The CHART Exchange March 2018

TABLE OF CONTENTS

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

6 9

When You’re Finished Changing, Your Finished!

CHART’S New Direction The Right Way To Do Telecommuting - Analysis

by NetRate

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Insurance Services In Antiquity - Analysis by Cost Financial

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An Interview With Kevin O’Connor, Managing Director of McGowan Hospitality Programs

Cover Image: [CREATIVE COMMONS)

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Buyer, Beware! The Risks of Inadaquate Due Dilegence in Investing Analysis by Kroll

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Celebrating Inclusive Progress At Lloyd’s of London

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Legislation Affecting California’s Employment Regulations - Analysis by Wilson Elser

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Why Do We Work So Hard? Analysis By Vantage Agora

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Lloyd’s Announces Three New Appointments To The Franchise Board

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The Captive Insurance Opportunity: Renewable Energy - Analysis by York Risk Services

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Lloyd’s Single Claims Agreement Model Goes Live

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2 Keys For TPAs Taking On The Future Risk Landscape - Analysis by Fortegra

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Lloyd’s Pushes Ahead With Electronic Placement

SPECIAL REPORT: SIAA: INDEPENDENT AGENT OUTLOOK FOR 2018: KEEPING INSURANCE APPEALING TO TALENT 39

SIAA: Independent Agent Outlook For 2018: Keeping Insurance Appealing To Talent

41

Lloyd’s To Launch Innovation Lab To FastTrack New Tech Solutions

41

Lloyd’s Claim Dispute Remanded To Lower Court

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Texas “Hailstorm Bill” Impacts Claims Related To Hurrican Harvey - Analysis

by Wilson Elser

PREFER TO READ IN PDF FORMAT? DOWNLOAD THE PDF VERSION HERE www.chart-exchange.com

MARCH 2018 VOLUME 3 - ISSUE 2

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.

CHART Exchange

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

ADVERTISING IN THE CHART EXCHANGE MAKES SENSE: 302.765.6056 TABLE OF CONTENTS

MARCH 2018

3

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Many employers may not even be aware that this type of disturbing behavior occurs within the workplace.

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The cost of defending against such a lawsuit — even a groundless one — could be financially devastating.

This is especially true for smaller firms.

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Message from the earliest adopter

“WHEN YOU’RE FINISHED CHANGING, YOU’RE FINISHED” - BENJAMIN FRANKLIN CHART Takes A New Strategic Direction

B

en Franklin may not have been an entrepreneur by trade, but he certainly understood a core principle of the business world. His words are especially relevant today. Things are changing at light speed.

business be without one now?

Flashback ten years, and Facebook didn’t even exist. Now, one-and-one quarter billion people and businesses use the platform to communicate.

Ben’s words are even applicable within the insurance industry. As little as three years ago, there was no organization dedicated to the growth of the U.S./London marketplace. CHART’s appearance on the scene has definitely changed the landscape.

Since 2015, new business opportunities representing $173 million in premium have been presented Diligent observation and focused learning to various Lloyd’s may often suggest a change in strategic direction Syndicates. Twelve new binder agreements have been Consider this: You probably didn’t implemented as a direct result of our even have an e-mail address twenty efforts – with more to come! years ago. Where would your

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Glenn W. Clark, CPCU Publisher & Earliest Adopter

Despite this track record of success, we are not “finished changing”.

CHART’s initial strategy was to bring together the various segments of our target niche – domestic insurance agencies, Syndicates, vendors catering to the insurance industry, and select London Brokers – all groups who stood to benefit if CHART realized its stated objective of growing the U.S./London marketplace. For this reason, we expected an almost collegial atmosphere where everyone contributed to achieve a common goal.

In hindsight, this notion was probably a bit naïve. Events held in elegant venues, cocktail parties, and interesting guest speakers are all well and good, but it’s not enough to attain our objective – to deliver new production for Lloyd’s.

www.chart-exchange.com

I

t is time to adapt to the realities of the market niche we serve.

In 2018, CHART will abandon many of the collegial aspects we initially espoused in favor of a more business-centric model.

Instead of event planning, our team will dedicate its resources to making CHART members successful. Consider some of the assets we have available for deployment: •

Vendor Team. Our partners have expertise in a vast array of disciplines, including Actuarial, Legal, Claims Administration, Marketing, and Systems. We can utilize this vast collection of knowledge to help domestic agencies turn business ideas into sophisticated program proposals for London consideration.

•

CHART Markets. CHART Markets is an on-line shopping mall established for the retail agent community. Much like it’s “brick-and-mortar” counterpart, this London-centric facility will provide participating members with virtual storefronts from which their various product and service offerings can be promoted. Marketing campaigns focused on our target audience (independent insurance agents) will be implemented in order to drive traffic to this unique internet platform. A multi-tiered promotional effort – using media advertisement, direct mail, broadcast e-mail, and other techniques – will be utilized to accomplish our objective.

•

CHART Magazine. Our very own monthly digital publication can assist members in raising awareness about new products/programs, establish new distribution channels, and educate the retail agent community about the benefits of doing business with London. Our e-magazine reaches over 100,000 producers throughout the United States.

•

Incubator Facility. Securing Delegated Underwriting Authorities from London takes time; some agencies with new program ideas want to launch as soon as possible. Our Incubator Initiative helps expedite the process. Existing Coverholders can also choose to serve as mentors to entities dealing with Lloyd’s for the first time.

Once we have built a core group of committed partners we intend to have an annual gathering limited to those that contribute to the organizations’ success (vs. attendees that seek to merely “harvest” from our efforts) to build a gamechanging group. In April of 2019 we hope to have our first “Members Only” event.

Do you have any questions, comments, or input regarding CHART’s new strategic direction? We’d welcome the opportunity to hear from you. Write to us at info@chart-exchange.com.

Glenn W. Clark , CPCU CHART’S Earliest Adopter

www.chart-exchange.com

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877-738-2411TABLE OF CONTENTS www.netrate.com www.chart-exchange.com

MARCH 2018

ANALYSIS - NETRATE

THE RIGHT WAY TO DO TELECOMMUTING

T

he benefits of telecommuting for both companies and employees are well documented. Not only are telecommuting workers more productive and engaged (their companies love that!), they save money and time when they’re not commuting, and they achieve greater work-life balance. It’s no wonder this new way of getting work done is increasingly important to companies. Approximately 43 percent of all employees nationwide work remotely at least part of the time.

Yet did you know there’s a right way to manage telecommuting? Gallup’s State of the American Workplace report reveals that telecommuting yields the most benefits to employees and employers when

workers don’t spend 100 percent of their time at home. Employees are more engaged when they spend some of their workweek working remotely and the other part working in a location with their coworkers.

The optimal engagement boost, according to Gallup, occurs when employees spend 60 percent to less than 80 percent of their workweek — three to four days — working offsite and the rest of it in the office.

Why is this the case? There are numerous factors that come into play. One important one is the out-of-sight-out-of-mind issue.

Numerous studies show that telecommuting workers on average are as productive or even more productive than employees who work in the office and who have greater distractions to deal with. But when an employee is in the same

office as their manager, it’s easier for the manager to see and recognize achievements, according to Gallup.

When the manager and employees are in different locations, there are fewer opportunities for this to occur. That can leave telecommuting workers feeling undervalued and less engaged. Managers need to make sure they are celebrating the successes of — and offering advancement opportunities to — both in-office workers and telecommuters.

Another reason why a 100 percent telecommuting plan is not always ideal is that fully remote workers do not get that opportunity to connect with their co-workers, which can lead to feelings of isolation. Human

See Right Way To Telecommute Page 31

R Image Credit: Wikimedia Commons

ob Zuzula is Director of Marketing at NetRate Systems, a leading insurance solution provider of cloud-based underwriting, rating, and issuance software applications targeted at the Program Administrator, MGA, Carrier, and Lloyds Coverholder and Syndicate markets. Rob and the NetRate Systems team work with these markets to develop cloud-based solutions that deliver more efficient daily work processes, more consistent and controlled underwriting and rating, improved data reporting and analytics, and other custom business enhancing solutions that are rooted in the company’s long history of delivering rating solutions that support ISO®, NCCI, and proprietary rate plans.

www.chart-exchange.com

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MARCH 2018

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ANALYSIS - COST FINANCIAL

INSURANCE SERVICES IN ANTIQUITY

T

he world has changed quite a bit since insurance services were first conceived. Yet, the model on which the insurance industry is based upon has remained static. It is all a matter of risk protection. Without proper risk protection, skyscrapers wouldn’t get built, products wouldn’t be marketed, and goods wouldn’t be shipped.

Protecting a business’ vital assets from the risks associated with the real world represents the foundation upon which insurance services rest upon.

Image Credit: Creative Commons

In today’s day and age, insurers and reinsurers are at the vanguard of risk management and play the vital role of shock absorbers in our interconnected age. Yet, the insurance industry does so much more than just help mitigate risk. Insurance premiums are invested on a long-term basis and are packaged into different financial assets.

Insurance services like premium financing and other tools allow insurers to provide capital within the real economy. These are the men, women, and businesses whose work supports the production and

www.chart-exchange.com

distribution of goods and services throughout our world.

VIEWING INSURANCE SERVICES THROUGH THE LENS OF ANCIENT SOCIETIES

INSURANCE SERVICES THEN AND NOW

Even though insurance by itself may have been a foreign concept to societies of old, there were still ways in which people managed to alleviate losses, mainly through sharing risks within social and business communities.

Insurance and reinsurance services have been around for a long time, but not as long as people think. In fact, individuals providing financial services designed to accommodate risk mitigation can only be traced back to the late 19th Century.

In antiquity, risk was often viewed through the lens of fate. Rather than meeting disaster with defiance, many times one simply resigned themselves to their fate. For this reason, protecting one’s life and assets against misfortune was considered a vital tool to lessen the negative effects of “divine providence.”

Yet, for centuries, rather than protecting one’s assets using insurance services, people often resorted to prayers, pilgrimages, and donations to their deity of choice. If you go back to even the early 1800s, insuring people against death was often a controversial topic.

In ancient times, meeting places such as guilds, trade associations, and inter-village communities provided the foundation by which risk was mitigated. If your city or village was a seafaring one, you may have distributed cargo among different ships to protect valuable assets against major storms or other disasters.

Still, spreading the risk around in this fashion was not without challenges.

Ship owners traveling the same routes might see losses multiplied, no matter how the cargo was spread around.

See Insurance In Antiquity Page 31

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within the insurance industry by assisting firms with their corporate development and acquisition/divestiture objectives.

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chart interview

AN INTERVIEW WITH KEVIN O’CONNOR Director of McGowan Hospitality Programs Managing the hospitality initiative for The McGowan Companies.

CHART: Tell us about your

I became a coverholder of Lloyd's when I was probably about 30 years old.

www.chart-exchange.com

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Kevin O’Connor

CHART is part of the equation, and they're a necessary part of the company? equation that is value added. But, Kevin: McGowan is a professional they don't control the dialogue. wholesaler, MGA , and coverholder.

It’s directly between the The firm has been in existence coverholder and the risk taker. for about a hundred years.

From a collegial I think that's huge. From a Tom McGowan runs the education standpoint CHART collegial education standpoint company. He's the fourth CHART is helping the industry generation, and I am the third is helping the industry up our up our game and making it generation of my family in game and making it better.” better. insurance. My grandfather was in it. My father was a Lloyd's CHART: As a coverholder how is it CHART attracts the best in class. You coverholder, and I'm in the business. advantageous to be involved with can sit down across the table from My son Kevin Jr. is in the business, CHART? people who are decision makers, too.

Kevin: CHART Exchange includes present an idea to them, then put coverholders and the people who together a business plan. Then three CHART: Were you a coverholder want to be coverholders. And, you've or six months later you're issuing prior to being involved with CHART? also got the risk bearing entities policies. That's a gift. That's what Kevin: Yes. My Dad owned a piece of Lloyd's. CHART Exchange is the makes CHART so different than every of a syndicate back in Lloyd's in the only place that I am aware of where other association.

60's and 70's. I realized at a very you have the actual principals, the young age the value of Lloyd's and coverholders, and the risk takers being a coverholder - and what having direct communication.

Lloyd's means to one's career. So, See Kevin O’Connor Page 40 MARCH 2018

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Analysis - Kroll

BUYER, BEWARE! CAVEAT EMPTOR, “BUYER BEWARE,” IS THE STARTING PROPOSITION FOR ALL INVESTORS AS THEY MAKE THEIR DECISION TO PROCEED WITH A TRANSACTION OR DEAL.

By Richard Dailly & Duncan Jepson

T

he challenge of turning a possible investment idea into a feasible target is to narrow the information gap with due diligence. Even in information-rich locations – where there are reliable historical accounts and accounting rules, strong rule of law and enforcement, and comprehensive registries of rights and documentation – it is still impossible to answer all relevant questions with complete certainty.

In emerging markets, information asymmetry, the difference between what is known and what is happening, is exacerbated by the absence of institutional and

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administrative infrastructure that generate and store the records and data needed to reduce risk. This systemic lack of information and the infrastructure required to support it make acquiring any kind of credible data exceedingly difficult.

The threat of exposure to criminal activity, such as slavery and trafficking, has steadily increased since the opening and swift development of many new global markets. These include the markets that emerged in Asia-Pacific and Central Asia in the 1980s and 1990s, and the development of Eastern Europe since the fall of the Berlin Wall during that same period. A potential indicator of just how much societies have changed and benefited from economic development can be seen through the change in the population and poverty figures.

Income and wealth-generating activities have flourished across humanity, but they have also brought the potential for exploitation of some of the most vulnerable groups.

Forced labor or other human rights offenses, such as land grabbing, denial of access to justice, and large-scale misappropriation through corruption, are some of the most common means See Buyer, Beware! Page 36 www.chart-exchange.com

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MARCH 2018

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News

CELEBRATING INCLUSIVE PROGRESS

After years of campaigning, the (U.K.) Government passed the Representation of the People Act on 6 February 1918, giving women the right to vote. Since those days, Lloyd’s has introduced a number of initiatives to build an increasingly diverse, inclusive and innovative market.”

Lloyd’s CEO Inga Beal Speaks on Inclusion Progress This article originally appeared on the Lloyd’s of London website and is reprinted here with permission.

O

n 6 February 1918, British women made history. After decades of campaigning to be treated equally and to be given the right to vote, the Government passed the Representation of the People Act. This legislation enabled all men and some women over the age of 30 to vote for the first time, and paved the way for universal suffrage a decade later.

It was a milestone for women, and a breakthrough towards achieving a more equal, inclusive UK. Yet, while there was much progress for women in the decades that

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followed, it wasn’t until 1969 – some 51 years later – that Lloyd’s began allowing women to be involved in its business by passing a resolution to admit women as investors (also known as Names). This development helped change attitudes and a year later Lloyd’s welcomed its first female underwriter, Countess Inchcape, into the market. However, she wasn’t allowed in the Room (where brokers and underwriters still meet to this day) to conduct business personally and could only communicate with clients through a male agent. Then came Liliana Archibald who was the first female allowed to conduct business in the underwriting room in Lloyd’s in 1973.

www.chart-exchange.com

Since those days, Lloyd’s has introduced a number of initiatives to build an increasingly diverse, inclusive and innovative market.

In 2014, the then Chairman John Nelson hired Lloyd’s first female CEO, Inga Beale, and in 2015 Lloyd’s the launched the Dive In Festival, which celebrates diversity and inclusion in 17 countries around the world.

www.chart-exchange.com

While Lloyd’s celebrates the past five decades of progress for women in the market, it also recognises that more needs to be done.

Lloyd’s strength and world-renowned brand is built on the bedrock of thousands of people, including many women, who have worked hard to ensure we remain the world’s specialist insurance and reinsurance market.

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Their talent means we continue to provide insurance that protects communities, cities and countries and enables inventors, innovators and ideas – to drive forward human progress.

Lloyd’s support for women’s success is critical for the market’s future, and for the long-term success of London as a financial centre. The work is not finished.

MARCH 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

LEGISLATION AFFECTING CALIFORNIA’S EMPLOYMENT REGULATIONS Authors: Jennifer A. Brody, Keith J. Rasher, Alex Kaplan, Min K. Kim

CALIFORNIA ASSEMBLY BILL NO. 1008 – BAN-THE-BOX LAW

CALIFORNIA ASSEMBLY BILL NO. 168 – SALARY INFORMATION Labor Code section 1197.5 prohibits employers from paying any employees at wage rates less than the rates paid to employees of another sex, race or ethnicity for substantially similar work unless an exception applies. Assembly Bill No. 168 adds section 432.3 to the California Labor Code to prohibit an employer from asking, either directly or through an agent, about a job applicant’s salary history, including compensation and benefits, and requires the employer, upon reasonable request, to provide the pay scale for a position to a job applicant.

The Authors:

Jennifer A. Brody

www.chart-exchange.com

of the offense or conduct; (2) the time that has passed since the offense or conduct; (3) the time that has passed since the offense or conduct and completion of any sentence imposed; and (4) the nature of the job held or sought.

Assembly Bill No. 1008 prohibits an employer with five or more employees from inquiring about or considering a job applicant’s conviction history at any time before a conditional offer of employment is made. Employers must take the following steps prior to rescinding an employment offer based on an applicant’s criminal conviction history: •

•

Step 1: Conduct an individualized assessment to determine whether the applicant’s conviction has a direct and adverse relationship with the job’s specific duties, considering the following factors: (1) the nature and gravity

Keith J. Rasher

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Alex Kaplan

Step 2: If the employer makes a preliminary decision to rescind an offer because of the applicant’s conviction history, the employer must, at least five business days before the decision becomes final, (1) provide written notice to the applicant stating the disqualifying conviction(s) that is/are the basis for the preliminary decision to rescind the offer, (2) provide a copy of

See CA’s Employment Legislationo Page 46

Min K. Kim

MARCH 2018

21

Analysis - Vantage Agora

WHY DO WE WORK SO HARD?

By Ashley Luczaj, Vantage Agora Customer Experience Manager Services

I A

bout the author: With experience that includes working with one of the largest moving and storage companies in the industry, client needs are alway's Ashley's number one focus. Her role as Manager of Customer Experience in Services is to deliver on the Vantage Agora promise of continuous improvement, maintaining quality of and finding new opportunities to enhance processes. Her business management degree and experience in lean management gives her the skill set needed to assist clients every day and keep their needs at the forefront.

t’s the beginning of an exciting year, and we are keeping busy with many new interesting ventures. We at Vantage Agora have never shied away from unique challenges that present themselves.

As users of our own software solution, OX Zion, taking on innovative requests internally, as well as from clients, is the fuel that keeps us going. We don’t see it as hard work, but rather an opportunity to learn, grow and expand our horizons.

Aiming to do something that has

never been done before is what makes us who we are and what drives us. New prospects keep things engaging so that we don’t get stuck in mediocrity and the fatigue of our routine day-to-day.

Laura Vanderkam, author of several time management and productivity books, has a solid concept as to why hard workers stay busy.

See Work So Hard Page 47

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www.chart-exchange.com

www.chart-exchange.com

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23

News

LLOYD’S ANNOUNCES THREE NEW APPOINTMENTS TO THE FRANCHISE BOARD Three new appointments to the Lloyd’s Franchise Board were confirmed by Chairman Bruce CarnegieBrown today.

M

ike Bracken, Nigel Hinshelwood and Fiona Luck will come onto the Board as non-executive directors for three year periods commencing 1 March 2018.

Welcoming the appointments, Bruce Carnegie-Brown said, “These are great appointments for Lloyd’s. Mike, Nigel and Fiona bring experience and expertise from across the business spectrum from insurance to banking to technology, built up over the last twenty-five years. The Corporation will undoubtedly benefit from their expertise and I am looking forward to working with them.”

Mike Bracken brings extensive knowledge of digital, technology and innovation to the Franchise Board. He was formerly Chief Digital Officer at the Co-Op Group and prior to that he spent four years as the UK Government’s Executive Director, Digital and also as Chief Data Officer. In this role he created the Government Digital Service, the organisation behind GOV.UK and

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the transformation of mainstream Government transactions.

Nigel Hinshelwood brings over 27 years’ experience in the financial services sector working across the UK and Europe, North and South America, the Middle East and Asia Pacific. He was most recently Head of the UK and Deputy Chief Executive Officer of HSBC Bank plc. He had a 12-year career at HSBC, where he was a Group General Manager, in a variety of senior global roles including Global Head of Operations, Chief Operating Officer for Europe, Middle East and Africa, Head of HSBC Insurance Holdings and Head of Business Transformation.

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Prior to joining HSBC, Nigel was a partner at Ernst & Young (subsequently Cap Gemini Ernst & Young) where he held numerous positions including Head of Financial Services and Chief Executive Officer of Southeast Asia. Nigel was also a Group General Manager with Unisys where he was responsible for the Financial Services practice in Asia Pacific. Nigel is a non-executive director on the board of Marks & Spencer Financial Services plc.

Fiona Luck has over 25 years’ experience in insurance and reinsurance. She has been a Nonexecutive Director of the Bermuda Monetary Authority the regulator of financial services on the island, since 2013. Previously, she was nonexecutive director at Catlin Holdings Ltd and Allied World Holdings Ltd and, prior to that, spent a decade at XL Capital Ltd, in a variety of senior roles including Chief of Staff to the CEO and Executive Vice-President responsible for Strategy, Global HR, IT and Corporate Social Responsibility.

Fiona has also worked for the ACE Group between 1996 and 1999 and was President and CEO of Marsh and McLennan’s Bermuda operation between 1992 and 1996. www.chart-exchange.com

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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.).

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www.chart-exchange.com

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25

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

To learn more, contact Aubrey Fountain, at 850.650.2380 or Aubrey.Fountain@yorkrsg.com.

C L A I M S M A NAG E M E N T | M A N AG E D CA R E | R I S K MA N AG E ME N T | LOSS CO N T R O L www. YORKRSG .co m

aNALYSIS - York Risk Services

THE CAPTIVE INSURANCE OPPORTUNITY: RENEWABLE ENERGY With carriers Renewable Energy Groups are often “assigned by analogy” because it is a relatively new industry and there is not enough ratemaking data to support their own classification and rate structure.”

By Monica Everett

A

WHAT IS A CAPTIVE?

captive is an insurance company created and wholly owned by one or more non-insurance companies to insure the risks of its owners (example: a group of businesses, individuals, a franchisor, or their association could form a captive).

Captives are a form of self-insurance (with full reinsurance protection) where the insurer is owned wholly by the insureds. They are typically established to meet the risk management and insurance needs of its owners or members.

A

One of the main reasons businesses form a captive program is to earn underwriting profits and investment income based on the performance of their individual company. Because members have the potential to earn underwriting profits and investment income, participation in a captive insurance program is viewed as one way to transform the insurance expense line of a P&L into a profit source.

RENEWABLE ENERGY GROUP CAPTIVE PROGRAM – WHY THE TIMING IS RIGHT FOR THIS INDUSTRY GROUP

bout the author: Monica Everett is Vice President of Sales for York Alternative Risk Solutions, responsible for the design and implementation of captive insurance structures and solutions. With over thirty years’ experience in Property & Casualty and Alternative Risk Insurance, Monica is well versed in both Group Captive and Single Parent Captive Insurance Programs, with a focus on the long-term reduction of risk and expense for clients. She was the lead broker and top producer for a very successful Group Captive Insurance Program for ten years and has established many Captives and Alternative Risk Programs throughout her career. Because of her extensive experience, Monica is regarded as an expert advisor to clients seeking Captive, Self-insured, Large Deductible, Risk Retention Groups or Retrospective Rating Plan Insurance Programs. Monica is a graduate of the University of Texas and holds a Construction Risk and Insurance Specialist Designation. Monica.Everett@yorkrsg.com | email

www.chart-exchange.com

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York Risk Services has developed a member-owned group captive for the renewable energy industry. Renewable energy has had tremendous growth in the US in the past several years.

The leaders in this space are seeing their Workers’ Comp and GL premiums rise, while their historical loss ratios have been extremely low. These accounts are often “assigned by analogy” See A Captive Opportunity Page 29

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27

news

LLOYD’S SINGLE CLAIMS AGREEMENT MODEL GOES LIVE A transformational new model that will simplify how claims within the London market are handled is launched today in an effort to improve client service and streamline claims agreement across the London market.

From an initial idea from London & International Insurance Brokers’ Association ( LIIBA) this collaboration between LIIBA, the Lloyd’s Market Association (LMA), International Underwriting Association (IUA) and Lloyd’s will enhance London’s claims service for (re)insureds. It represents a significant step in making the London market more competitive and enhancing its position at the centre of the international insurance industry through the implementation of efficient working practices.

LIIBA’S CEO Christopher Croft said: “The broking community is delighted that we can move forward with the Single Claims Agreement

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as it will expedite the handling, agreement and payment of small to medium sized losses under London subscription market placements to the benefit of clients.”

LMA’s CEO David Gittings said: “The single agreement model will make the settlement of claims in the London market more efficient and will offer an improvement in service and customer experience. The delivery of a market-wide agreement will become a reality thanks to the collaborative efforts of the LMA, IUA, LIIBA and Lloyd’s.”

IUA’s CEO David Matcham said: “The introduction of an option to provide for a single claims agreement, at the time of placing promises to make the processing of claims in London faster, cheaper and more effective.”

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Lloyd’s CEO Inga Beale said: “In a competitive global sector, customers want and expect the London market to be easier to do business with. By ensuring that the most critical part of our business offer, the resolution of claims, can be done in a more straightforward manner, this will mean London can continue to remain an attractive proposition.”

Under the Lloyd’s Claims Scheme, following syndicates are already bound by the decision of the lead Lloyd’s underwriter for ‘standard’ claims within a set class of business thresholds, typically below £250k.

However, a lead agreement model is not typical in the company market, and each IUA carrier has agreement rights to the claim for their proportion. The new single claims agreement arrangement and the related model will allow the (London) slip lead to bind all followers on risk, if carriers accept the arrangement and the clause as a policy term at the point of placement.

www.chart-exchange.com

Alpha Stock Images - http://alphastockimages.com/

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he Single Claims Agreement Party model will enable quick and efficient authorisation of claims by allowing policy leaders to agree non-complex payments up to £250,000 on behalf of following carriers. Participation in a single agreement arrangement will be optional and considered by brokers and carriers at point of placement.

Analysis - York Risk Services Continued From Page 27

•

CAPTIVES: AN OPPORTUNITY

• •

because it is a relatively new industry and there is not enough ratemaking data to support their own classification and rate structure.

Because of the low loss ratios and misclassification issues, most carriers cannot price these accounts appropriately with their current filed rate plans. A group captive option is one of the few ways in which these accounts can take advantage of their strong risk management practices, and ultimately pay fair and equitable premium for their exposure.

AMONG THE BENEFITS TO BUSINESS OWNERS: •

• •

•

Underwriting profits that directly enhance your company’s P&L A market-competitive insurance rate Superior Safety and Claims Management Services that reduce your claims frequency and drive costs to the lowest possible level Comprehensive coverage designed to meet the insurance requirements of your contracts (for Workers’ Compensation, General Liability & Auto Coverage) www.chart-exchange.com

•

Full insurance and reinsurance protection from an “A+ XV” Rated insurance carrier Greater control over and involvement in how your claims are managed The lowest net cost for insurance, which provides you with a competitive advantage in the business marketplace

CAPTIVES ARE THE FASTEST GROWING SEGMENT OF THE COMMERCIAL INSURANCE MARKETPLACE Chances are a captive could be a good fit for your company and satisfy your insurance needs. For qualified businesses, a captive program would provide a greater degree of control over insurance costs while also providing a welcome new profit stream.

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

TARGET MARKET SEGMENT/CLASS OF BUSINESS THAT FIT INTO THE RENEWABLE ENERGY CAPTIVE The Renewable Energy Captive is focused on Commercial, Utility and on a limited basis, Residential, Solar and Wind Operations.

The Captive includes Contractors, Developers, Owners and Integrators of Hydro, Biomass, Geothermal, Recycling Plants and service providers to those operations.

The program will also target Manufacturers of Panels, Inverters, Trackers, Wind Turbines, Storage, and other businesses focused on renewables.

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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.

MARCH 2018

29

News Continued From Page 11

INSURANCE SERVICES IN ANTIQUITY Another major drawback to risk mitigation of ancient times was the lack of financial sophistication within individual transactions. Early forms of insurance financed operating costs out of their members’ contributions.

These societies simply didn’t have any advanced ways of investing capital wisely.

WHY MODERN INSURANCE SERVICES MIX THE OLD AND THE NEW With today’s complex, globally interconnected society, modern life can hardly be imagined without insurance as a form of risk protection.

Without insurance services, industrialization, innovation, and economic development would not have progressed in the fashion it has.

The insurance industry has proven extremely resilient to both the challenges of yesteryear and the challenges of today. Insurers have demonstrated a long history of prudent risk awareness and cautious innovation.

Ensuring the prosperity of our clients has always been paramount to COST www.chart-exchange.com

Financial Services. Our goal is to help insurers grow their balance sheet by offering additional services. As the industry has evolved, insurers have new tools at their disposal designed to help maximize profit while offering a bevy of products their clients rely on. To learn more about how we can help light the way, contact us today.

Continued From Page 9

THE RIGHT WAY TO TELECOMMUTE

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

beings crave connection with others. Employees form bonds with other employees in office break rooms, lunch rooms and at the water cooler and coffee pot.

Even small amounts of face time with co-workers and managers can help increase the odds that an employee’s telecommuting efforts are successful for everyone involved.

Did you know that you can provide access to dashboards within our solutions based on the role of the user? That way, your team members see views of data important for their role, and sensitive information you want kept secure is kept secure.

Please contact us to discuss what our solutions can do for you!

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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.

MARCH 2018

31

ANALYSIS - Fortegra

2 KEYS FOR TPAS TAKING ON THE FUTURE RISK LANDSCAPE

By Steve Davidson, Fortegra Vice President of Warranty

customer patterns and their varied needs.

t’s no secret: insurance risk is evolving. As a result, keeping risk management practices up to date must become a priority for thirdparty administrators (TPAs) looking toward the future.

But to really make big data work in your favor, don’t rush it. Instead, slowly integrate this tool into your processes. By being more deliberate in your introduction, you can set your sights on one task at a time and ensure each step is effective.

I A

bout the author: Steve Davidson is Vice President of Warranty for Fortegra Financial Corporation (a Tiptree Inc. company).

Fortegra® and its subsidiaries comprise a single-source insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting programs.

Delivering multifaceted coverage with an unmatched service experience for domestic and international partners and their customers, Fortegra solves immediate, everyday needs, empowering consumers to worry less and experience more.

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But expect challenges; this is much easier said than done. A recent Accenture report found that greater volume of data, regulatory demands, legacy technologies, and the increased threat of cyber attacks are all impacting risk management effectiveness.

Fortunately for our TPA crowd, these challenging factors don’t necessarily spell trouble for the industry—but they do require preparation. Ready?

Here are two key ways you can set yourself up for success.

KEY #1: USE DATA TO YOUR ADVANTAGE Big data is only a challenge if you don’t know how to leverage it. One great way to improve processes and customer service is by using the massive amounts of available data to optimize claims management automation and upgrade insurance offerings based on established

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KEY #2: BE A CONSULTATIVE PARTNER Each and every customer is different.

As a TPA, you must play the role of a consultative partner, zeroing in on each customer’s individual and specific needs. How? Optimize your insurance offerings by uncovering market trends, and educate customers by passing along what those trends can mean for them. As a consultative partner, you can help end the guessing game customers often play when deciding which insurance options are best for them—earning their trust and loyalty in the process.

The future doesn’t have to be scary.

TPAs: as you take on the challenges of the evolving risk landscape, focus on a few key areas—data-optimized processes and offerings, and a consultative approach—to create a favorable future.

www.chart-exchange.com

Your Partner for Admitted Market Capacity

1

PROGRAM CARRIER WITH NEARLY

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ADMITTED

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CAPTIVES & RETRO COMMISSION STRUCTURES RISK PARTICIPANT SUPPORTING COVERHOLDERS, MGA S & MGU S

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As CHART's newest vendor partner, Fortegra's admitted paper helps coverholders and MGAs gain access to premier markets.

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.

BRIDGING THE GAP

BETWEEN USA AND LLOYD’S OF LONDON

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www.chart-exchange.com

News

LLOYD’S PUSHES AHEAD WITH ELECTRONIC PLACEMENT Lloyd’s today announced plans to push ahead with electronic placement to support face to face negotiation, further increase efficiency in the market, reduce back office costs and improve customer service.

L

loyd’s CEO, Inga Beale, said, “The London Market has made great strides towards modernisation. We have invested time and money in the London Market Target Operating Model (TOM) programme and delivered systems that we know work.

For example, over 15,000 risks have been bound to date on the electronic placing platform (PPL) and nearly 60% of the Financial and Professional Lines risks are being placed electronically.

“Adoption is now vital and it is happening but, in the case of electronic placement, it is not happening fast enough. Unless the market moves together it will not reap the benefits and reduce administration costs. Electronic placement will support face to face negotiation, further increase efficiency in the market, reduce back office costs and most importantly, improve customer service.

Inga Beale, Lloyd’s CEO

www.chart-exchange.com

“Without higher levels of adoption throughout the market we put our investment to date at risk and we are in danger of seeing administration costs rise even higher. It is for this reason that Lloyd’s is proposing to mandate the use of electronic placement on a phased basis over time.

Lloyd’s will hold briefing sessions with the market to provide more information about PPL as well as details of how the electronic placement mandate might work and gather their input.

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

AtriumUw

www.atrium-uw.com

Atrium Underwriters Ltd

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MARCH 2018

35

Analysis - Kroll Continued From Page 14

broad recognition of the importance of the UN Guiding Principles on business and human rights1 , the launch of International Labour Organisation’s Alliance 8.722, and the rapid rise of environmental, social, and governance ratings3 demonstrate a greater commitment to reducing involvement in criminality and human rights and environmental abuses.

BUYER, BEWARE used for exploitation. However, the news is not all bad.

While rule of law in many countries is still weak and legal frameworks patchy, they have been growing and evolving such that countries which were previously in continual political upheaval and under constant threat of armed civil unrest in the mid-twentieth century have become more peaceable, enabling their communities to engage in commercial activities.

The generally positive response to environment and societal issues from the global business community4 is timely as there is also increasing evidence of widespread involvement of terrorist and transnational organized crime in human and wildlife trafficking activities. There are also increased links between the private sector, organized crime, and corrupt government and law enforcement in trafficking5, forced labor, and abuses and offenses against communities and the environment.

All of these activities are directed at supporting local and regional businesses to increase profits and in turn pay kickbacks. The mass graves of Rohingya discovered in southern Thailand and northern Malaysia in 2015, and the convictions earlier this year of Thai officials, including a senior army general, are an example of one of the worst consequences of human trafficking6 , and after two years it is still not yet known where those who survived were sold and put to work.

There are businesses that benefited from those victims.

Activities such as land grabbing, that were not recognized as criminal decades ago, are now being treated as such.

It is not the knowledge that there is an absolute failure in the establishment of rights and access to justice that creates the risk; rather, it is the unpredictability of the treatment that creates the uncertainty.

Those seeking to explore and invest in opportunities in emerging markets need to be more certain than ever before of who they are doing business with. The

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The risk of exposure to trafficking and slavery might seem small from an investment perspective when a search across the internet yields little of concern.

However, while deeper open source intelligence and analysis can provide much information, it cannot be solely relied upon in markets where local and national media are influenced by regional elites and the potential for disclosure and transparency to uncover corruption is accordingly decreased.

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www.chart-exchange.com

Analysis - Kroll ABOUT KROLL

Accessing grassroots intelligence and on-theground due diligence is crucial in such markets to attempt to find unrecorded and unpublished information which may lead to more informed decision-making. Until recently, information from the ground about slavery have been unavailable. However, growing collaborations between civil society, academic researchers, and the private sector have significantly increased the flow of substantiated data.

The most reliable annual source still is the U.S. State Department’s “Trafficking in Persons Report.”7 But during the last few years, those committed to combating slavery have increasingly focused on examining slavery’s connection to the private sector, making businesses exposed to, and involved in, exploitation accountable.

Kroll is the leading global provider of risk solutions. For more than 40 years, Kroll has helped clients make confident risk management decisions about people, assets, operations and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security and data and information management services.

Headquartered in New York with more than 35 offices in 20 countries, Kroll as a multidisciplinary team of nearly 1,000 employees and serves a global clientele of law firms, financial institutions, corporations, non-profit institutions, government agencies and individuals.

ABOUT LIBERTY ASIA Liberty Asia aims to prevent human trafficking through legal advocacy, technological interventions, and strategic collaborations with NGOs, corporations, and financial institutions in Southeast Asia.

REFERENCES 1 http://www.ohchr.org/Documents/Publications/ GuidingPrinciplesBusinessHR_EN.pdf 2 http://www.ilo.org/global/topics/forced-labour/publications/ WCMS_450718/lang--en/index.htm 3 https://www.msci.com/esg-ratings 4 https://www.advisorperspectives.com/articles/2015/05/12/thefuture-of-investingesg-portfolios-changing-beliefs-perceptions-and-

In some cases, businesses have become targets of litigation, such as the recent Nestle pet food case8 and the Unocal pipeline case in Myanmar9; in other cases, less confrontational means have been employed via disclosures and audits. The risk of a business being identified as exposed to, complicit in, or actively involved in slavery or other human rights abuse has become much greater with this increased flow of information and collaboration. As we progress to hyper-transparency, businesses would be wise to be aware of the risk and perform initial and ongoing due diligence of their investments or potential investments. www.chart-exchange.com

goals 5 http://www.unodc.org/unodc/en/frontpage/2012/July/humantrafficking_-organizedcrime-and-the-multibillion-dollar-sale-ofpeople.html 6 http://www.cnn.com/2015/08/24/asia/malaysia-mass-grave/ 7 https://www.state.gov/j/tip/rls/tiprpt/ 8 https://business-humanrights.org/en/nestl%C3%A9-faces-newlawsuit-in-californiacourt-alleging-use-of-fish-sourced-from-thaicompany-using-slave-labour 9 https://business-humanrights.org/en/unocal-lawsuit-remyanmar

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www.chart-exchange.com

Special report - SIAA

SIAA: INDEPENDENT AGENT OUTLOOK FOR 2018: KEEPING INSURANCE APPEALING TO TALENT By: Matt Masiello, Executive Vice President and COO, SIAA (This article first appeared on PropertyCasualty360.com. All rights reserved. Reprinted with permission.)

T

he insurance industry continues to face a crisis and this one is not due to the deluge of recent hurricanes affecting the Southeast or devastating wildfires out West. What the insurance industry faces – large corporation to Main Street independent agent – is a talent drought.

Property and casualty insurers will need to fill 400,000 positions by 2020 in the U.S. alone, according to a 2013 article in PC360. Fueling the problem is attrition. A 2010 report from McKinsey & Company found that the number of workers in the insurance industry over age 55 increased

In this article, we’ll explore best 75 percent during the previous practices for independent agents, decade – leaving 20 percent of the in particular, insurance workforce to combat the approaching The looming talent retirement. independent drought.

Meanwhile, agent is a critical the report also Let’s Admit It: We part of the fabric found that those Have an Issue. graduating from of the insurance In some ways, risk management industry.

Ensuring we, as an and insurance the next generation industry brought programs met only this problem 10-15 percent of the is on board to fuel on ourselves. industry’s need. the independent The industry agent distribution neglected Moving into channel for the next to focus on 2018, we are at a critical point. The few decades cannot attracting talent and educating the excessive number be overlooked.” next generation of people retiring about the from the industry benefits of an insurance career. Now coupled with a low number of young we are facing a deficit of qualified or people signing on to insurance as a even interested candidates. In order to career presents a great risk for each attract younger candidates to the field organization in the industry – big or small.

See Appealing to Talent Page 42

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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.

www.chart-exchange.com

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chart interview Continued From Page 13

INTERVIEW WITH KEVIN O’CONNOR CHART: What new products have you launched since being involved with CHART? Kevin: Since we started with CHART, we have received underwriting authority from DTW for liability and liquor for McGowan Hospitality. We also have some other players that support us on property coverage including Dale Underwriting partners. Through CHART Exchange I was able to rekindle and reconnect with some people that I've known for years that have supported me in the past, that are now supporting me in our new venture. We're very excited about that.

sold the business a couple of years ago.

When I joined McGowan, we wanted to look at how we could better serve the hospitality space. We felt that starting out with the night clubs and being able to start writing business immediately in that space would be great. And, then we could branch into other products as we went along.

We have recently been able to secure the exclusive endorsement of the New York City Hospitality Alliance, which includes restaurants, bars, taverns, and nightclubs in New York City. We're the exclusive provider for them.

CHART: Tell us about

Lloyd’s underwriters are much more receptive to hearing about something different and to being creative, as opposed to some other underwriters that look at their playbook and say it fits or it doesn’t fit.”

Hospitality Nightlife Program?

Kevin: We write bars, lounges, and full-blown nightclubs. The program is a nationwide exclusive to McGowan Hospitality. We can write in all 50 states.

Plus, we can write general liability and liquor as well as assault and battery up to certain coverages. We can cover property up to $5 million total insured value.

the hospitality niche.

Kevin: Hospitality is a massive universe. It's about a $15 billion marketplace. Anything that sells food or liquor or is fun could technically be defined as hospitality. It could be a Dunkin Donuts, Starbucks, McDonald's, a family restaurant, a nightclub, casino, or a country club. Those are all massive pieces of the hospitality industry. What we've chosen to do is go after a couple of subsets including bars, nightclubs, and lounges.

CHART: Was this a niche you felt

CHART: It seems that Lloyd's is the right

CHART: What is the McGowan

needed to be filled?

Kevin: In my past I was an owner of RCA Insurance Group. It was the largest restaurant writer in the United States. We

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include many good people, and there are some very solid A-rated companies. But, they're very much restricted to their quarterly reports, earnings, and where their stock prices are. They have generally very defined underwriting guidelines. That's the way most U.S. companies have to run, because that's the culture that they're in.

choice for a niche product that isn’t a good fit for U.S. carriers?

Kevin: It's about relationships and about creativity. The domestic carriers TABLE OF CONTENTS

Lloyd's is set up completely different.

There are over 200 syndicates that bear risk, and they are represented by very good quality, creative people.

Lloyd's underwriters are much more receptive to hearing about something different and to being creative, as opposed to some other underwriters that look at their playbook and say it fits or it doesn't fit.

CHART: What is the advantage is becoming a coverholder?

Kevin: I've been in business for 36 years. If you want to be achieving best practices, it's worth your time to get to know the Lloyd's market. Once you have that coverholder status it's your ticket to the game. If you want to be considered a player in the MGA and program space, you have to have coverholder status. That’s the benefit of CHART. CHART helps you navigate the waters and make the contacts you need. Other associations are not going to do that for you. www.chart-exchange.com

news

LLOYD’S TO LAUNCH INNOVATION LAB TO FAST-TRACK NEW TECH SOLUTIONS Lloyd’s is delighted to announce that it will be launching an Innovation Lab later this year.

T

he initiative will focus on designing technology-driven solutions to meet the unique and rapidly changing needs of the Lloyd’s market.

The Innovation Lab will enable new concepts and ideas to be tested in a fast-track, fast-fail environment with the support and active involvement of Lloyd’s market participants. Lloyd’s will be appointing an external partner firm to assist in setting up and running

the Lab which will be launched in the second half of 2018.

Lloyd’s CEO Inga Beale said: “There are a host of advanced technological solutions involving data analytics and artificial intelligence that enable a better understanding and predictability of risk. By creating a Lloyd’s Innovation Lab, designed to bring in creative talent from around the world to work in partnership with Lloyd’s businesses and the Corporation,

we can ensure the market continues to innovate as the world moves into an increasingly digital, data-driven future.”

Lloyd’s Chief Commercial Officer, Vincent Vandendael, said: “Following the creation of the Innovation team under Trevor Maynard, the Innovation Lab represents a significant next step in driving a cohesive yet nimble approach to idea generation and implementation for the benefit of the Lloyd’s market.”

LLOYD’S CLAIM DISPUTE REMANDED TO LOWER COURT

A

tlanta, GA - Lloyd’s of London insured a machine owned by Oregon based TriQuint Semiconductor, Inc. used in the coating of silicone wafers during its journey in 10 shipping crates from South Korea where it was manufactured to Orlando, Florida where it was to be used.

The shipper, South Korea based Expeditors, rather than shipping direct from Incheon, South Korea to Orlando, instead shipped direct to Miami where www.chart-exchange.com

it made a multi-step ground journey to Orlando. The machine was damaged between Miama and Orlando.

Lloyd’s paid $918,000 in damages for the loss but Lloyd’s then filed suit for $920,000 in damages in U.S. District Court claiming coverage should not apply due to the Montreal Convention, an international treaty providing uniform rules for claims in air carriage and the U.S. District Court found in favor of Lloyd’s.

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A 3-judge appeals court subsequently ruled that the Montreal Convention did not apply, since the cargo was damaged during ground transit: The ruling read: “Given the ambiguity in the waybill, under federal common law, extrinsic evidence such as industry custom or usage, may be examined to help shed light on its meaning, We conclude that it would be inappropriate for us to exercise such discretion here because of the need for the taking of evidence and fact finding.”

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special report - SIAA Continued From Page 39

INSURANCE INDUSTRY MUST APPEAL TO TALENT of insurance, the industry – known in many circles for its stodginess [drabness?] – must change with the times.

In its report, McKinsey blamed three realities for the insurance industry’s lack of appeal to the younger generation: “a poor reputation, a dim awareness and understanding of career opportunities among high school and college students, and a shortfall of trained students produced by professional schools.”

While the industry can’t deny those realities, it can embrace change and tackle the problem head on. From the perspective of the independent agent, there are a number of best practices they can adopt to raise awareness of the industry and highlight the positives of their business with the goal of attracting new talent.

1. UNDERSTAND THE NEEDS AND WANTS OF THE NEW GENERATION. The habits, likes and expectations of

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math and technological skills, among millennials seem to make headlines others. Opportunities are available every day. If an agency wants to from sales to marketing to legal, and ensure its future, it will need to understand what millennials want and internships are available for those looking to get a foot in the door. align those wants and needs with the Further, agencies should let these opportunities within prospects know the agency. They Agents can that a full career will need to try to educate the awaits in insurance match the interests of those millennials young professionals with many with those of the and college students opportunities for growth both agency. in their communities professionally and on the merits of an financially.

Agencies should insurance career. consider using language to They can do this by 3. WHAT’S THE EMPLOYEE VALUE catch their eye, being a resource, PROPOSITION? including key words being visible in the like flexibility, to community, making According opportunity, the headlines, their community innovation, charity Generation Z is and independence. involvement looking for more Additionally, they known, and sharing than just a job. should consider Volunteering and information about offering in-house are often job opportunities and charity mentoring and significant parts the culture of the promote its of their lives, and availability, along workplace on their painting an agency with descriptions of with a philanthropic website, via social the agency’s culture. brush can only 2. PLUG THE VARIETY OF OPPORTUNITIES AND CHALLENGES AVAILABLE.

media and through any other medium relevant to their communities.”

Insurance careers engage a wide range of skills and talents and offer competitive pay. Agencies need to let potential insurance professionals know this. Insurance is an innovative industry offering opportunities to work in more than just claims and sales. New hires will tap into their

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help attract these communityminded individuals.

Agencies need to explain what sets them apart from other employers and be sure to highlight philanthropic activity, and the agency’s awareness that it is part of a larger society that needs to give back. Agents should motivate candidates and new hires to get them excited for a career in insurance.

www.chart-exchange.com

special report - SIAA

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MOVING TOWARD THE FUTURE The problem has been identified. The facts and statistics are in. While the industry as a whole works to promote risk programs at the college level to How Millenials Are Searching For Career Opportunities encourage more careers in insurance, agents can take Agency owners should point out action as well. the benefits of the agency, including paid time off, remote work options, Agents can educate the young anything that highlights a focus on professionals and college students in work-life balance and in particular, their communities on the merits of an highlight the agency’s volunteer insurance career. They can do this by opportunities. being a resource, being visible in the community, making their community 4. GET THE WORD OUT. involvement known, and sharing Agencies need to advertise for new information about job opportunities hires, including anticipated openings and the culture of the workplace on or additional staffing requirements. their website, via social media and To keep a steady flow of professionals through any other medium relevant into the field, they should solicit new to their communities. candidates year-round. One place to establish an awareness is the local Independent agents who need to community college. A number of boost these resources can consider these students may not have finalized joining a network or alliance to their career path, and seemingly have improve their influence. ties to the local community.

Agencies should also explain how such a career can be satisfying on a number of fronts. Working in insurance, professionals are helping people protect their homes, are available at their time of most need, and are giving back to their communities regularly. www.chart-exchange.com

CHART DEFENDER COVERHOLDER E&O AVAILABLE NOW!

Mark Lann Phone:

305-248-9495 Email: chart.eo@rockwoodinsurance.com

The independent agent is a critical part of the fabric of the insurance industry. Ensuring the next generation is on board to fuel the independent agent distribution channel for the next few decades cannot be overlooked. Looking forward to a prosperous 2018!

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aNALYSIS - Wilson Elser

TEXAS “HAILSTORM BILL” IMPACTS CLAIMS RELATED TO HURRICANE HARVEY

By Ross Holiday Jones, Esq.

making it the costliest storm in U.S. history.

INTRODUCTION On August 26, 2017, Hurricane Harvey made its second landfall in Texas after having decimated Rockport and other areas of the south Texas coast. Over a three-day period, Harvey dumped a recordlevel rainfall on Houston, Beaumont and surrounding areas, equaling typical annual totals in some locations. According to conservative estimates, more than 203,000 homes were damaged by the storm, of which 12,700 were completely destroyed, and more than 70 percent of them were not covered by flood insurance. In the final analysis, storm-related damages from Harvey are expected to have a hefty price tag of about $190 billion,

On May 27, 2017, Texas Governor Abbott signed into law the Texas “Hailstorm Bill.” This new law reformed parts of Texas’s “Prompt Payment of Claims” statute (Chapter 542 of the Texas Insurance Code) and its “Bad Faith” insurance law statute (Chapter 541 of the Texas Insurance Code). The new legislation created section 542A of the Code, which is related to first-party claims − those claims payable to insureds as opposed to third parties − caused by “forces of nature,” including earthquakes, wildfires, floods, tornados, hurricanes, lightning, hail, wind, snow or rain.

SIGNIFICANT CHANGES

Section 542A introduces four significant changes to the Code that will affect claims made as a result of Harvey.

First, for claims under section 542A, insureds may recover interest and attorneys’ fees from insurers that do not comply with statutory deadlines for responding to, adjusting and paying such claims.

The statutory interest rate is (1) simple not compound (applied to principal only) and (2) reduced from the 18 percent recoverable under Chapter 542 to 5 percent above the prejudgment interest rate. For most claims from Hurricane Harvey, the statutory interest rate is reduced from 18 percent to roughly 10 percent, depending on the prime interest rate.

About the author: Ross Holiday Jones focuses his litigation practice on transportation and auto accident cases, premises liability claims, and oil and gas litigation claims. He has handled personal injury and property damage claims, well blowout cases, environmental contamination, and first-party property defense work, most recently related to losses sustained by Texas policyholders in hurricanes over the past decade. Ross has represented insurers and their insureds over his nearly 25 years in practice. He has tried and arbitrated cases in state and federal courts in Texas for policyholders in personal lines, commercial lines, errors and omissions, and first-party claims. Ross also has numerous appellate cases to his credit, including three cases of first impression with opinions favorable to insurers and insureds on issues of waiver and coverage.

Ross has handled and tried cases in state and federal court throughout Texas and has experience trying cases in many different venues, from the Rio Grande Valley to central, eastern and southeastern Texas.

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Hurricane Harvey: The costliest storm in U.S. history

The second significant change is related to notice provisions. A claimant must give 60 days’ notice to its insurer before filing suit on any claim covered by section 542A. It is significant that the notice required is a prerequisite to initiating suit.

Under Chapter 542, proper notice must include: • •

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•

Acts or omissions giving rise to the claim Specific amount of damages incurred Attorneys’ fees incurred by the claimant.

Attorneys’ fees sought in the presuit notice must be derived by calculating the number of hours worked as of the date of the notice evidenced by contemporaneously kept time records, multiplied by an hourly rate that is “usual and customary” in the area. Section 542A.007(d) provides that if a defendant in an action under this chapter pleads and proves that he was entitled to but not given appropriate pre-suit notice, the court may not award any attorneys’ fees incurred after the date on which the defendant files its pleading in opposition with the court.

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Third, an insurer who is a party to a first-party action by its insured (claimant) may elect to assume its agent’s liability (including the liability of adjusters and adjusting companies) for alleged acts or omissions in claim handling by providing written notice to the claimant of such an election. If an insurer assumes liability of an agent pursuant to section 542A, no independent causes of action against the agent exist and any suit filed against the agent must be dismissed with prejudice. This section of the Code is significantly advantageous to insurers, many of whom are not corporate citizens of Texas, who want to have their cases removed to federal court.

• • •

•

•

For example, a Hurricane Rita trial resulted in a property damage award of approximately $31,000, and the claimant’s attorney recovered a fee award of $243,000.

Recovery of fees provided significant leverage for claimants asserting first-party insurance claims.

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If less than 20 percent of claimed pre-suit damages are awarded, then no attorneys’ fees are recoverable.

If 20 percent to 79 percent of claimed pre-suit damages are awarded, then the same percentage of fees is recoverable.

If more than 80 percent of claimed pre-suit damages are awarded, then all fees are recoverable.

• These three scenarios highlight this change, assuming that the pre-suit demand for damages is $50,000: •

Finally, the fourth significant change pursuant to section 542A involves recovery of attorneys’ fees. In many cases, the claim for attorneys’ fees by lawyers representing claimants in property damage cases is the biggest damage element of a case.

Under the old law, even if the disputed claim was relatively small, all work done by the claimant’s lawyers would be recoverable no matter how disproportionate the dollar amount of the fee is to the recovered claim amount.

Under the new law:

•

•

•

Verdict 3 is $7,500 (15 percent) – no fees would be awarded.

Verdict 2 is $25,000 (50 percent) – 50 percent of fees would be awarded.

Verdict 1 is $40,000 (80 percent) – all attorneys’ fees would be awarded.

This change to the law encourages early and accurate pre-suit investigation and damages calculation by claimants and their attorneys.

TAKEAWAYS The Hailstorm Bill (Senate Bill No. 10 and House Bill No. 1774) imposes limitations on claims for loss and damage resulting from so-called “forces of nature” and on related attorneys’ fees. However, important protections remain for Texas policyholders seeking to recover in first-party claims.

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News & Analysis - wilson elser Continued From Page 21

CALIFORNIA EMPLOYMENT LEGISLATION the conviction history report, and (3) notify the applicant of his or her right to respond and provide evidence challenging the accuracy of the report or of other mitigating circumstances.

•

•

Step 3: The employer must give the applicant at least five business days to respond to the notice of rescission of a job offer. Applicants are entitled to an additional five business days to respond if they provide timely notice in writing that they dispute the accuracy of the conviction history report and are taking steps to obtain evidence in support thereof.

Step 4: If an employer makes a final determination to deny an applicant because of his or her conviction history, the employer shall notify the applicant in writing of its final decision, any existing procedures for challenging the decision or requesting reconsideration, and of the right to file a complaint with the department.

CALIFORNIA SENATE BILL NO. 63

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– PARENTAL LEAVE FOR SMALLER EMPLOYERS The California Family Rights Act (CFRA) prohibits employers with 50 or more employees from refusing a request by an employee who has at least 1,250 hours of service with the employer during the previous 12-month period to take up to 12 weeks of unpaid parental leave to bond with a new child within one year of the child’s birth, adoption or foster care placement.

Senate Bill No. 63 expands existing law to require employers with 20 to 49 employees to provide employees who have at least 1,250 hours of service with the employer during the previous 12-month period to take up to 12 weeks of unpaid, job-protected leave to bond with a new child within one year of the child’s birth, adoption or foster care placement.

CALIFORNIA SENATE BILL 396 – GENDER IDENTITY, EXPRESSION, SEXUAL ORIENTATION Senate Bill 396 requires employers with 50 or more employees to provide supervisors with two hours of sexual harassment prevention training every two years. The training must discuss harassment based on gender identity, gender expression and sexual orientation.

The training also must include specific examples and be presented by trainers with knowledge in these areas. Under the new law, covered employers also must display the “Transgender Rights in the Workplace” poster issued by TABLE OF CONTENTS

the California Department of Fair Employment and Housing.

CALIFORNIA ASSEMBLY BILL 1102 – WHISTLEBLOWER PROTECTIONS FOR HEALTH FACILITIES Assembly Bill 1102 increases the maximum statutory fine that can be assessed against a health care facility for a violation of whistleblower protections from $20,000 to $75,000.

Wilson Elser can provide up-todate information about new and changing legislative requirements for employers. We invite you to contact a member of our California or National Employment & Labor practice team to discuss how legislative issues can affect your organization.

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Analysis - Vantage Agora

Continued From Page 22

WHY DO WE WORK SO HARD?

the reliable person winds up with many opportunities. He becomes busy. That’s why if you want something done, you ask a busy person. He’s busy because he’s shown he can get stuff done.”

There are many reasons that people work hard, but perhaps the greatest reason for Vantage Agora, aside from that fact that it makes our clients happy, is that it gives “A good juggler You may find us a competitive can juggle advantage in that after a lot of more…reliability everything we hard work and and busyness go do. Ideas don’t hand-in-hand commitment, happen just for two reasons. some ideas fail, because they First, those who are great. In fact, but putting forth are successfully you may find the effort to juggling a lot that after a lot of have good explore them can hard work and systems for commitment, provide invaluable avoiding some ideas fail, knowledge and be dropping balls. but putting They intuitively just what is needed forth the effort think like project to set the chain of to explore them managers. How can provide events in motion long will the that spurs the next invaluable proposed task knowledge and take? What steps great idea!” be just what is are involved? needed to set the chain of events in When would each step need motion that spurs the next great to be completed by, and what idea! problems might arise that would preclude meeting those deadlines? Any hard worker knows that there They keep looking ahead to see is no shortcut to lasting success. If what’s on deck. Then they build you’d like to see Vantage Agora’s in enough margin so that when work in action and learn how it things come up, as they inevitably can help your business, contact us do, they stay on track. Over time, today! as this realization gets repeated, www.chart-exchange.com

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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.

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