17 minute read
IIABL STAFF
JEFF ALBRIGHT
Chief Executive Officer jalbright@iiabl.com (225) 236-1366
BENJAMIN ALBRIGHT
Vice-President of Strategic Initiatives balbright@iiabl.com (225) 236-1357
KAREN KUYLEN
Director of Accounting & Finance kkuylen@iiabl.com (225) 236-1353
JAMIE NEWCHURCH
Director of Insurance Programs jnewchurch@iiabl.com (225) 236-1350
KATHLEEN O'REGAN
Director of Communications & Events koregan@iiabl.com (225) 236-1360
BRANDI VAN PELT
Insurance Programs Administrator bvanpelt@iiabl.com (225) 236-1358
DUSTIN WAMBSGANS
Agency Consultant dwambsgans@iiabl.com (225) 236-1361
LISA YOUNG-CROOKS
CONTENTS
06
SMALL11COMMERCIAL CARRIERS WITH 14 BIG APPETITES CLOSING THE DISCONNECT BETWEEN CYBER RISK AWARENESS & ACTION
18153 E. Petroleum Drive Baton Rouge, LA 70809 Ph: (225) 819-8007 TABLE OF CONTENTS & FEATURED STORIES
02 IIABL STAFF
At your service! 18 YOUR STATES CONNECTION
TO IMS
Independent Market Solutions 20 PREPARE YOUR VENUE FOR
WINTER WEATHER
RMS Hospitality Group 23 BIG I FLOOD UPDATE
NFIP's D2C Proposal & FHA Private Option 26 NEW TUNE: UNDERSTANDING ISO'S
RECENT CHANGES TO THE PAP
Chris Boggs 33 UNDERINSURED CONCERNS
Burand's Insurance Agency Advisor 35 SUMMARY REPORT - AMEND RULE 10 -
CONTINUING EDUCATION
Louisiana Department of Insurance
36 CATASTROPHE CLAIMS PROCESS
Seven steps to make it smoother
38 TIME TO KNOW YOUR
AGENCY'S VALUE
Carey Wallace, Agency Focus LLC
40 TOP 10 PERSONAL INSURANCE
CONSIDERATIONS
AIG
43 2023 MARKETING REIMBURSEMENT
PROGRAM
Trusted Choice
48 ADVERTISER INDEX 49 INDUSTRY PARTNERS 50 IIABL BOARD OF DIRECTORS
www.iiabl.com
There is no good news about the Louisiana property insurance market right now. And it will probably get worse before it gets better.
But IIABL has been studying the underlying problems and searching for solutions. Following is an analysis of the problems, plans to address some of the problems, and suggestions on what you need to tell your customers.
The Problems
Louisiana has a difficult insurance environment. There are a combination of factors that insurance companies consider as impediments to committing capital investments in writing insurance in our state.
1) Louisiana is a small insurance market with small profit opportunities that major insurers consider insufficient to merit the commitment of capital to write insurance
J e f f A l b r i g h t D e c 2 0 2 2
here. Florida and Texas have significant hurricane exposures like Louisiana, but the risk is offset by the profit opportunities when the wind does not blow. Insurers believe the risk outweighs the rewards in Louisiana.
2) The economic opportunities are further diminished by the weak economy in Louisiana. Louisiana per-capita GDP was $55,213 in 2021. which is $14,008 lower than the US average percapita GDP, further limiting economic opportunities for insurers.
3)The dominant business and personal insurable risk exposures in Louisiana are high risk and not desirable for most insurance companies. Oil and gas, petro-chemical, heavy contractor, wet marine, agricultural and timber risks are not what most insurers want to insure. A large population of low income policyholders who often carry minimum limits on automobile and who more often rent apartments than own high value homes is not the target market for top rated personal lines companies.
4) After the historic hurricane seasons of 20202021 with four storms and two Category 4 hurricanes, it is obvious to everyone that Louisiana has severe catastrophe (hurricane) risks. IIABL did an analysis of A.M. Best market statistics of the Louisiana Homeowners market from 2005 when Hurricanes Katrina & Rita ravaged our state through 2021. The cumulative underwriting profit for the period was almost a $14 billion LOSS! Insurers paid out almost $14 billion more than they took in! Total, annual Homeowners market premiums in Louisiana total $2 billion, and in the most profitable year since Katrina, insurers made just under $800,000 in underwriting profit. It takes a lot of good, storm-free years to make up that deficit. Insurers HAVE NOT made a long-term profit by writing Homeowners insurance in Louisiana.
5) Louisiana has a long standing hostile tort system that dramatically increases insurance company claims expenses. Our automobile claim rate is only slightly higher than the national average, but our bodily injury claim rate is consistently double the national average. As a result, we have the highest automobile insurance premiums in the country. In the past couple of years, the tort problem has expanded into property insurance as frustrated policyholders, judges, and juries award 50% bad faith penalties and 40% attorney fees to hurricane claims. Not an attractive legal environment for insurance companies.
6) Insurers consider the legislative environment in Louisiana hostile. The Louisiana Legislature continually tightens insurance laws in the interests of “ protecting consumers” but ultimately discourage insurers from selling insurance in our state which is not good for consumers.
7) The Louisiana Department of Insurance prides itself on their strict regulation of insurance companies, again in the cause of “ protecting consumers. ” But insurance companies find the regulatory environment bureaucratic, unresponsive, and difficult to navigate. If insurers feel that they cannot properly manage their business in Louisiana, they will not do business here.
The Near Term Future
The Louisiana property insurance market does not appear likely to improve significantly in the next couple of years. Eleven Homeowners insurers have gone insolvent over the past two years. Primary insurance companies, especially large national carriers, have retreated from the Louisiana market after the historic losses from Hurricanes Laura and Ida in 2020-2021. Reinsurers lost over $100 billion from natural catastrophes in both 2021 and 2022. Indications are that reinsurers are seeking significant premium increases on January reinsurance treaties, but more importantly are demanding higher attachment points and participation by primary insurers in the reinsurance layers. Small insurers will struggle to maintain capacity with such reinsurance terms.
Where do we go from here?
Louisiana desperately needs new property insurance market capacity. We must find ways to address our market problems and attract new insurers.
There is little we can do about hurricane loss experience except pray for some years without major storms.
Louisiana can try to address economic, business, and demographic challenges, but it is hard to be very optimistic that we will see major improvements.
The call to action was made by the insurance industry in August in an important report: It’s Not Just the Weather. The American Property Casualty Insurance Association, Reinsurance Association of America, and Bermuda Insurance Association jointly identified the man made crisis for property insurance markets in Louisiana, Florida, and California. The report acknowledges that climate change is causing more frequent and more severe natural catastrophes which is causing stress on the insurance industry. However, the report states that the industry is well positioned to handle these changes.
The problem in certain states, including Louisiana is the man made catastrophes caused by hostile plaintiff oriented legal environments, state legislatures that pass laws that burden insurance companies, and regulatory systems that prevent insurers from effectively managing their business so that they have a reasonable expectation of making a profit.
These are the problems that Louisiana must address.
IIABL has been discussing specific problems insurers have with the legal, legislative, and regulatory systems in Louisiana to identify reforms that the Louisiana Legislature can consider. We must immediately reform our bad faith statute with its amorphous “ satisfactory proof of loss” trigger to provide a clear standard of how insurers pay property claims, with a reasonable process for resolving disputes on the value of a claim. Additional tort reforms are desperately needed, but realistically will have to wait until 2024 when Louisiana will have a new governor and legislature.
The Louisiana Legislature needs to pass laws to reduce the “ social inflation” which results after a major storm when billions of dollars of insurance payouts cause massive increases in the price of materials, cost of labor, and abuses by contractors, roofers, and mitigation contractors.
The Louisiana Legislature needs to reform insurance laws to accommodate insurance companies and encourage them to do business in our state. For example, two thirds of states have more flexible insurance rating laws than Louisiana
to allow insurers to charge the premiums they need to offer coverage.
These are just a few examples of the reforms that insurance companies have identified that would make Louisiana a more attractive place to deploy property insurance market capacity.
IIABL will work with the insurance industry to try to pass some of these reforms in the 2023 Legislative Session and in the coming years to improve the Louisiana insurance market.
What to tell your customers?
First, educate them about the problems. It doesn’t take a rocket scientist to figure out that after losing almost $14 billion since 2005, insurers don’t want to write Homeowners insurance in Louisiana. With the increasing severity of catastrophes (in Louisiana, but also globally), the rates that homeowners were paying before Hurricane Laura in 2020 were probably inadequate. However, there is hope that the current rates, in some cases double, triple or quadruple what insureds were paying just a couple of years ago will not be a new normal for Louisiana. What we need is to attract insurers do offer new capacity in Louisiana so that the competitive market drives down the price to a stable, affordable value.
Talk to them about the need to bring down the cost of claims in Louisiana.Discuss the problems in our legal, legislative, and regulatory systems. We can’t beat up on insurance companies and then expect them to sell us cheap insurance. We need to attract insurance companies to Louisiana with the hope of someday creating a healthy, competitive insurance market that drives down insurance premiums.
Second, ask your customers to talk to their legislators about what they are going to do to bring new insurance companies to Louisiana. Only the Louisiana Legislature has the power to fix our legal, legislative, and regulatory environments to make Louisiana more attractive to insurance companies. IIABL will provide much more information about specific reforms and our plans for the 2023 Legislative Session as our legislative plans develop.
Finally, when it’s appropriate, encourage your clients to build for the future.Modern construction practices including the Fortified building standard, superior building materials, and other best practices can not only provide discounts on some insurance policies, but they can help harden Louisiana’s coasts to minimize damage from future storms.You don’t need to be an expert, but encouraging your clients to contact a reputable contractor that specializes in these best practices is one of the best things we can do to bring down the long-term cost of Hurricane claims and make insurance in Louisiana affordable.
Big "I" Markets
When it comes to small commercial coverage, Big “I” Markets put choice and quality at your fingertips. As a Big “I” member, you have access to three big carriers with big appetites and great coverages in most states to help you find the small commercial coverages you need. Submit one application online, then select from among available carriers online. It is that easy.
Our all-star carrier lineup includes:
Travelers Select®
Travelers Select Accounts offers a robust variety of coverages for small businesses. A proprietary BOP product called Master Pac®, workers' compensation, commercial automobile, and commercial umbrella are available, with a broad array of industry-specific coverage options and coverage extensions. Review the full Travelers eligibility guide to learn more. Travelers is available in all states except AK, FL, & HI.
CNA Small Business
CNA Small Business currently offers a market for a broad variety of businesses, representing healthcare, financial institutions, professionalservices, business services, technology, retail, real estate, wholesalers and manufacturing. BOP, workers’ compensation, commercial automobile, umbrella and miscellaneous professional liability products are available. Review CNA’s eligibility guidelines to learn more. CNA is available in all states except AK, FL & HI.
Chubb
Chubb Small Commercial Insurance (SCI) leverages superior underwriting expertise and world renowned claims, account services, and financial strength to offer solutions for small businesses with up to $10M in revenue, in more than 500 business classes across the following industries: Clubs and associations, cultural institutions, financial services, healthcare, real estate, retail stores, service businesses, technology, and whole-sale businesses. BOP, workers compensation, commercial automobile, and umbrella products are available. Review Chubb’s appetite guidelines for full details. Chubb is available in all states except AK, HI, LA & WA. Additional regional limitations may apply.
Progressive
Progressive Insurance is available for commercial auto only. Progressive offers a wide range of commercial auto insurance programs to fit the needs of the small business operation. Whether it is for passenger autos or heavy trucks, Progressive can write the policy. Cover a wide variety of drivers and vehicle types, with accurate and competitive pricing that considers each risk independently.
To submit a quote, log into Big "I" Markets and click on "Small Commercial. " Contact Big "I" Markets commercial underwriters Claire McCormack at claire.mccormack@iiaba.net or Gwen Lombardi at gwen.lombardi@iiaba.net to learn more.
Not yet registered for Big “I” Markets, the online market access program available exclusively to Big “I” members featuring no fees, no minimums and ownership of expirations? Complete a simple and free registration online at www.bigimarkets.com.
This article is intended for general informational purposes only. IIABA and its subsidiaries and affiliates shall not be held responsible in any way for, and specifically disclaim, any liability in any way relating or connected to any reliance on or use of this article. The information contained or referenced herein is not intended to constitute and should not be considered legal, accounting or other professional advice, nor shall it serve as a substitute for obtaining such advice. If specific legal or other expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.
Copyright © 2020, Big I Advantage, Inc. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big I Advantage. For permission or further information, contact Big “I” Markets, 127 South Peyton Street, Alexandria, VA 22314 or email at bigimarkets@iiaba.net.
CLOSING THE DISCONNECT BETWEEN CYBER RISK AWARENESS AND ACTION
Bethan Moorcraft 07 Nov 2022
Cyber threats are keeping business leaders up at night because of their ability to shut down a company for a long period of time, or even put it out of business completely.
According to the 2022 Travelers Risk Index, cyber threats were the top overall concern for business decision markets – for the third time in four years. Of the 1,200 survey participants, 59% said they worry some or a great deal about cyber threats, and 57% think a future cyberattack on their company or organization is inevitable.
While awareness of cyber risk has increased significantly in recent years, there remains some disconnect in terms of how business leaders turn that awareness into effective risk management and insurance decisions, according to John Menefee (pictured), CyberRisk product manager at Travelers.
“More and more organizations are purchasing cyber insurance; 59% of respondents have a
cyber policy, ” he said.
“That number has increased, but it should continue to increase, and we're engaging every day with agents and customers to stress the importance of that coverage. That's a battle that we've been fighting for a long time, and we're starting to gain some ground.
“From a risk management perspective, despite the increased awareness of attacks, ransomware, and all sorts of bad things that can happen on the internet, we still see that many of the most effective controls and prevention methods are underutilized. Most respondents aren't utilizing endpoint detection and response (EDR) technology, about half report they don't require multi-factor authentication (MFA) for remote or admin access, and most don't have an incident response plan. So, there's still a big disconnect there. ”
There are lots of things that businesses can do to mitigate their cyber risk, some of which are relatively low cost, such as MFA. Menefee said MFA is “ one of the most impactful preventative controls, ” and if more companies implemented MFA for email, remote access, and internal administrative access to systems, “the number of successful attacks would plummet” .
However, MFA has been slow to catch on. According to the 2022 Travelers Risk Index, 90% of survey respondents said they were familiar with MFA, yet only 52% said their company had implemented the practice for remote access.
“I found that really interesting … especially since so many of our respondents (93%) were confident that they'd implemented best practices to prevent or mitigate a cyber event, ” Menefee told Insurance Business. “I think it's just a knowledge gap. Because we [as insurers] respond to so many events, we know which controls are the most effective in reducing the chances of an organization being the victim of a cyberattack. And we also know many of the vulnerabilities and attack methods that the threat actors are using to gain access to these networks. Based on the low usage of some of those controls, there seems to be a disconnect in the level of confidence respondents have and their actual exposure.
LOUISIANAAGENT C o n t i n u e d f r o m p a g e 1 4 “For that reason, it's important for cyber carriers to share the information and intel that we have. If we work with our customers, we provide them with resources to reduce that knowledge gap, we can reduce the likelihood that they'll become victims of cybercrime. And when we engage with our customers in this way… our customers seem to be very receptive, and they tend to work towards putting those controls in place. They just don't know what they don't know. ”
Beyond MFA, all cyber risk experts stress the importance of employee education, and training employees how to identify and report suspicious online activity and phishing emails. As Menefee noted, the user is sometimes the weakest link, and even the best cybersecurity controls can be defeated by a lack of education.
“Also, threat actors often choose their victim based on vulnerabilities that are visible on the internet, ” Menefee added. “Organizations that are
aware of their attack surface, that effectively patch critical vulnerabilities, avoid having ports open that are often targeted by threat actors those organizations are much less likely to be targeted in the first place. Organizations that can avoid doing things that will put them in the crosshairs of a threat actor are going to be a lot better off.
“For some of the more advanced technology that costs a little more, EDR technology can be a really sophisticated control that can identify behavior or commands on the network that's unwanted, and stop it from executing. It's almost like a backstop, so if other things fail, EDR is another layer of protection that can prevent a claim from happening or ransomware from being executed. ”
One challenge with cyber is the ever-changing nature of the risk. Security controls implemented one day could be obsolete the next day. While 93% of business decision makers in the 2022 Travelers Risk Index are confident they ’ ve implemented best practice controls to mitigate or prevent cyberattacks, 80% of respondents also said it’s difficult to keep up with the evolving cyber risk landscape and threat vectors.
“And we can help, we can share our data, we can provide resources to customers, and then by encouraging customers to implement those best practice controls, we can reduce the number of cyberattacks that happen, ” Menefee reiterated. When we're successful at encouraging our customers to make those changes based on all that knowledge, we can be a major factor in reducing the impact that cyber criminals have in our daily lives. I think it is important for our customers to view this as an ever-changing risk. I think many of them are starting to, the awareness is there, and we're encouraged by it. ”
