting on average $103.3bn in global economic output at risk per year. Reflecting the rising level of geopolitical instability around the world, the study indicates that interstate conflict is the second costliest peril – totalling $80.0bn in GDP@Risk.

www.chart-exchange.com

•

Climate change is still a major risk driver: Climaterelated risks together account for $123.0bn of GDP@Risk, and this sum is expected to grow as extreme weather events become increasingly frequent and severe. The costliest climate events are windstorms which account for $66.3bn of GDP@ Risk and flood that puts a further $42.9bn of economic output at risk.

•

The majority of risk is concentrated in a few cities: The 10 cities with the highest GDP@Risk together face $126.8bn in potential losses to economic output each year. This is almost a quarter of total GDP@Risk and more than the amount of GDP@Risk in Africa, the Middle East and Latin America combined. This finding reflects the increasing concentration of wealth in certain geographic regions and, therefore, the vulnerability of the global economy to disruptive events.

•

Building resilience is an urgent priority: The index scores each city’s resilience based on criteria such as funding for emergency services and insurance levels. If every city in the index were to improve its resilience to the highest level then global GDP@ Risk would decrease by as much as $73.4bn.

Extreme events are rare but costly www.chart-exchange.com

when they do take place. To reflect this fact, the index averages out these large losses to produce an annual average loss estimate – GDP@Risk.

help significantly reduce the impact of extreme events on cities, improve economic stability and enhance prosperity for all. I urge insurers, governments and businesses to look at the index, and work together to reduce these exposures by building more resilient infrastructure and institutions.”

However, the actual losses from an extreme event in any given year could be much higher than this. An illustration One of is provided by Los the most Angeles where, according to the prominent features index, the average of the index is the annual loss estimate worldwide rise in for an earthquake is $2.7bn GDP@Risk. geopolitical risk, However, according driven in large to the index, in an part by the threat extreme scenario an of interstate earthquake in Los Angeles could cause conflict and civil the city to lose as unrest. We are much as $380.4bn of likely to see this GDP.

Professor Daniel Ralph, Academic Director of Cambridge Centre for Risk Studies, at the University of Cambridge Judge Business School, added: “One way of thinking about GDP@Risk is as the money a prudent city needs to put trend continue on aside each year to Lloyd’s Chairman, cover the cost of a global level.”

Bruce Carnegierisk events. Lloyd’s Brown, said: “No City Risk Index city will ever be completely risk helps governments, businesses and free. Disruptions will always the insurance sector understand occur, whether it is the result of the economic implications of a a hurricane or a cyber-attack. We variety of man-made and natural have created this unique index risks, and use the GDP@Risk metric to help cities around the world to enhance their preparedness and identify, understand and quantify resilience. their exposure to risk, which will help them prioritise investments “One of the most prominent and build resilience. features of the index is the worldwide rise in geopolitical risk, “The index shows that investing driven in large part by the threat of in resilience – from physical interstate conflict and civil unrest. flood defences to digital firewalls We are likely to see this trend and enhanced cyber security, continue on a global level.” combined with insurance – will TABLE OF CONTENTS

JULY 2018

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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 world’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 Europe-based insurers with ready access to more than 60 discrete legal services delivered by nearly 800 attorneys in 34 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.

wilsonelser.com Š 2017 Wilson Elser. All rights reserved. 567-17

news & aNALYSIS - Wilson Elser

LISTERIA HYSTERIA

By Jennifer Willis Arledge

R

ecently, there have been several food warnings and recalls based on confirmed or suspected Listeria contamination. Some recent culprits have been smoked salmon, turnip sticks, pre-made sandwiches, ice cream bars, cream cheese, green beans, and frozen meatballs. Fresh, raw, and unpasteurized products are especially susceptible to Listeria contamination.

WHAT IS LISTERIA? Listeriosis is food poisoning caused by eating foods contaminated with the Listeria monocytogenes (L. monocytogenes) bacterium. An estimated 1,600 people contract listeriosis each year and about 260 die. Listeriosis mainly affects

pregnant women, newborns, the elderly and adults with impaired immune systems. Healthy adults and children may become infected with L. monocytogenes, but rarely become seriously ill.

Symptoms of listeriosis include fever, muscle aches, and sometimes nausea or diarrhea. If infection has spread to the nervous system, symptoms such as headache, stiff neck, confusion, loss of balance, or convulsions can occur. Otherwise healthy persons do not need treatment, and symptoms will abate within a few weeks. When treatment is necessary, antibiotics are used. Pregnant women often are prescribed antibiotics to prevent infection of the fetus or newborn, but some babies born with the infection also may have to receive their own round of antibiotics.

WHY DOES IT SEEM LIKE LISTERIA CONTAMINATION HAS BECOME MORE COMMON? Listeriosis is usually diagnosed with a bacterial culture from blood, spinal fluid, or the placenta. The typical time from consumption of the contaminated food to experiencing symptoms is between 1 to 3 weeks.

Otherwise healthy adults typically recover without becoming seriously ill.

Add to that the myriad other reasons why a person may experience similar flu-like symptoms, and it is easy to see how many cases of potential listeriosis could go without diagnosis.

Science has aided investigators in determining the source of infectious organisms such as Listeria through See Listeria Hysteria Page 33

A

bout the author: Jennifer Willis Arledge practices in the areas of product liability, pharmaceuticals, medical devices, general liability in the hospitality arena and construction defect, primarily representing architects and engineers.

Jennifer also handles toxic tort and bankruptcy matters. Most of her cases are complex and include serious injury or death as well as substantial monetary damages. An experienced litigator, Jennifer is recognized for her aggressive advocacy. She has handled all aspects of cases from advising the client at the first sign of a claim through trial. Earlier in her career, Jennifer was an assistant public defender in the state of Ohio, representing juveniles and adults in criminal and family law matters. Jennifer returned to her practice at Wilson Elser following her work as a solo practitioner with a successful general practice. Jennifer’s early work as a plaintiffs’ lawyer gives her an important perspective when dealing with personal injury cases, not to mention the education she affords the junior lawyers in her practice, who benefit from her enthusiastic approach to mentoring.

www.chart-exchange.com

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analysis - CJ Coleman

TOMS – THE LONDON MARKET TARGET OPERATING MODEL - HOW LLOYD’S IS EMBRACING THE NEW WORLD

By Christine Shrimpton

L

loyd’s of London is the oldest and most recognized insurance brand in the world. Over the course of its 332-year history, the market has established a reputation for being both innovative and flexible. In order to retain this position, Lloyd’s is always on the lookout for ways to make them more accessible and efficient.

technologically proficient, demanding answers to their business-related inquiries in near real time. New and emerging market growth is becoming more predominant. And – of course – the length of the current soft market cycle is reaching historic proportions!

and are looking at way to improve operational efficiency and understand their exposure whist they adapt.

The insurance market is described as “soft” when the amount of capital available exceeds the finite pool of risk. The glut of competition puts

PLACING PLATFORM LIMITED (PPL).

For this article, we will focus on two components of the TOM project. They are:

This is an electronic open market placing platform that allows brokers and risk takers to quote, negotiate,

Lloyd’s has responded to this challenge by launching the Target Operating Model (TOM) initiative.

This ambitious project – unanimously supported by all the stakeholders identified fifteen initiatives designed to deliver central services and provide the benefits of straight-through-processing for all market participants.”

Today’s market environment offers a stern test of the market’s commitment to remain in the forefront. It is not a stretch to say this is perhaps one of the most tumultuous times the insurance industry has seen in a long, long time. Customers are becoming more

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downward pressure on premiums and lowers the return on capital. Over time, this has the unfortunate side effect of reducing the funds available for the market to invest in operations and technology. Every insurance market is feeling the competitive pressure TABLE OF CONTENTS

and bind business. PPL is beneficial as it improves access to London by removing the obstacle of prohibitive processing costs. When fully integrated, the initiative removes

See TOMS Page 24 www.chart-exchange.com

www.chart-exchange.com

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SPECIAL REPORT - Vantage Agora

WHAT’S UP WITH ALL THE ACRONYMS IN BUSINESS?

By Thomas Balla

• • • • • • •

• • • • • • • •

SOP (Standard Operating Procedure) PPM (Project Portfolio Management) OX (Operational Excellence) SME (Subject Matter Expert) BOS (Business Operating System) OI (Operational Intelligence) CRM (Customer Relationship Management and/or Customer Records Management) PTO (Paid Time Off) COI (Certificate of Insurance) B2B (Business to Business) EE (Employee Excellence) GUI (Graphical User Interface) NLP (Natural Language Processing) SaaS (Software as a Service) UAT (User Acceptance Testing)

The list above does not even begin to scratch the vast surface of acronyms in today’s business climate.

Acronyms soar around the workplace at rapid-speed, and in response many employees keep an acronym dictionary at their workspace for daily reference. It is increasingly difficult to keep up with these ever-changing lists, and thus the only way to become truly comfortable with acronym use it to jump right in and begin!

Many believe millennials are responsible for the acronym explosion, as their acronym dictionaries are much more extensive and fluid than that of the business world – in large part due to the texting explosion. In 1995, the average American sent less than one text per month. As phones and

networks adapted to better support texting, by the year 2000 the average number of text messages sent in the U.S. increased to 35 per month per person. By 2007, Americans sent and received more text messages per month than phone calls. Today, the number of texts sent and received continues to skyrocket at a rate of 18 billion texts per minute worldwide– where, of course, shorthand is increasingly commonplace. Appbased messaging platforms and social media, particularly on limitedcharacter sites like Twitter, have even further complicated the world of texting and rapid communication, where speed is paramount and acronyms are key.

See Continued Page 42

A

bout the author: Thomas Balla is the Learning Product Manager for Vantage Agora and their industry-leading Business Operating system (BOS) software, OX Zion. His role within VA and OX Zion includes product assistance and training for new and existing clients, as well as VA's internal team. Thomas works closely with VA's Research & Development team to continually enhance OX Zion based on customer specifications and changes in the market.

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www.chart-exchange.com

Now here’s a

REAL SURPRISE…

A firearm liability product that can be sold by independent insurance agents!

It is estimated that nearly 80 million Americans own at least one firearm. But what happens if a law-abiding citizen is actually forced to use that weapon to protect themselves, a loved one, or their personal property? Many homeowner policies specifically exclude firearm use — even in self defense — as a covered exposure, deeming it to be an intentional act. That leaves the gun owner personally liable for legal expenses, bail bond costs, and any judgments awarded through a civil action.

As an insurance agent, you are in the best position to explain the significant personal liability exposure faced by your gun-owning clients. Unfortunately, you haven’t been able to help your clients by offering a product to address this need — until now.

Rockwood Programs now offers a firearm liability policy designed to protect insureds against civil or criminal actions resulting from the use of a gun in self-defense. It is the only one available in the industry that can be sold through insurance agents. A wide variety of limit options are available, ranging from $50,000 to $5 million. Annual premiums start at just $135.

Best of all, we make it easy for you to present the firearm liability product to your clients. An inventory of customizable sales aids is available, including marketing brochures, simplified self-rating applications, and more. Our team can even help provide product-specific content for your website!

Visit us at www.rockwoodinsurance.com to learn more We can also accommodate group accounts (police, security, gun clubs, etc.).

E-mail: president@rockwoodinsurance.com Rockwood Programs, Inc., 3001 Philadelphia Pike, Claymont, DE 19703 p: 800-558-8808 • f: 302-764-5477 • e: sales@rockwoodinsurance.com

www.chart-exchange.com

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Partners who understand your needs.

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

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news

LLOYD’S CEO INGA BEALE TO LEAVE IN 2019 Lloyd’s announced that Chief Executive Officer, Dame Inga Beale, will step down next year after leading the global insurance and reinsurance market for five years.

Zurich Insurance earned $1.71 million (USD) in 2017.

Inga will leave Lloyd’s with a strengthened reputation as one of the most respected and trusted insurance brands in the world, with a strong and experienced leadership team focused on delivering Lloyd’s strategic priorities.

I

nga joined Lloyd’s in January 2014. Since then, her commitment to transformation across the market, and within the Corporation, has led to significant cultural change and the adoption of new technology that has accelerated the market’s modernisation and digitalisation.

There was no indication from Lloyd’s or Beale as to the reason Beale will be stepping down and only a small amount of information regarding her plans post-Lloyd’s. In an interview wtih The Sunday Times, Beale, now 55- years-old, said, “I’m too young to go non-executive, but not too old to take on another big challenge. I would like another executive position before it’s time to retire or to go plural. I just don’t know what it is.”

It was reported that Beale, who has worked at Prudential Assurance and www.chart-exchange.com

resource, while supporting the LBGT Insurance Network. She married Philippe Pfeiffer in 2013 and the couple reside in Spitafields.

Inga Beale, Lloyd’s 1st Femaile CEO Image Credit: Lloyd’s of London

Meanwhile, the Inclusion@Lloyd’s initiative, which Inga founded in 2013 and is celebrated via the annual Dive In festival, has embedded diversity and inclusion as a business imperative across the global insurance sector.

Dame Beale is openly bisexual and headed up the launch of Pride@ Lloyds, an internal LGBT employee TABLE OF CONTENTS

Inga Beale, Chief Executive Officer at Lloyd’s, said: “The decision to leave has been a tough one and when the time comes I will miss the energy, innovative spirit and expertise that I come across every working day. Leading Lloyd’s is an honour and I am proud to have played a part in ensuring that it remains relevant and fit for purpose for the future. The world trusts Lloyd’s to be there when it matters the most and I believe it is well placed for the next 330 years.”

Bruce Carnegie-Brown, Chairman at Lloyd’s, said: “In her five years at Lloyd’s, Inga has set in motion a series of changes aimed at modernising the market and See Continued Page 42

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NEWS

LLOYD’S PREDICTS FRANCE WILL WIN THE 2018 FIFA WORLD CUP BASED ON INSURABLE VALUE

L Lloyd’s has predicted, based on insurable value, France has the most expensive team competing in the 2018 FIFA World Cup and therefore should be victorious in Russia.”

loyd’s, the world’s specialist insurance and reinsurance market, today released research with the Centre for Economics and Business Research (Cebr) ranking teams in this year’s FIFA World Cup based on the collective insurable value of players. The total collective value of all teams in this year’s tournament is estimated at £13.1bn, according to the research.

A snapshot of this year’s research shows that France (£1.4bn), England (£1.17bn), Brazil (£1.1bn) have the three most expensive teams in terms of insurable value and that the average insurable value of one England player is more than the entire Panama squad.

Group G, which includes Belgium, England, Panama and Tunisia, has the highest insurable value at over £2.3bn, according to the analysis.

Colombia, Japan, Poland and Senegal will battle it out in the ‘Group of Death’ for a place in the knockout stages – with just £26.5m separating the three teams in terms of valuation,

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Group H will be the most competitive in the tournament.

Having plotted the teams’ paths right through to the final, Lloyd’s predicts that Germany will fail to retain their title and France will be crowned World Champions. Similar analysis was undertaken by Lloyd’s and Cebr ahead of the 2014 FIFA World Cup which correctly predicted that Germany would be victorious.

The research also provides insight into the average insurable values of players: Forwards are the most valuable players – their legs are worth £19.2m on average.

Midfielders have the largest share of total squad insurable value (38%).

Players aged between 18-24 years old have on average the highest insurable value at £20m.

Cebr used players’ wages and endorsement incomes, alongside a collection of additional indicators, to See FIFA World Cup Page 48

www.chart-exchange.com

Chart Attribution Lloyd’s of London

Analysis - Wilson Elser Continued From Page 23

LISTERIA HYSTERIA

to prevent major or widespread outbreaks. While it may seem like Listeria contamination has become more common, this is likely due to better methods for identifying the actual cause of a person’s illness.

HOW CAN YOU PREVENT THE SPREAD OF LISTERIA?

Listeria is found in soil, water and DNA fingerprinting. This process decaying vegetation and in the involves comparing the DNA gastrointestinal tracts of many fingerprint patterns of Listeria animals. It is especially difficult to bacteria to determine if they control because it can grow in the came from the same source. refrigerator and survive belowEpidemiologists investigate clusters freezing temperatures. of people who have bacteria with the same DNA Listeriosis can While listeriosis be prevented fingerprint to find out what they can be a serious by safe food have in common. handling condition, This method practices. Bag following simple, can be used to raw meat, good food-handling trace the source poultry, and fish of the Listeria, separately from procedures can often narrowing significantly reduce the other food items. it down to Wash hands risk of contamination. a particular before and food product, Education, protocols, after handling manufacturer, or and color-coded utensils food. Wash even a particular fresh fruits and are three easy steps production line. vegetables with that can be taken to running water.

This ability to Use two cutting minimize the risk.” identify the boards, one source of the bacterium enables for fresh produce and one for raw public health officials to work meat, poultry, and seafood. It is with the manufacturer to stop the simple to color-code the utensils outbreak and initiate recalls when and cutting boards and restrict necessary. With the development their use to certain food products. of these scientific tools, what Wash knives and cutting boards in otherwise might have been called the dishwasher to disinfect them. the “stomach flu” is being identified, Set the refrigerator to 40ºF (4ºC) or fingerprinted, and traced in an effort colder. Clean up any spills, especially www.chart-exchange.com

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from hot dogs, raw meat, and poultry, immediately. If you are unsure whether a food is safe, do not eat it. Reheating contaminated food will not make it safe.

Limiting consumption of foods more likely to become infected is another way to prevent the spread of Listeria. While health advocates have been touting the benefits of consuming raw foods, there is a risk associated with drinking beverages or eating food products that have not been pasteurized.

Pasteurization is the process of heating a product to over 140ºF. By heating the product to high temperatures, harmful organisms such as the L. monocytogenes bacterium are killed.

According to the Centers for Disease Control and Prevention, soft cheese made with unpasteurized milk (also called raw milk) are estimated to be 50 to 160 times more likely to cause Listeria infection than when they are made with pasteurized milk.

While listeriosis can be a serious condition, following simple, good food-handling procedures can significantly reduce the risk of contamination. Education, protocols, and color-coded utensils are three easy steps that can be taken to minimize the risk.

For more information, visit the Centers for Disease Control and Prevention website www.cdc.gov/ listeria.

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ANALYSIS - Fortegra

3 BENEFITS OF OFFERING PRODUCT PERFORMANCE GUARANTEES

By Roger High, VP New Markets at Fortegra

T A

bout the author: Roger High is Vice President of New Markets at Fortegra where he leads strategic partnership development for the company’s warranty division, with an industry focus on cable and utility, OEMs, and emerging markets.

A graduate of Miami University (OH), Roger previously served as National Sales Director at Fortegra subsidiary ProtectCELL, where he was responsible for building a sales organization that doubled revenue growth four years consecutively.

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hanks in large part to the development of advanced features, the mobile phone repair industry has now reached $4 billion. When you look at the manufacturer warranty for, say, the new Apple iPhone X, that number begins to make a lot of sense. Though Apple claims their new glass is unbreakable, there already have been plenty of examples to the contrary. And since drops aren’t covered under the phone’s warranty, customers are left to foot the bill out of pocket. A screen repair on the iPhone X? $279. If it suffers even more damage from a drop, Apple is charging a whopping $549. Yikes!

Many consumers are purchasing protection accessories—like screen protectors or phone cases—to help avoid these types of costs. But the list of tools available to protect consumer devices doesn’t end there. OEMs can add an additional layer of protection by enlisting a product performance guarantee from a third-party warranty provider. OEMs can use these measures—warranties that supplement the benefits of owning a protection accessory—to stand behind the quality and value of their product with the promise of a guarantee.

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Plus, by working the price of a product performance guarantee into product pricing, you can provide consumers that extra backing within the convenience of a single payment. Offering these types of protection solutions can put you one step ahead of the competition and keep your company top of mind for consumers – if and when their phone is damaged, they know you’ll take care of them because the device is protected, once again, with guaranteed coverage.

Finally, the right partner can (and should!) work with you to create a turnkey solution—from the product itself, to the language on the packaging, to compliant program filing and claims administration services—to best suit your products and customers.

Interested in learning more about adding performance guarantees to your product lineup? Contact Fortegra today to get started!! www.chart-exchange.com

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Learn how Fortegra’s admitted program can help you Experience More at fortegra.com/programs, or via email at programs@fortegra.com.

Fortegra® is the marketing name for the specialty underwriting operations of Fortegra Financial Corporation and its subsidiaries. Specialty underwriting program availability varies by jurisdiction. Where available, the programs are underwritten by admitted insurance companies.

Analysis - fortegra

WARRANTY OFFERINGS: CHECKED BOX OR REVENUE DRIVER?

By Roger High, VP of New Markets, Fortegra

WHILE MANY RETAILERS LOOK AT OFFERING WARRANTIES AS CHECKING A BOX, THEY CAN BE A BIG PLUS FOR A BUSINESS. Is your retail business treating warranties as simply a checked box, something that merely allows you to keep up with the competition? You may be leaving money on the table. While warranty protection definitely helps you keep pace with competitors and delivers benefits for

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customers, they can also provide retailers with another line of revenue.

Do we have your attention now? Good. Here are a few other ways your retail business can benefit from warranty offerings.

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of another business, you can expect an increase in revenue. In 2016, customers spent $23 billion on protection plans for items like mobile devices, computers, and appliances—plans that provide coverage if these items break or catch fire, for example. Wouldn’t you like to be the retailer providing this added protection and enjoying the subsequent revenue boost?

THE FEELING OF IMPROVED CUSTOMER LOYALTY If you’ve been in retail any length of time, you know customer service is first and foremost. When your team excels at serving your customers, it builds loyalty and trust for your business—and often leads to repeat and referral business down the line.

And the power of solid customer service holds true when offering warranties as well. 25 percent of consumers say they’re more likely to purchase a warranty if it’s offered to them in a professional manner. Ensure your team knows these products and, most importantly, how they can benefit your customers. If you need an assist, the right third-party warranty provider can serve up training and education solutions to make sure everyone is in sync— helping produce happy customers while boosting sales across multiple KPIs. It’s a two birds, one stone scenario: sales associates can both get up to speed on the warranty product itself and learn about how best to position it during the sale.

If you’re struggling with making warranty offerings more than just a checked box, partnership with a third-party warranty provider like Fortegra can help you make them a revenue driver for your business. For more information on your next move, check out our lineup of warranty options.

Proud supporters of CHART

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

THE SMELL OF NEW REVENUE This may be one of the most commonly overlooked benefits to warranty offerings, but it’s pretty simple: when your customers are purchasing value-adds from you instead www.chart-exchange.com

AtriumUw

www.atrium-uw.com

Atrium Underwriters Ltd

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news Continued From Page 16

FTC SUES TO STOP ROBOCALLS place outbound calls in campaigns designed to leave messages in consumers’ voicemail boxes -- hanging up on people if they answered the phone.

In addition to his role in Jones’s robocalling enterprise, Salisbury was the president and part owner of World Connection, a call center enterprise that received transferred calls from consumers who “pressed 1” in response to a robocall message.

Those robocalls often were placed with the help of Justin Ramsey, a recidivist robocaller who has also been named in FTC lawsuits in 2017 and 2018.

The FTC alleges that, through TelWeb, Jones’s operation bombarded consumers with more than one billion illegal robocalls annually. This includes hundreds of thousands of illegal calls that resulted in consumers being transferred to a World Connection call center. At least 64 million of these calls used a technique called “neighbor spoofing,” which fakes caller ID and makes it appear that

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calls are coming from a consumer’s local area.

Based on this alleged conduct, the FTC charged Christiano, NetDotSolutions, and TeraMESH with assisting and facilitating: 1) illegal robocalls, 2) calls to number on the DNC Registry, 3) calls with spoofed caller IDs, and 4) abandoned calls, in which TelWeb hung up on consumers who answered.

Salisbury and three companies related to World Connection are charged with initiating or causing the initiation of: 1) calls with unlawful prerecorded messages, 2) calls to numbers on the DNC Registry, and 3) making calls with spoofed caller IDs. They are also charged with assisting and facilitating TSR violations by others. The FTC is seeking a court order stopping the defendants’ illegal conduct, along with appropriate civil penalties.

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The Commission vote authorizing the staff to file the complaint was 2-0. The complaint was filed in the U.S. District Court for the Central District of California on May 31, 2018, after being referred back to the FTC by the U.S. Department of Justice.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (3824357). Like the FTC on Facebook (link is external), follow us on Twitter (link is external), read our blogs and subscribe to press releases for the latest FTC news and resources.

www.chart-exchange.com

analysis - wilson elser Continued From Page 15

MONKEY BUSINESS The court held that the Copyright Act does not contemplate statutory standing for animals.

PETA argued that corporations are nonhuman and are allowed standing. The court countered that the Supreme Court specifically held that corporations are “persons” for standing purposes; and in any event they are formed and run by humans, and not animals.”

•

not part of the settlement – when Mr. Slater agreed to pay a quarter of his earnings from the monkey selfie book to charities that protect the habitat of crested macaques in Indonesia.

The court proceeded to the merits after finding that the monkey did have standing to sue

www.chart-exchange.com

under the “case or controversy” clause of Article III of the U.S. Constitution, citing Cetacean Cmty. v. Bush, 386 F.3d 1169 (9th Cir. 2004), which held that the world’s whales, dolphins and porpoises, through their selfappointed lawyer, had standing under Article III. The Ninth Circuit opined that Cetacean was decided wrongly, but it is binding precedent nonetheless.

• Finally, the court held that the Copyright Act does not contemplate statutory standing for animals. PETA argued that corporations are nonhuman and are allowed standing. The court countered that the Supreme Court specifically held that corporations are “persons” for standing purposes; and in any event they are formed and run by humans, and not animals.

The outcome of the “Monkey Selfie” lawsuit is not surprising. In fact, since this lawsuit began, the U.S. Copyright Office has included “a photograph taken by a monkey” as an example of a non-copyrightable item. This case does cast light, however, on some unexpected precedent that may, in another matter, affect the result.

The case also serves as a reminder to litigants that a federal appellate court may choose to rule on matters it considers significant, despite a settlement that was reached possibly to avoid creating unfavorable precedent.

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

I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.

JULY 2018

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www.chart-exchange.com

Analysis - SIAA

THE SKY IS FALLING! A 3-PART ARTICLE FOR SIAA MEMBER AGENCIES: PART 3

By Matt Masiello, EVP & Chief Operating Officer

I

n the first two parts of this article, I discussed changes coming to the insurance industry and what SIAA is doing as the consumer-centric focus evolves. In this final chapter, I will talk about YOU and the action steps needed to evolve and succeed (now). After all, it IS all about you. SIAA, our Master Agencies and our Strategic Partners don’t win unless you win!

While there’s much to do to evolve, take it one step at a time. You’ve already taken the first step by being part of this organization. Here are a few other things you need to do:

Build a local brand. Website, social media, direct mail, community involvement. Become a resource for other local businesses.” Remember those struggling captive agents with one product?”

• No one ever succeeded by simply showing up. Use the tools we have for you. Use the tools your companies provide. Don’t know how?

Ask your local Master Agency - they’ll help!

• Fully automate your agency. Maximize your agency management system. Efficiency will be

a key to survival. Also, as millennials continue to join the (insurance) workforce, they bring their love of maximizing technology.

They’ll help you evolve, but you need to get it started.

The tech vendors are ready to help.

• Self-service will come in many forms, but having the data within your agency will be key as well. The vendors often share that their available training is underutilized. One vendor offers a system that ties together: agency website, rating (including website and social media rating), drip campaigns, management

See The Sky Is Falling! Page 47

A

bout the author: Matt Masiello is executive vice president and COO of SIAA. Matt is responsible for operational management of the largest alliance of independent insurance agencies in the United States and its related companies, providing leadership to over 50 direct employees, 49 Master Agencies and more than 6,500 independent insurance agents across the United States. Matt is also president and CEO of SAN Group and Strategic Independent Insurance Agency Solutions. He can be reached at mattm@siaa.net.

www.chart-exchange.com

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special report - Vantage Agora Continued From Page 26

WHAT’S WITH ALL THE ACRONYMS? Current “millennial speak” has progressed beyond the humble beginnings of LOL and OMG. TBH (To Be Honest), YSK (You Should Know) that today it is critical to understand both millennial and work-place abbreviations.

Though each industry, company and specific office culture procure their own acronyms and initialisms (for example, calling Project Manager a PM), utilizing too many acronyms and initialisms is not always disadvantageous. On the contrary, acronyms can simplify and facilitate communication, enhance recall, and save time, space and effort for everyone involved.

However, when a new employee is being immersed with “acro-speak” during their very first week of onboarding at a new position, it can indeed become overwhelming and discouraging. Each Human Resources Directory should give new hires a guide with acronyms and initialisms commonly used at their workplace.

Much like initiation into a secret club, once you understand and begin to use your company’s acronyms, you

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can better showcase your knowledge of the industry and begin to earn your stripes–that is, you are officially IN. What is the most vital point to take away from this discussion? Become familiar with industry-specific and office-specific acronyms in your workplace–and most importantly, start using them ASAP! Because IRL (In Real Life), you can’t progress in business unless you’re in the club.

TTYL (Talk To You Later)…and YW (You’re Welcome).

Continued From Page 29

INGA BEALE TO STEP DOWN AS LLOYD’S CEO IN 2019 making it more efficient and inclusive. Her boldness and persistence have generated the momentum required to bring about real change. I have very much enjoyed working with Inga, and I am grateful for the support she has given me in my first year as Chairman.”

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Lloyd’s said Beales’ leaving date will be confirmed in due course.

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NEWS

LLOYD’S LAB BEGINS GLOBAL SEARCH FOR TECH TALENT

L

loyd’s Lab, the global insurance market’s new innovation accelerator, is today launching a global search for tech talent to partner with the Lloyd’s market and develop solutions for its unique and rapidly changing needs, in a fast-track, fast-fail environment.

For the first time in its 330-year history, Lloyd’s is opening its doors to the global tech start-up and entrepreneur community, giving unparalleled access to the world’s largest market for specialist insurance and reinsurance, in support of its digital evolution.

Lloyd’s CEO Inga Beale said: “The Lloyd’s Lab will contribute towards a more sustainable and competitive insurance market by providing a dynamic environment where start-ups can come in with different ways of thinking and fresh ideas. We want to challenge how we do things and we are looking for entrepreneurs that can help Lloyd’s redefine how we use technology to better serve our customers in this hyperconnected world.”

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The Lloyd’s Lab global talent search, led by applied corporate innovation specialist L Marks, is looking for entrepreneurs, alongside early and growth stage companies operating in the InsurTech space worldwide.

This tech talent will help deliver innovative solutions to some of the key challenges the Lloyd’s market faces and make a real impact on the market’s performance.

Over ten weeks, selected start-ups will be given the unique opportunity to work with Lloyd’s market experts to shape the next big innovation.

Start-ups will be given access to a state-of-the-art co-working space

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located in the Lloyd’s building in London, potential funding and the chance to develop products, platforms and processes that will help transform Lloyd’s into an increasingly technology-driven market.

The Lloyd’s Lab will initially focus on four key themes, developed with the Lloyd’s market with support from The Boston Consulting Group, together with a wildcard category. These include: • • • •

Enhancing the customer experience Building a relationship-driven culture for the digital age; Powering data-driven underwriting; and Creating smart insurance products.

Lloyd’s CEO Inga Beale said: “The Lloyd’s Lab will contribute towards a more sustainable and competitive insurance market by providing a dynamic environment where startups can come in with different ways of thinking and fresh ideas. We want to challenge how we do things and we are looking for entrepreneurs that can help Lloyd’s redefine how we use technology to better serve See Lloyd’s Search For Tech Talent Page 49 JULY 2018

43

FORESTRY WORLDWIDE FORESTRY (RE)INSURANCE FACILITY Pardus was established in 2013 by Keith Thompson, formally CEO of Advent capital Holdings Ltd and Darren Stockman Active Underwriter of Syndicate 780 and Director of Advent Underwriting Ltd. Pardus are an independent Managing General Underwriter, a Lloyd’s approved Coverholder, and an appointed representative of Capita Commercial Insurances Limited.

Cover

Maximum line of USD 8.5M any one risk, any one location. Capacity provided by Lloyd’s of London and “A-” rated company paper. Perils covered mainly Fire and Windstorm, but we can offer additional coverage for hail, ice, snow, frost.

We cannot cover Pest and Disease, although we can offer cover under a small sublimit for Pest and Disease treatment costs.

Sublimits available for fire-fighting costs, aerial photography, debris removal, claims preparation costs etc.

Frost

Hail

Snow & Ice Storm

Flood

PERILS COVERED Rainfall Deficiency

Fire

Malicious Damage

Windstorm

Business Interruption is offered when fruiting trees are destroyed by covered physical damage perils, leading to a loss of yield while the new trees develop •

We have specialist Pardus facilities in place to cover Public Liability (in Europe) and associated forestry Plant and Machinery risks

OUR TAILORED PRODUCTS

Full Value and Value at Risk

Full Value works in the traditional way with insurer retaining any salvageable value from the insured property.

Value at Risk leaves an agreed salvage (based on salvage scales developed by Pardus using age and species data) in the ownership of the client.

Pardus then only insure the non-salvage element meaning the final rate will be applied to a fraction of the TSI generating a lower overall cost to the client.

Target business: •

We are keen to see any enquiry for standing timber commercial planation forestry

• •

Information requirements for quote: •

Perils to be insured against

•

Schedule of forest locations by values, age, species

Forestry risks with accreditation from the Forestry Stewardship

Locational information needs to be provided in either

Council (or similar)

shape file format (.kmz) or the latitude/longitude

Forest Owners comprise:

coordinates of the centre point of each location

-

Individual investors

•

5-10-year ground-up loss experience by peril

-

Commercial Plantation Companies

•

Desired policy structure:

-

Individual Forest Owners

-

Timberland and Investment Management Organisations

-

(TIMO’s)

•

Additional features: -

-

Forest Management Organisations (FMO’s)

-

Real Estate Investment Trusts (REIT’s)

-

Banks loans made to forest owners or fruit tree owners

-

Forest Owner Associations

Deductibles, limit etc Firefighting costs, claims preparation, aerial photography, plantation infrastructure

To download our full forestry questionnaire, please visit our website https://pardusunderwriting.com/products/forestry/

Exclusions

Property

Buildings

Terrorism

Pest and Disease

Drought

Crop

Fruits, Nuts etc

Phil Cottle - Senior Agricultural Underwriter Direct +44 (0)203 735 1608 Mobile +44 (0)7769 895048 phil.cottle@pardusunderwriting.com Dan Longden Cert CII - Underwriting Assistant

Direct +44 (0)203 735 1610 Mobile +44 (0)7756 961500 daniel.longden@pardusunderwriting.com

Pardus Underwriting Ltd. 1st Floor, 3 Lloyd’s Avenue, London, EC3N 3DS www.pardusunderwriting.com

“We have access to a worldwide forestry binding authority covering the physical damage to commercial forestry. There is a maximum line of USD 8,500,000 any one risk, any one location and the covered perils can be found on this flyer. This is written 100% Lloyd’s/company market and Prospect are the Insurance broker”

analysis - Wilson elser Continued From Page 9

LITHIUM-ION BATTERIES: FIRE IN THE SKY with the battery terminals protected from short circuit.

The FAA reports that one lithiumion battery “incident” occurs every ten days on airplanes and at airports. In November 2017, panic ensued at Orlando International Airport when a camera’s lithiumion battery exploded at a security checkpoint, causing a terminal to be evacuated. More recently, a portable power-pack charger in a carry-on bag went into “thermal runaway” in an overhead storage bin on a China Southern Airlines flight during boarding, causing a small fire.

While in the airport, consumers are always looking for open outlets in which to charge their lithiumion battery powered devices.

These outlets can be difficult to find. Luggage manufacturers filled this consumer-driven need by introducing “smart luggage” – baggage equipped with lithiumion battery packs connected to convenient charging ports. The major U.S. airlines, however, recently announced that “smart luggage”

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cannot be checked if the internal battery packs are non-removable.

The FAA has also promulgated regulations barring recalled consumer products containing lithium-ion batteries from commercial flights. The major objective of these policies and regulations is to reduce the likelihood of a fire in an airplane.

An uncontrolled fire occurring anywhere is an emergency situation; an uncontrolled fire occurring in a sealed aluminum tube traveling 500 miles per hour seven miles above ground is a potential mass casualty event.

Fires in airplane cargo holds have resulted in catastrophes, including that associated with ValueJet Flight 592 in 1996. Since then, the FAA, airlines and airplane manufacturers have implemented policies and procedures and developed safety systems to reduce the likelihood of uncontrolled cargo hold fires.

A fire in an airplane cargo hold presents many more challenges than one in a passenger compartment where passengers and crew can use their senses to detect the early stages of a fire and respond accordingly to extinguish it. Pilots must rely on sensors to detect the early stages of a fire in a cargo hold, and must activate fire suppression systems (if installed) to extinguish cargo hold fires or perform maneuvers to starve the fire of oxygen, such as increasing altitude.

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In 2010, a UPS cargo plane crashed in the United Arab Emirates because of a fire in the cargo hold. The fire is believed to have been caused by a shipment of lithium-ion batteries. Investigation revealed that the on-board smoke detection system took too long to activate and did not alert the two crew members in time. The fire disabled various systems on the plane, including the oxygen supply. Smoke filled the cockpit within three minutes of alarm activation and the two pilots died.

Related announcements, policies and regulations are designed to prevent similar scenarios with far more profound consequences in commercial airliners.

As earlier mentioned, the likelihood of a battery failure is rare – and statistically, commercial airline travel is one of the safest means of travel when comparing deaths versus passenger miles traveled.

Hundreds, if not thousands, of lithium-ion battery powered devices are on each commercial airline flight in phones, tablets, computers, activity trackers, cameras and headphones.

Consumers, however, must realize and respect the risks that are associated with these products if not used, stored or charged correctly. Battery manufacturers, and the manufacturers of products containing batteries, must be ready to respond to all claimed incidents.

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Analysis - Siaa Continued From Page 41

THE SKY IS FALLING! system, accounting, renewal management, and an online customer service center in one package…what’s automated in YOUR agency?

•

•

•

Start becoming a business development agency. If you have staff ‘stuck in service mode’ its time to train them or replace them. Use the SIAA Training & Learning Center to get started.

Consider service centers.

The fee is less than paying for staff, but only do it if your staff (and you) are ready to become primarily focused on business development. Also, as an SIAA agency you have discounted service center fees. See our new Service Center training modules in the Training & Learning Center!

Start offering additional products.

Commercial Lines, Voluntary Benefits, Cyber Liability, Lifelock, Life Insurance. SIAA has numerous partnerships available to make these new ventures easier for your agency. Visit SIAA4U and SIAA MarketFinder to learn more.

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• Build a local brand. Website, social media, direct mail, community involvement.

Become a resource for other local businesses. Remember those struggling captive agents with one product?

Their books are filled with insureds that want a local agent. Go get them! Visit SIAA4U and the SIAA Store to learn more.

a dashboard to support interactions

SIAA and your Master Agency are here to help. We’re here for the future and we’re reaching for our goals. Our model only works if you grow your agency, if you thrive and succeed. We are all incentivized in your success.

Together, we will be the future of the local independent insurance agent distribution system.

all have had differing systems

with Lloyd’s so a clear trail of the agreement is available for all to see.

DELEGATED AUTHORITY (DA SATS).

The SATs (Submission, Access and Transformation) component is probably the biggest single DArelated TOM initiative. Before TOMs; Coverholders, Brokers and Markets within their businesses. The absence of seamless automation also increased operating costs, as the same data information needed to be entered multiple times.

Through TOMs, reporting for Coverholders is easier with a single set of market-approved risk, premium and claim data

Continued From Page 47

TOMS - THE LONDON MARKET OPERATING MODEL AND HOW LLOYD’S IS EMBRACING THE NEW WORLD

requirements and central processing of data, providing efficiency for all. The standardized format of information is uploaded to a dashboard which is capable of automating the generation of reports and statistics.

This will be capable of covering all territories, classes, as well as including tax and regulatory requirements. This capability will be accessible by all parties

removes duplicated effort and

within the insurance transaction

reduces processing time and errors.

– Coverholders (agents with

Just as importantly, the facility will

underwriting authorities), Brokers,

provide open market governance –

and the Lloyd’s Syndicates.

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NEWS Continued From Page 30

LLOYD’S PREDICTS FRANCE WILL WIN THE 2018 FIFA WORLD CUP BASED ON INSURABLE VALUE construct an economic model which estimates players’ incomes until retirement. These projections formed the basis for assessing insurable values by player age, playing position and nationality.

The contrast between the teams at the top and bottom in terms of insurable value is staggering, with the top six national teams worth more than the other 26 combined.“ The analysis enabled Lloyd’s to predict who would qualify from their respective groups. Thereafter, Lloyd’s has plotted the path of each team in the knockout stages based upon their insurable values. The team with the highest insurable value in each match is the team Lloyd’s predicts to win and progress.

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JULY 2018

The research was supported by Sporting Intelligence, who provided anonymised footballer salary data for each of the 32 teams participating in the 2018 FIFA World Cup, based upon an indicative 30man squad for each nation.

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Victoria De’Ath, Lloyd’s Class of Business, said: “Our model correctly predicted the winner of the 2014 FIFA World Cup so we wanted to put it to the test once again. The analysis makes interesting reading for football fans who are preparing for the most popular and widely viewed sporting event in the world.

“The contrast between the teams at the top and bottom in terms of insurable value is staggering, with the top six national teams worth more than the other 26 combined.

We can’t wait to see if some teams can defy the odds and make it through, and if the favourites can prove their worth.”

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I’m Kate Boyle Managing Editor. I handle CHART Exchange Advertising. Call me at 302 765-6056 and let’s have a conversation.

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News Continued From Page 43

LLOYD’S LAB BEGINS GLOBAL SEARCH FOR TECH TALENT our customers in this hyperconnected world.”

Lloyd’s Head of Innovation, Trevor Maynard, said: “We’re looking for solutions that can create true commercial value for the Lloyd’s market.

Whether by reducing costs, helping make better underwriting decisions, making operations more efficient or improving the policyholder experience, we want to see ideas that make a real impact on market performance.”

Applications for the chance to win a place in the first cohort of the Lloyd’s Lab close on 22 July 2018. The most compelling applications will be put forward to pitch to Lloyd’s senior leadership and market representatives on 3 September, with the inaugural Lloyd’s Lab cohort starting on 8 October.

Interested start-ups, entrepreneurs and businesses interested in applying for the www.chart-exchange.com

Lloyd’s Lab should visit www.lloydslab. com.

The Lloyd’s Lab is a key strategic initiative, which complements a programme of innovation projects that are focused on driving improved market performance, and enhancing access to Lloyd’s through technology. As announced in April, Lloyd’s will launch a new digital coverholder matching portal pilot next month (July) across the UK, Australia and New Zealand. The online portal will seek to quickly and easily match new binder, or coverholder, business with Lloyd’s underwriters, and will further enhance the market’s ability to quickly, easily and cost effectively attract new business by accessing coverholders in both established and fast growth markets.

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Mark Lann Phone:

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49

News Continued From Page 19

LLOYD’S NEWS ROUNDUP

Following the 2016 EU membership referendum in the UK, we have found ourselves managing the potential risks that may arise because of Brexit.

Scenarios as broad as a deal is agreed to no deal, soft Brexit to hard Brexit, Customs Union to World Trade Organization rules, mean that this is a very uncertain time.

As an organisation that prides itself on managing risk, we have therefore focused on providing certainty for our customers and partners. Our Brussels subsidiary will ensure that our partners in the EU27 can continue benefitting from Lloyd’s specialist expertise, innovative policies and financial security post-Brexit.

The Brussels subsidiary will be set up as a new insurance company with 19 branches throughout Europe, including the UK. MAN-MADE RISKS FORECAST TO COST WORLD’S CITIES $320BN EACH YEAR ON AVERAGE, LLOYDS Man-made risks like cyber-crime, interstate conflicts or market crashes

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JULY 2018

are a bigger threat to economic output than natural disasters such as hurricanes, floods, earthquakes and volcanoes, putting an estimated $320.1 billion of global GDP at risk on average each year, according to Lloyd’s, the world’s specialist insurance and reinsurance market.

The Lloyd’s City Risk Index, built in collaboration with Cambridge University, is a unique study measuring the impact of 22 threats on 279 cities’ projected economic output.

The index reveals that 279 cities across the world – the key engines of global economic growth with a combined gross domestic product (GDP) of $35.4 trillion – risk losing on average $546.5bn in economic output annually (GDP@Risk) from all 22 threats. This comprises $320.1bn to man-made risks and $226.4bn to natural catastrophes.

Lloyd’s Chairman, Bruce CarnegieBrown, said, “No city will ever be completely risk free. Disruptions will always occur, whether it is the result of a hurricane or a cyber-attack. We have created this unique index to help cities around the world identify, understand and quantify their exposure to risk, which will help them prioritise investments and build resilience.”

LLOYD’S OF LONDON ALLOWS MEN TO TAKE OFF THEIR TIES, FINANCIAL TIMES Over the past few months the insurance market has quietly started to relax its strict tie policy. While it has not yet formally repealed the rule, it is no longer enforcing it strictly. A TABLE OF CONTENTS

spokesperson for Lloyd’s said that the new policy was “in keeping with the norms of business dress in the City.”

HOOLIGAN, TERROR RISK PUSHED UP RUSSIA WORLD CUP INSURANCE PREMIUMS, SBS NEWS The risk of terror attacks and damage from hooligans has pushed up premiums for businesses and players buying insurance for the soccer World Cup in Russia compared to the previous event in Brazil, brokers and insurers say.

The insured value of the event is over $10 billion, they estimate. Premiums against terror attacks are around 10 percent higher than the last World Cup in 2014 or previous World Cups.

Stadium owners, ticketing agents, catering companies and players are among those insuring against risks that also include cancellation, kidnap, cyber attacks and personal injury.

LLOYDS BLOG: LLOYD’S PREDICTS THE WORLD CUP WINNER Having plotted the teams’ paths right through to the final, Lloyd’s predicts that France will be crowned champions, beating the top ranked team and reigning world champions Germany in the final. Believe it or not, England is predicted third place ahead of Spain by virtue of their more youthful, and, therefore, more valuable, squad. Other quarter finalists based on insurable value will be Argentina, Belgium, Brazil and Portugal.

We will know if Lloyds got it right by July 15 – or sooner!

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Image Credit: Creative Commons

LLOYD’S OF LONDON

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Credit: Loco Steve Attribution-ShareAlike 2.0 Generic (CC BY-SA