Kentucky IA Magazine-Spring 2024

Clearpath Specialty Insurance Company will maintain its position as an expert in providing monoline workers' compensation insurance through its unwavering commitment to in-depth industry knowledge and tailored solutions, ensuring businesses receive comprehensive coverage that meets their unique needs.

Providing competitive workers’ compensation coverage in KY, GA, IN, TN, and WV. Learn

Chair From the

A MESSAGE FROM LAURA YOUNT

While insurance wasn’t the career path I had initially envisioned, it was the connections made and the sense of community that kept me in the industry. I’m sure if I asked other Big I Kentucky agency members about the favorite aspects of their jobs, they would echo the sentiment of nurturing relationships and making a meaningful impact in their communities. As veteran agency owners contemplate their departure from our industry, it’s imperative that we safeguard these values within the independent agency system.

I am excited to share that the association will be hosting the first-ever Perpetuation Seminar during the 2024 Leadership Conference in Lexington on May 8-10. This event will feature panel sessions tailored for both sellers and future owners, offering valuable insights on maximizing revenue while upholding the agency’s legacy and principles. By attending the Conference, you will also have the opportunity to connect with a lender, valuation consultant and attorney in one-onone meetings. Start compiling your questions now! For those less interested in perpetuation, the conference has an impressive lineup of speakers on other subjects including the customer experience, navigating detrimental trends in 2024, leveraging AI in agency marketing and a finance bootcamp.

Even if you’re unable to join us at the Leadership Conference next month, rest assured that Big I Kentucky extends several resources to its members for perpetuation planning. Through the partnership with consulting firm Agency Focus, members can delve into their agency’s Fair Market Valuation, understand pertinent risk factors and growth opportunities and strategize on enhancing agency value. And our friends at InsurBanc and Westfield Bank are ready to assist with various agency financing needs, from perpetuation to acquisition and working capital.

As the landscape of the independent agency evolves, so do the benefits and services offered by Big I Kentucky. From the newly introduced Kentucky Compensation Report to collaborative efforts with the technology experts at Catalyit, we’re committed to addressing your agency’s pain points. Let our association serve as an extension of your office, supporting your growth and success.

I’ll offer a final word on relationships, building them isn’t effortless and taking that initial step of showing up is crucial. Attending an event for the first time or approaching someone you don’t know can feel daunting, but rest assured, our Board of Directors and Emerging Leader Committee members will always be there to welcome you. We look forward to seeing you at the Leadership Conference in April!

OFFICERS

Laura Yount, CIC, CISR Chair, London 606.878.0100

Chris Wiseman, CIC Chair-Elect, Bowling Green 270.781.2020

Carolyn Reynolds Vice-Chair, Richmond 859.623.8485

Allen J. Crawford, CIC, CSRM Treasurer, Somerset 606.679.6311

George “Chip” Atkins III National Director, Louisville 502.585.3600

Whitney L. Floyd , CIC Immediate Past Chair, Henderson 270.827.3543

DIRECTORS

Philip Anderton, CIC, CRM Louisville, 502.585.3277

Susan Coblin Frankfort, 502.875.2244

Tori Conn Louisville, 502.713.0004

Neel Ford, CIC, AU, CPIA Owensboro, 270.926.2806

Dustin Million Lexington, 270.926.2806

John Purdom Murray, 270.753.4751

Jared Pursley Glasgow, 270-646-8162

Nick Rolf Fort Thomas, 859-781-0434

Adam Sheridan, CLCS Somerset, 606-679-6311

Tara T. Purvis President & CEO

Erin Fosson Sales & Marketing Director

Mary Pat Hartmann Workforce Development Director

Katie Hines Membership Services Director

Jennifer Hurt Office Manager

Kristie Weyer, CISR Insurance Services Director

We are a third-generation, family-owned, independent managing general agency and wholesale insurance broker with a history of valuing and trusting business relationships. Our underwriters and brokers coordinate among specialty teams to meet the needs of multi-faceted risk opportunities, piecing each risk puzzle together for our producers.

We strive to be a premier resource through our core pillars of honesty, integrity, respect and trust.

DEVELOPING MASTERYPRACTICE MAKES PERFECT

Seven steps to “mastering”

mastery by : Cheryl Koch, CPCU, ARM, AAI, ACSR, AFIS, and Mary Belka, CPCU, ARM, ARe, RPLU, CIC, Rough Notes

Mastery is one of the best and most successful ways to differentiate your agency. Yes, there is work and discipline involved, but the rewards are many.

Challenge and change are givens for any organization. They can strike fear in the hearts of the weak, bring chaos to the unstructured and poorly staffed, and paralyze those who lack the ability to lead clients—and employees—through the maze. Yet, those same components can create the greatest opportunity for those who are focused, prepared, and able to embrace the very things that others fear. Rising premiums, high interest rates, supply chain ramifications, hiring challenges, social inflation on claims, remote employees, and more—the strong say, “Bring it on!” What sets them apart? What gives them that confidence?

There are many spices in the proverbial secret sauce of success; the ingredient we bring into focus today is that of mastery. What does it really mean and why does it matter? Bottom line, it’s skill or knowledge that gives one command of a subject, the upper hand in a competition, superiority, and authority. Those who have developed true mastery—so-called subject matter experts—are truly assets to their clients and associates. How do agency leaders create an environment where mastery can happen and thrive?

Follow these seven steps:

1. Build and reward it. Establish a culture that celebrates mastery. You get the behavior you reward. This is the time to ditch equal end-of-year bonuses just for showing up. Raise the bar by establishing baseline performance-based compensation metrics.

We’ve covered the details before; suffice it to say it works, as long as all components are intimately related to the job at hand. Set the example! Leaders must demonstrate, celebrate, expect and then reward mastery.

2. Define it. Really examine the skill sets that will lead your agency to new heights. What will differentiate you?

Old-school understanding of exposures, risk management, and how our industry works seem obvious to make the list, but how many people really get to the level that is needed for true mastery? There is no substitute for real knowledge and nothing so rewarding for leaders as witnessing their employees’ confidence build as they gain expertise and use it to help their clients. Identify your standards: what people are expected to know to achieve mastery and a path to get there.

Effortless digital skills to interact with all systems are priceless.

Communication skills, once taken for granted, are now lacking in many people for a variety of reasons (don’t get us started). There are tough messages to deliver in a hard market, and the majority of those messages should not be handled via email or text alone. The ability to have proactive, substantive, empathetic conversations, listen to insureds’ concerns, explain current market conditions and coverage changes, and help clients make sense of it all, are all invaluable. Mastery is essential.

MASTERY

Emotional intelligence. Enough said.

3. Uncover hidden gems—inside and out. We believe there are people who crave mastery; they excel in all they do. Learn to recognize those hungry souls both inside and outside of your organization. There are ways to identify them—the “naturals” hiding in plain sight in sales- and service-related positions all around you. Look past that perfect sales or service experience you just had and take a close look at the person providing it. Could you merge their natural abilities with intense insurance knowledge to create a new master in your organization? Is there someone you’ve overlooked inside your agency, somebody just waiting for you to notice their tendency to excel? What are you waiting for?

4. Establish clear roles and goals. This is where position descriptions, educational career paths, and procedures intersect with effective communication from leaders to set all employees on the road to top-notch performance. They are the critical building blocks for your internal structure that underpin mastery. It cannot be overstated how much younger employees need this structure to unleash their inner expert. They are simply not raised to “wing it.” They need that “GPS map” to mastery, and you must provide it.

5. Digital considerations. Two generations of employees and clients have now grown up digital. The technological baseline they have become accustomed to throughout their lives needs to match what you are providing. If you haven’t created and implemented a comprehensive digital strategy as part of your overall agency plan, there is no time like

the present to make it a priority. Now is the time to incorporate the necessary tools— and beyond—to attract and hold the interest of your up-and-coming masters. Your staff needs the best tools you can provide to perform at the highest level.

Are any employees struggling with the digital side of things? This can be related to age, but that is not always the case. Be sure to identify characteristics and gifts of your entire team and provide opportunities for co-workers to help each other excel. Teaching and team play are evident in the best agencies.

6. Training and education. Relevant, structured, continuous training and education are absolutely necessary to achieve and maintain mastery. It goes way beyond CE classes. We are working with agencies where literally every person is taking formal, national-level classes, regardless of position, age, or experience. These are organizations that recognize the importance of ongoing education and set an example. They hold each other accountable and revel in each other’s success. Mastery cannot help but develop in this environment. No one is exempt—new and existing employees alike should always be learning and growing. Courses that make employees stretch a bit create a sense of accomplishment that boosts confidence in the end.

7. Muscle memory—pulling it all together. Practice makes perfect. For instance, the same muscle memory that elite athletes and musicians must develop to achieve mastery in their respective professions

We

The traditional coverage your clients need.

The customized options your clients desire.

The affordable price your clients deserve.

We’ve been successfully protecting small businesses since 1983.

applies to professionals in our industry as well. Whether one is preparing for a golf match, baseball game, piano concerto, or ice-skating competition—or helping clients with their risk management and insurance needs—the same tenets apply. Repeated, perfect practice is essential in preparing for performance. As Julie Andrews once said, “The amateur works until they get something right. The professional works until they can’t go wrong.”

Effective practice for developing mastery in our industry should include:

Role-play. It cannot be overstated how important this is. Practicing using role-play with real-life scenarios, scripting, and relevant analogous examples is essential, for instance, in helping to move clients from a pre-loss to postloss frame of mind when account rounding. Leaders should encourage staff to share examples where scripting or practice is needed. This is when the value of insurance mastery is at its highest—the ability to understand and uncover exposures, and to discuss risk management options with clients that actually resonate with them.

As indicated above, this can increase the effectiveness of role-play. It’s not designed to be robotic or rote. Rather, it should be designed to be conversational and can be especially helpful to new employees trying to become comfortable with new vocabulary, phrases, or concepts as they gain confidence in speaking with clients and underwriters. Overcoming objections, for example, takes practice; having several responses ready can help employees to develop communications skills and experience essential to mastery. New employees need examples to fall back on until they’ve been in the business long enough to build their own story portfolio. Real examples are compelling and essential to building confidence.

Account managers should be assigned issues, coverages, or concepts to review and to share with the group. Real data matters. They need to know where to look for answers, how to assimilate what they’ve learned, and how to put

it to use. Mastery will eventually follow.

Spirited discussions. Opportunities to discuss current issues, concepts, policy forms, claims, exposures, and more, help employees to apply the formal and practical knowledge they’ve acquired. Some agencies have weekly “lunch and learn” sessions where they actively discuss exposures, coverages, claims, and current issues. This path to mastery includes these exchanges.

The best way to learn is to teach. Mastery includes sharing knowledge with others. There will never be a tougher audience than your peers. Everyone who attends or takes a class should be required to come back and teach their co-workers what they have learned. This leads to better note-taking and engagement in classes, when employees know they will need to explain the concepts they’ve learned to others. This creates higher levels of mastery, and provides practice for discussing the same concepts with clients.

Lifelong learning is essential to mastery and forms the basis for ever-expanding expertise.

Go for it!

Mastery is one of the best and most successful ways to differentiate your agency. Yes, there is work and discipline involved, but the rewards are many. The best clients can actually sense and appreciate that your agency is in a class by itself; in fact, they are hungry for it. Carrier partners appreciate the difference as well. It is harder than just wishing it were so, but certainly within the reach of those who put in the time and effort—and it’s well worth the journey.

This article was originally published in Rough Notes.

BLOWING UP THE BENCHMARKS

By: Carey Wallace, AgencyFocus

There are several key benchmarks that independent insurance agencies use to measure their success. They include retention rate, sales velocity, profitability, and revenue per employee – just to name a few.

In many cases, the historic metrics for each of these benchmarks are being redefined by agencies that are thinking differently about how the work within each role inside an agency is accomplished. Those that are able to rethink “the way we have always done it” at the task level are finding ways to drive efficiency, unlock capacity, and drive up the profitability inside their agency.

The core metric that measures efficiency is revenue per employee, and the following are some examples of how thinking differently is blowing up this metric. The revenue per employee ranges from $135K-$257K according to the 2022 Best Practices Study published by IIABA and Reagan Consulting. This metric varies based on the agency’s size, book of business

makeup, staffing, technology, and infrastructure.

There are three main roles within an agency – sales, service, and administration. How can new metrics have impacts in each of these roles?

Sales Roles

Agencies that think through the tasks required to complete the sales process are identifying the repetitive tasks that can be automated, eliminated, or transferred to another person in order to increase the capacity and overall productivity of their producers. This includes the data entry that is required to set up a new customer in their system, data collection to quote a new prospect, appointment setting, and remarketing legwork just to name a few.

Leveraging technologies like InsurGrid to collect accurate policy data for prospects or utilizing virtual

assistants to complete administrative tasks that are embedded in the sales process is a game changer. Utilizing commercial raters or tools like SALT to streamline the personal lines quoting process are all examples of how technology can drive efficiency into the sales process. Knowing what resources and technology will drive the best results for your agency is key, as it is not a one-size-fits-all but instead depends on your agency’s makeup.

Service Roles

Everyone knows that being responsive to our customer’s needs - especially in a claim situationis critical to the success of any agency’s performance. Providing great service to customers is what drives high retention rates and customer satisfaction scores, so this is a huge area of need.

Leveraging tools like Ask Nicely that provide a Net Promoter Score and insights into which customers need extra time and attention to maintain a high retention rate is incredibly impactful for your service staff. As an agency, we want to be proactive in our efforts and this is one example of how to find ways to determine the best way to allocate our limited resources. Utilizing tools like Glovebox allows your customer to self-serve, access their insurance documents, and answer common service and administrative requests when they want to and how they want to. This improves the customer experience and also creates internal capacity.

Administrative Roles

Streamlining parts of the administrative process can be accomplished with RPA automation or bots to perform repetitive tasks such as downloading carrier reports, reconciling statements, and entering information into your agency management system. In situations with agency billed policies, solutions like Ascend can help automate labor intensive and costly financial operations such as collections, financing, carrier and commission payables allow agencies to operate without incurring large back office associated costs. It also reduces the chances of human error by relying on software to handle these repetitive and manual tasks while increasing the speed at which carriers are funded and commissions are received.

Rethinking these kinds of tasks can be most impactful as agencies grow and these costs build up (whether via hiring additional headcount to manage or through increases in external bookkeeper hours) as you sell more policies, eating away at your margins.

In every role inside an agency, there is an opportunity to think differently about how to go about completing specific tasks that are only small parts of each role but have a massive impact on the performance of the agency when you add up all of the time they require to complete those tasks. By removing, eliminating, and/or automating these types of tasks you will create the capacity to focus on the high-impact tasks that require expertise and drive performance, growth, and profitability inside the agency.

Agencies that are doing this have higher retention rates, growth, profitability, and revenue per employee metrics. In addition, they also tend to have higher staff retention. No one enjoys completing monotonous work, so identifying and minimizing those parts of the process can make a significant difference in the overall job satisfaction of your team.

Time is Money

There is no question about it, there are tasks inside every role that can be optimized. These are just a few examples of how thinking differently and utilizing technology, tools, and alternative staffing resources can have an incredible impact on the agency’s performance, capacity, profitability, and VALUE.

By talking to your staff to find out what tasks they do each and every day that are time-consuming, repetitious, and low impact, you can identify the right options for you to consider. Every agency is estimated to spend 60% of its time on administrative and repetitive tasks, reducing the time, and cost, and redirecting that time will change your performance, efficiency, and the value of your agency.

This article was originally published on the AgencyFocus blog at agency-focus.com

$1 to $5 million limits available

h Backed by a financially secure, A+ AM Best company

h $1M excess uninsured/underinsured motorist optional coverage available

h

h

h

h

WEST BEND

THE BEST REMEDY FOR WORKERS’ COMPENSATION

West Bend has a long history of writing workers’ compensation insurance. Our underwriters are knowledgeable and experienced. Our loss control reps have the expertise and tools to help keep employees safe. And our claims practices are the best in class.

From Main Street-type businesses to specialty businesses like childcare, West Bend has the experience and expertise to protect businesses of many kinds and many sizes. We want to write all of your workers’ compensation business, small to large!

When you select West Bend for your valued customers, you can rest assured you made the right choice. After all, we are the best remedy for workers’ compensation.

Learn more by visiting thesilverlining.com

All the agency tech guidance you need in one place. Catalyit is the ultimate technology ally for independent insurance agents. We’re here to guide you through the tech landscape to help your agency thrive in the digital age.

Why Catalyit?

Smart Technology Choices

Avoid costly mistakes with our trusted guidance.

Enhanced Agency Performance

Leverage our insights to get the most out of your tech investments.

Stay Informed

Keep ahead with the latest in tech trends and updates.

Save Time

Efficient solutions that let you focus on what matters—your clients.

Achieve More

Stress less about tech and focus on growing your business.

Start transforming your agency today!

Agency Tech Assessment & TechSelectors™

Understand your tech needs and how to fulfill them.

Generative AI Guide

Get the latest AI news and recommended tools.

Guides & Reviews

Make informed decisions with our comprehensive reviews.

Consulting

Our advisors can help identify your agency’s tech challenges & implement the solutions.

a lot

Why do agents join Smart Choice?

• Agents that join Smart Choice retain ownership of their policies, period. That’s right, agents own what they already have, own policies they write in the future and give up nothing.

• Agents pay no startup fees, maintenance fees, or exit fees, ever. Agents are free to be as active with Smart Choice as they want – all while paying zero fees.

Partnering with Smart Choice gives agents the opportunity to grow their business without risking part of their business to do so! We help you get appointed with top-tier carriers that your customers and prospects want. Our Smart Start program enhances your efforts to expand your product offerings while supporting you in the underwriting process. We can get you access to excess and surplus carriers through our Express Markets program, so you don’t have to turn away potential clients. Plus, we have an entire team of experts to assist you as you grow.

And that’s why agents join Smart Choice!

The new E&O Guardian insurance agency risk management web site is designed to arm Big “I” members with information and tools to mitigate agency errors and omissions. Big “I” members can tap into a variety of educational materials designed to safeguard your agency. Explore the site and dive into specialty agency risk management articles on a wide variety of topics, recorded webinars, sample checklists, sample letters, an archive of newsletters, and more.

“Partnering with Shepherd Insurance six years ago was the best business decision I have ever made. The support and resources made available to myself and my fellow teammates provides our clients with a “Best In Class” experience. Shepherd provides a unique and wonderful model that allowed us to maintain what makes our agency unique while providing support for continued growth, professional development, and advancement opportunities for our employees.”

-Trent Hunt Executive Partner

•

(Formerly Logan Lavelle Hunt)

HOW AGENCIES CAN SUCCESSFULLY MANAGE CASH IN A RISING RATE ENVIRONMENT

By: Patricia Smith, InsurBanc

Cash management involves monitoring and controlling cash inflows and outflows, investing idle funds and maintaining expenses. It's an essential aspect of running any successful business and independent insurance agencies are no exception. Regardless of their size, focus or location, agencies need to manage cash effectively.

With interest rates currently on the rise, independent insurance agencies need to be especially mindful of their cash management practices to maximize the value of their cash, ensure they have the funds they need when they need them, reduce the risk of financial difficulties, and improve their bottom line.

Effective cash management is essential for all strategies, from expanding an existing

agency, starting a new one, or simply maintaining financial stability. For example, if an agency is looking to expand, it needs to have the cash flow to support new hires, marketing campaigns and other growth initiatives. On the other hand, if an agency is focused on maintaining financial stability, it needs to be mindful of its expenses and cash flow to avoid financial difficulties.

Automated cash management sweep products can be a valuable tool for independent insurance agencies. These products simplify the cash management process, reducing the time and effort spent on manual money management by helping monitor and control cash inflows and outflows, invest idle funds, and minimize expenses—allowing agencies to maximize the value of their cash.

Cash management sweep products allow agencies to automatically sweep excess cash out of their operating accounts into high-yielding accounts, helping them to earn more on their funds. Agencies do not have to monitor interest rates or transfer funds manually, which frees up time and resources for other tasks.

They also allow agencies to optimize their commission flow—another crucial aspect of an insurance agency's financial health. By maximizing commission flow, agencies can earn higher returns on idle funds, improve their overall cash flow and ensure they have enough cash on hand to cover expenses and invest in growth opportunities.

It is important to remember that the insurance industry is consistently evolving, and it is essential for independent insurance agencies to be proactive and responsive to changes in the market. Now may be the perfect time to reevaluate your agency's banking relationship and take advantage of rising rates.

By taking advantage of a rising rate environment and optimizing cash management strategies with a cash management sweep product, agencies can build financial strength and position themselves for success in the long term. w

IS YOUR AGENCY READY TO SOAR WITH BIG “I” ALLIANCE?

Big "I" Alliance was created to assist independent agents gain market access through membership. Our objective is to aggregate premium, identify opportunities for growth, promote protability, and provide broad communication and training to agency members on behalf of our carrier partners.

Big “I” Alliance benets include:

DIRECT ACCESS TO CARRIER SYSTEMS AND UNDERWRITERS

PROFIT SHARING AND INCENTIVE ELIGIBILITY

OWNERSHIP OF EXPIRATIONS AND CARRIER CODES

NATIONAL AND REGIONAL CARRIER PARTNERSHIPS

OPTIONAL PARTICIPATION IN A MASTER AGENCY E&O PROGRAM

VENDOR PARTNERSHIPS

WHAT IS BIG “I” ALLIANCE?

Big “I” Alliance is an alliance created to assist independent agents to gain market access through membership.

WHO CAN PARTICIPATE?

You must be a member of your Big ‘”I” state association and qualify to join based on the agency requirements set by the alliance. Learn how to join your state association at independentagent.com/BELONG.

IS THERE A CONTRACT?

Yes. When the agency makes the decision to join Big “I” Alliance, they are committing to a 3-year contract that will automatically renew annually each year after.

IS THERE A SIGN-UP FEE?

Yes, there is a $2,500 one-time fee.

WHAT IS THE MONTHLY MEMBERSHIP FEE TO JOIN BIG “I” ALLIANCE?

$250/month. This fee is separate from the state Big “I” membership fee.

IS THERE A BUYOUT/TERMINATION OPTION?

Yes.

HOW MUCH COMMISSION WILL I EARN?

100% - Commission is paid directly to the agency from the carrier.

CAN MY AGENCY EARN PROFIT SHARE?

Yes.

DOES MY AGENCY OWN THE AGENCY CODE, POLICIES, AND EXPIRATIONS?

Yes, each member agency will own their code, policies, and expirations.

CAN I BELONG TO ANOTHER ALLIANCE OR NETWORK AND JOIN BIG “I” ALLIANCE?

No. We require each agency member to be exclusive to Big “I” Alliance.

WILL MY AGENCY OWN THE AGENCY CODE, POLICIES, AND EXPIRATIONS?

Yes, each member agent will own their agency code, policies, and expirations.

WHEN GETTING NEW APPOINTMENTS, WILL I BE ABLE TO ACCESS THEM DIRECTLY?

Yes, you will have direct access and work on the carrier portal with their underwriting team.

HOW DO I GET STARTED?

Visit us online at independentagent.com/ALLIANCE to complete a pre-application.

INSURANCE HISTORY - AND MAYBE SOME MYTHS AND LEGEND

By: BIg I Virtual University

"Insurance" was not the original term used to describe what we narrowly understand as insurance today. "Assurance" was originally used to speak of the modern concept of insurance according to the February 2009 issue of Reinsurance News published by the Society of Actuaries.

Assurance, as stated in this 2009 article, A Brief History of Reinsurance, is Italian in origin, thus it is no surprise that the oldest studied insurance (assurance) policies - or policies containing insurance-type protections - are from Italy. The Federation Francaise des Societes d'Assurance cited a life insurance policy written in Florence dated April 2, 1329. An October 29, 1298, policy reportedly covers a shipment to Bruges from Genoa. The first reinsurance-like contract dates from July 12, 1370; it was written in Latin and covered the cargo of a ship sailing from Genoa to Sluis.

Insurance (or assurance), as we understand the concept today, is more than 700 years old. But what events shaped our modern world of insurance? Following are some interesting facts, myths, and legends that helped mold the current insurance world in America.

Lloyd's of London. Although the first informal gatherings of shippers and investors in 1688 were not intended to produce an insurance mechanism, Edward Lloyd's coffeehouse on London's Tower Street witnessed the first days of what has become the world's best

known insurance underwriting society. The first "official" committee of subscribers did not meet until 1771. The first 100 years of Lloyd's were somewhat "unofficial," operating on trust among the insureds and the underwriters. Three insurance legends surround Lloyd's of London.

A sticking point during discussions surrounding America declaring its freedom from England was insurance. The vast majority of insurance covering interests in America was provided by Lloyd's and other British-based insurers. Imagine that, we almost didn't declare independence because of insurance.

Following the Great 1906 San Francisco Earthquake, legend states that Lloyd's contacted its representative in San Francisco and said, "Pay the claims, we'll figure out if there is coverage later."

In 1955-56, a replica of the Mayflower was built, the Mayflower II. Allegedly the owners contacted Lloyd's to provide coverage and the underwriter said, "Hold on, let me see what we charged last time." (Obviously this is myth or legend since the Mayflower sailed to America in 1620, but it is a good story).

Lloyd's of London is a pilgrimage site for all insurance geeks.

The Philadelphia Contributionship for the Insurance of

Houses from Loss by Fire. Founded by Benjamin Franklin and several prominent business associates in 1752, The Contributorship, as it is now commonly called, was a proactive insurance carrier refusing to provide coverage to houses and other structures that were not constructed according to strict building standards. During the British occupation of Philadelphia in 1777, The Contributorship hired a chimney sweep to maintain the chimneys of insured houses that were still occupied. This was one of the first insurance carriers to enact loss control standards. In an "official" operating capacity, The Contributorship is older than Lloyd's.

The Friendly Society for Mutual Insurance of Houses Against Fire. The Friendly Society predates The Contributorship by 16 years and was the first insurance company founded in America. It was founded in Charles Towne (Charleston), South Carolina in 1736. In November of 1740, "The Great Fire of 1740" bankrupted the company after only four years.

The Oldest Active Reinsurance Companies. CologneRe is the oldest specific-purpose, continuously active reinsurance company founded April 8, 1846. SwissRe opened in 1863.

Workers' Compensation. Prior to workers' compensation laws, workers injured on the job were required to seek recovery through the court system. In court, they had to prove their employer was negligent in causing the injury. Many did not have the funds to wage this fight leaving injured workers without income and somewhat destitute.

Germany in 1884 was the first country to enact a form of workers' compensation. America did not attempt to enjoin the workers' compensation social revolution in the early 1900s. Maryland (1902), Massachusetts (1908), Montana (1909), and New York (1910) each introduced workers' compensation statutes. All four laws were struck down under constitutional challenge as violating "due process."

Wisconsin in May 1911 became the first state to effectuate an ongoing workers' compensation program that survived legal challenges. Nine more states adopted workers' compensation laws before the close of 1911. By the end of 1920, 42 states plus Alaska and Hawaii (even though statehood didn't come for either until 1959) enacted workers' compensation statutes. Mississippi was the last state to implement a workers' compensation statute, waiting until 1948.

The 1943 New York Standard Fire Policy. This 165-line document became the basis for nearly all modern

property insurance contracts. In several states the attachment of or referral to this policy is still required by statute. Although first adopted in 1918, any current mention of the Standard Fire Policy is a reference to the 1943 edition.

National Flood Insurance Program. Federal flood insurance was proposed as early as the mid-to-late 1930's, when private insurers ceased offering flood coverage; but it wasn't until the National Flood Insurance Act of 1968 was signed into law that federal flood insurance became a reality in the form of the National Flood Insurance Program (NFIP). Although signed into law in 1968, necessary funding was not provided to carry out the mandates of the program until the early 1970's. Although currently troubled by charges of inadequate or incorrect rating information and heavily subsidized rates, creation of the flood policy was an important milestone in insurance history.

Insurance Services Office (ISO). Insurance Services Office (ISO) was founded and created in 1971 by a merger between the Mutual Insurance Rating Bureau and the Insurance Rating Bureau (known as the National Bureau of Casualty Underwriters until 1968). ISO provides statistical and actuarial services, rating information, claims data, standardized policy language, and other relevant industry data. It has one of the largest databases in the world and by far the largest insurancerelated databases. ISO is now a wholly owned subsidiary of Verisk Analytics, a publically traded company.

American Association of Insurance Services (AAIS). American Association of Insurance Services (AAIS) was organized in 1975 as a multiline property/casualty advisory organization and as a licensed statistical agent. AAIS is the successor organization of the former Transportation Insurance Rating Bureau, a Chicagobased inland marine rating bureau formed from the merger of two smaller bureaus founded in the 1930s. AAIS promulgates, files, and maintains on behalf of its member companies forms, rules, and rating information for more than 20 lines of personal and commercial insurance.

National Council on Compensation Insurance. Founded in 1922, the National Council on Compensation Insurance (NCCI) promulgates rules, rates, and forms; develops and monitors the work comp class codes; and develops experience modification worksheets (and factors). In addition to these main services, NCCI manages the residual (non-standard) workers' compensation market for many states and provides cost analysis of proposed and enacted workers' compensation legislation.

Surety and Fidelity Association of America. The Surety and Fidelity Association of America (SFAA), founded in 1908 and formerly known as the Surety Association of America, is a fidelity and surety bond advisory rating organization and the statistical agent in all states (except Texas) for the reporting of fidelity and surety experience. In addition to providing advisory loss costs and statistical reporting, the SFAA also promulgates underwriting rules and recommendations, and is involved in governmental affairs as they relate to fidelity and surety bonds.

Automobile Insurance Plans Service Office. The Automobile Insurance Plans Service Office (AIPSO) is a pseudo bureau founded in 1973. AIPSO promulgates loss costs and forms for the management of the residual (high-risk) automobile market, but not necessarily for member companies. AIPSO's "members" are the various state-run residual auto markets. And beyond managing forms and loss costs, AIPSO processes applications for the residual auto market and actually manages the residual auto programs in approximately 39 states. AIPSO acts in more of a servicing capacity than do any of the other bureaus listed, thus its classification as a pseudo bureau.

The Businessowners' Policy (BOP). First introduced by ISO in 1976, this was the first time commercial risks were offered property and liability coverage in the same coverage form without the need to "piece-mill" the parts together in a package. Originally designed for small, "low-risk" operations, eligibility for the BOP has expanded beyond the protection needed.

"Comprehensive" General Liability Policy. The "Comprehensive" General Liability policy was introduced by ISO in 1973 as a replacement for the Owner's Landlord's & Tenant's (OL&T) and Manufacturer's & Contractor's Liability policies. This version of the CGL was the primary general liability form from 1973 until 1986 (when ISO "simplified" all their forms).

Although this was an improvement over the old forms, it required the attachment of multiple endorsements to achieve the breadth of protection seen in the modern "Commercial" General Liability (CGL) form.

Coverages contained in today's CGL form which had to be added by endorsement included (not a complete list): Personal Injury and Advertising Injury (now Part B);

Blanket Contractual Liability; Broad-Form Property Damage; Host Liquor Liability, and Employees as Insureds. ISO introduced the Broad Form General Liability Endorsement in 1977, to package the "missing" coverages into one endorsement.

Any contractual reference to an OL&T, "Comprehensive" General Liability, Blanket Contractual Liability or Broad-Form property damage is proof that whoever wrote the contract is either near retirement or plagiarizing.

First Modern Life Insurance Policy. William Gybbons was the named insured on the first modern life insurance policy placed on June 18, 1536; a one-year term policy. Gybbons died within that year on May 29, 1537, after being hit by a bullock cart (no, seriously). The policy was for 400 pounds.

America's first life insurance carrier is, in a sense, still in existence. "The Corporation for Relief of Poor and Distressed Presbyterian Ministers and the Poor and Distressed Widows and Children of Presbyterian Ministers" was formed in 1759. Eventually becoming known as the "Presbyterian Ministers' Fund," it is now part of Nationwide Insurance.

Creation of Mortality Tables. Sir Edmund Halley (yes, the same one for whom the comet is named) constructed and published the first known mortality tables in 1693. Statistical credibility of the data is questionable because the information came from a very small sample, a small town in eastern Germany (now a part of Poland), over a four-year period. Although it is unlikely his findings could be considered "actuarially accurate," Haley's was the first step in applying probability to estimate human life. Insurance companies and governments would not make use of such life-expectancy tables for at least another century. (Taken from "Against the Gods: The Remarkable Story of Risk").

Creation of Property Insurance. Modern property insurance was first introduced following the Great Fire of London in 1666. The fire destroyed more than 13,000 homes and 87 churches in the "old" part of London (the part built by the Romans). Thousands were homeless due to the lack of any mechanism available, no financial safety net, to help the property owners pay the cost to rebuild. In 1681, Nicholas Barbon along with several associates established the first fire insurance company,

the "Insurance Office for Houses," located on the back side of the Royal Exchange. Initially premiums were based on rents not the value of the houses. Operations appear to have ceased around 1720.

Modern Health Insurance Coverage. The first modern health insurance policy was written for a group of teachers in 1929. Baylor hospital and a group of school teachers contracted for room, board, and medical services in exchange for a monthly fee. Blue Cross and Blue Shield organizations began to appear in 1932.

World War II saw explosive growth in health insurance. Just prior to and during WWII, the federal government imposed wage restrictions to keep employers from enticing workers away with more money. To get and keep employees, employers began offering health insurance as an employee benefit to offset the inability to pay higher wages.

Paul v. Virginia. From the beginning of insurance in the US, states regulated the industry. There was little or no question that states were and should be the proper regulatory authority – until an insurance agent was arrested for selling "fire" insurance.

Samuel Paul was arrested and charged with violating Virginia law because he was selling insurance in the state without the proper license. Paul sued the state claiming that insurance was an interstate commerce and thus subject to federal regulation not state regulation. The state supreme court disagreed so the case moved to the US Supreme Court.

In 1869, the US Supreme Court ruled that insurance was not interstate commerce and was thus subject to state regulation. Paul v. Virginia remained the law of the land for 75 years.

United States v. South-Eastern Underwriters Association. Francis Biddle, the Attorney General of the United States, brought suit against the South-Eastern Underwriters Association (SEUA) in January 1944 charging it with violating the Sherman Anti-Trust Act. His indictment alleged two conspiracies: 1) Restraint of trade and commerce by fixing and maintaining arbitrary and non-competitive premium rates on fire and specified allied lines of insurance in six southern states; and 2) monopolizing trade and commerce in the same lines of insurance. In short, the attorney general claimed that the SEUA was guilty of collusion in setting rates.

The Supreme Court agreed with the attorney general and on June 5, 1944, published its decision stating that

insurance and the business of insurance was subject to the Sherman Anti-Trust Act and thus could be regulated by Congress. This remains the common law of the land today.

The McCarran-Ferguson Act. Following and in response to the US v. SEUA decision, Congress passed the McCarran-Ferguson Act into law on March 9, 1945. The act did not legislatively overturn the common law arising out of the SEUA ruling; neither does it prevent the federal government from regulating the insurance industry. The Act simply grants states very broad authority in the regulation of the insurance industry. Basically, the law keeps the federal government out of insurance regulation as long as it feels the states are properly regulating the industry.

The Yonkers Case. Officially listed in court records as National Fire Insurance Company v. Sullard, this was the keystone case regarding who owned policy "expirations," the independent agent or the insurance carrier. The New York Appellate Court reversed a lower court decision to solidify what all independent agent's already believed, that the information in and rights to the book of business written by that agency belonged to the agency. The National Association of Independent Agents, which ultimately became the Independent Insurance Agents and Brokers of America (The Big "I"), was instrumental in garnering the financing for the appeal. Without this appeals case, independent agents may have lost the rights to the business they wrote.

Formation of the NAIC. The National Association of Insurance Commissioners (NAIC) is a non-regulatory body established in 1871 to develop minimum standards and model laws individual states can elect to enact or not. Additionally, the NAIC awards accreditation to states that comply with specific financial regulation standards.

The Sanborn Map Company (1867-1970). The Sanborn Map Company developed maps used by the insurance industry for the underwriting purposes. Sanborn maps provided much of the detail underwriters needed to provide coverage include: construction (based on the colors used), size (provided measurements and number of floors), the year built, the occupancy of a particular building, water supplies, and the surrounding exposures. Surveyors mapped every structure in a particular town and compiled the information in book form for use by insurance carriers. In addition to the great amount of useful information they provided, Sanborn maps gave underwriters the opportunity to view the number of risks insured in a specific area so that they could adequately spread their risks, a proper

activity. Stories are told that the Sanborn map surveyors were so well trained they did not need measuring tapes or wheels; they could accurately "walk off" a building with incredible accuracy.

ISO's Policy Form Simplification – 1986.

Compulsory Insurance Laws. The US Supreme Court cleared the way for compulsory insurance laws in 1917. In New York Central Railway Co. v. White the US Supreme Court ruled that compulsory insurance requirements (at the state level, not the federal level) were not a violation of due process. This cleared the way for compulsory workers' compensation laws and auto liability laws.

Terrorism Risk Insurance Act (TRIA). As a result of the terrorist attacks of September 11, 2001, President George W. Bush on November 26, 2002, signed into law the Terrorism Risk Insurance Act of 2002 (Pub. L. 107–297, 116 Stat. 2322). TRIA created a temporary federal program that provides for a transparent system of shared public and private compensation for certain insured losses resulting from a certified act of terror. The Treasury Department administers the program. The law has been extended several times: 1) December 22, 2005: the Terrorism Risk Insurance Extension Act of 2005 (TRIEA) extended protection through December 31, 2007; 2) December 26, 2007: the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA 2007) further extending protection through December 31, 2014; and 3) January 12, 2015: the Terrorism Risk Insurance Program Reauthorization Act of 2015 (TRIPRA 2015) amended the expiration date of TRIP to December 31, 2020.

Eliot Spitzer and Bid Rigging. Eliot Spitzer, former New York Attorney General, sued Marsh & McLennan Cos. on October 14, 2004, for supposed bid rigging and other misdeeds and misinformation. This suit led to laws requiring insurance agents and brokers to disclose who they represent (the carrier or the insured), the sources of income, and sometimes the amount of income. Currently only 15 states have these laws on the books.

Professional Employer Organizations. Tax Equity and Fiscal Responsibility Act of 1982 cleared a path for the creation and expansion of PEOs. Between 700 and 900 professional employer organizations operate in all 50 states. According to the National Association of Professional Employer Organizations (NAPEO), between two and three million employees work under a PEO arrangement and PEOs as an industry earned $92 billion in gross revenues in 2012 (gross revenues are the

total payrolls plus the fees charged by the PEO).

Federal Crop Insurance. Congress first authorized Federal crop insurance in the 1930s along with other initiatives to help agriculture recover from the combined effects of the Great Depression and the Dust Bowl. The Federal Crop Insurance Corporation (FCIC) was created in 1938 to carry out the program.

Mehr & Hedges. Robert I. Mehr and Bob A. Hedges were the first to consolidate the multi-step risk management process into simple rules. In their 1963 book, "Risk Management in the Business Enterprise," Mehr and Hedges took all the concepts and theories surrounding risk management and the risk management process and combined them into three simple rules still applicable today: 1) Don't risk more than you can afford to lose; 2) Consider the odds; and 3) Don't risk a lot for a little.

Captive Insurance. Fred Reiss, considered the father of modern captive insurance in the US, coined the term "captive" in the 1950s.

Claims Made Liability Policy. Because of the time lag between the wrongful act or error, the resulting injury and the ultimate claim or lawsuit, Joe D'Alessandro in 1964 deduced that there was a better way to insure a "professional." Secondarily, D'Alessandro postulated that there had to be a way to provide greater actuarial certainty that there would be no further claim activity following the close of the policy period (eliminating the "incurred but not reported" (IBNR) problem). This creative thinking led to the development of the first "claims made" policy wording.

Credit Default Swaps. Created by JP Morgan in 1994. Almost destroyed the world in 2008. Arguments and debates persist whether a Credit Default Swap is insurance. In the traditional sense, CDS's are not insurance because the CDS buyer was not required to have ANY interest in the business on which he was buying a CDS. In fact, at the height the notational values of CDS in America was $47 trillion dollars on a total asset value of $27 trillion. In short, more people were hoping for failure than where counting on gain.

The "All Risk" Property Insurance Policy. Introduced sometime in the 1950s.

Creation of the Homeowners' Policy. The first modern homeowners' insurance policy written in America was issued in September 1950.

First Auto Insurance Policy. Debate surrounds the

timing of the first auto insurance policy. There is no doubt which carrier wrote the first auto policy; it was written by Travelers Insurance Company. The debate is when and to whom the first auto policy was sold. For decades myth stated that the first personal auto policy was written for and sold to Dr. Truman Martin of Buffalo, New York effective February 1, 1898. The policy gave Martin $5,000 in liability coverage.

However, new information from Travelers indicates that the first auto policy was written almost four months earlier in October 1897. According to a press release from Travelers, on October 20, 1897, Gilbert J. Loomis of Westfield, Massachusetts bought the first auto insurance policy to insure a car that he built himself. The policy purchased by Loomis provided $1,000 of coverage and cost $7.50.

The First Director's and Officer's (D&O) Policy. Followed the passing of the Securities Act of 1933 and the Securities Exchange Act of 1934. Lloyds offered these policies in the 1930s, but few publically traded companies purchased the coverage.

Independent Insurance Agents and Brokers of America (IIABA). Founded in 1896 as the National Local Association of Fire Insurance Agents. The name was changed to the National Association of Insurance Agents in 1913. To emphasize its members' ability to work with a variety of insurance companies, the organization became the Independent Insurance Agents of America in 1975. And in 2002 the name was changed to the current Independent Insurance Agents & Brokers of America to reflect the diversity of its membership, which includes both independent insurance agents and insurance brokers.

National Association of Professional Insurance Agents (NAPIA). Founded in 1931

Council of Insurance Agents and Brokers (CIAB). The Council was established in 1913, when the National Association of Casualty & Surety Agents formed and held its first convention in Cincinnati to discuss state regulation. The name was changed to the Council of Insurance Agents and Brokers in October 1993.

First State Insurance Department. New Hampshire opened the first department of insurance in 1851.

Property Casualty Insurers Association of America (PCIAA). Formed in 2004 by the merger of the National Association of Independent Insurers (NAII) and the Alliance of American Insurers (AAI). Initial merger talks

began in 1999 / 2000 but were not consummated until January 8, 2004. NAII was founded in 1945 and AAI began operations in 1922.

American Insurance Association (AIA). Its beginnings are traced back to 1866 when the National Board of Fire Underwriters (NBFU) was founded. The NBFU, the original AIA and the Association of Casualty and Surety Companies merged in 1964 to form the AIA in operation today.

National Association of Mutual Insurance Companies (NAMIC). Initially operating as the National Association of Co-Operative Mutual Insurance Companies, the first meeting of this association occurred in 1896 in Chicago. The association known today as NAMIC was incorporated in Indiana in 1920. NAMIC is the largest property/casualty insurance carrier trade association serving more than 1,400 property/casualty insurance companies.

Captive Insurance Companies Association. CICA was formed in 1972 to foster and support the development of captive insurance companies around the globe.

Fire Extinguishers. Early fire extinguishers used gunpowder as part of their activation mechanism, this seems rather counterproductive in a fire. Ambrose Godfrey patented the first "extinguisher" in 1723; it used a system of fuses to ignite the gunpowder to scatter the extinguishing solution. What we recognize as a modern fire extinguisher was invented by British Captain George William Manby in 1818; a three-gallon copper container containing potassium carbonate and compressed air.

Sprinkler Systems. The first "sprinkler-type" systems were installed in mostly mill properties from the 1850s to 1880s. These were not automatic systems like are used today, these were simply perforated pipes throughout the building that required human intervention to get the water to the pipes. Not until 1878 was the first automatic sprinkler system installed – the Parmelee sprinkler.

This article was originally published by IA magazine in 2009

Acquisitions

Established Louisville agency interested in acquiring insurance agencies in Jefferson and surrounding counties. If you are interested in selling, merging, or need assistance with perpetuation, we would like to talk with you in confidence.

Call Kevin Lavin, CIC or Philip Anderton, CIC, CRM at Sterling Thompson Company at 502-585-3277

Looking for Producers

Independent with top best markets looking to expand presence in Jefferson, Oldham or Shelby counties. Wanting Personal lines Producer or book of business to move or purchase. All arrangements possible, in strict confidence.

Please send inquiries to:

Turner Insurance Agency, 2460 Shelbyville Road, Shelbyville, KY 40065 or call Kurt Turner, CPCU at 502-633-6060.

You 2024 Industry Partners (as of 3/15/24)

I Kentucky gratefully acknowledges these fine companies, our 2024 Industry Partners. Without their assistance, fees for the events and programs throughout the year would be significantly higher and/or the quality of the program would be restricted.