Kentucky IA - Summer 2021 by Big I Kentucky

Summer 2021

KENTUCKY P&C INSURANCE

MARKETPLACE SUMMARY P. 29

WEARING TWO HATS

Q&A WITH STATE REPRESENTATIVE BART ROWLAND P. 24

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ClearFocus ClearVision ClearPath to

Success Reaffirmed AM Best Rating “A-“ (Excellent) with a Stable Outlook Leading Regional Insurance Company Workers’ Compensation that is Clearly Better

9960 Corporate Campus Drive, Suite 1400, Louisville, KY 40223 t 502.894.8484 | 800.367.5372 | clearpathmutual.com 2 | Kentucky IA - Summer 2021

WHAT'S

INSIDE

Page 12

CONTENTS

7 Owner to Owner Column 12 Requiring the COVID-19 Vaccine 16 Leadership Conference Photos

Page 24

24 Wearing Two Hats: Q&A with Bart Rowland 29 Kentucky Insurance Marketplace Report 38 Post-Pandemic Leadership 44 The Myth of Agency Multiples

The Kentucky IA is the official magazine of Big I Kentucky, and is published quarterly. Office Address 13265 O’Bannon Station Way, Louisville, Kentucky 40223. Telephone: (502) 245-5432 Email: info@bigiky.org Fax: (502) 245-5750 All advertising and editorial submissions are welcome.

EVERY ISSUE 4 From the Chair

46 Industry Partners

5 From the Commissioner’s 47 Advertiser Index Desk 47 Classified Ads 10 Upcoming Events 47 Social Media Links 21 Education

OUR

Page 38

MISSION

Create value for our members through innovative resources and legislative advocacy while fostering industry relationships.

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Chair From the

ig I Kentucky is fortunate to have had great leadership throughout its 125 year history. The names of R.C. Riley, Bill Greenwood and Bill Stiglitz come to mind as Kentucky leaders who also served as Big I National President/Chairman. The Past President/Chairman list from Kentucky is a Who’s Who of insurance agents. Sandra Blain, Steve Ford and Tommy Adams are some of the names that remind me of great leadership. All organizations need strong, committed and savvy leaders to stand the test of time. Agents in our state have been well served by past leaders but we need more people to step up and lead us into the next 125 years. Leaders make a difference, they don’t accept the status quo. Instead, they use their ideas and principles to the benefit the organization. When discussing leadership in our organization, I must mention the untimely passing of former Chair Mike Johnson of Al Torstrick Insurance. Mike came to Kentucky over 20 years ago as a novice to the insurance industry. His wit, passion and undeniably bold personality made him a great leader as an Emerging Leader and as Chair of the association. Mike was a leader in all walks of life. He was an awesome father, husband, friend and colleague. Our events will not be the same without Mike. I would like to extend my condolences to Ali, Davis and Donovan along with the rest of his family. Mike’s star was very bright for Big I KY, and we want to see our members shine in the same way. This year we are introducing a new award: BE LIKE MIKE. This award will be given to a member that displays exuberance both inside and outside of the industry… in other words, someone just like Mike. The recipient will receive $1,000 from Arlington Roe to donate to a charity of their choosing. Mike Johnson was one-of-a-kind, and we need more members like him to step up to the plate. We need YOU to get involved and keep this association strong. Bart Rowland is a voice we depend on in this industry. He has taken his talents to Frankfort as a State Representative and made a huge difference for our association and our state. Bart will tell you that he was “in the right place at the right time” or some other deflection, but he is a great example of leadership in our state, at the national level and in his hometown. Being a leader is rewarding. The association can take your ideas and build on them for the betterment of our industry. Our staff is so tuned in to the insurance climate. They are constantly looking for ways they can help YOU, and it is unbelievable how much they care about the well-being of our members. Under the leadership of Tara Purvis, we have flourished during the pandemic and look forward to many brighter days ahead. Tara is a leader who doesn’t just show up for work and pass the time. She encourages her staff, board and association membership to reach for the stars. Tara always keeps her eye on the ball, and she always hits a grand slam. Leadership looks different to everyone. You must be willing to take a stand, look at all possibilities and lead with your voice, but that can take many avenues. You don’t have to commit to being Chair, just get involved and lend your talents so we can better our industry. Insurance agents in Kentucky play key roles in their hometowns and counties already, so being a leader within this association should come easily. My time as chair is running out. I have been blessed to lead you for two years due to the pandemic. There are many reasons for not becoming a leader, but the rewards far outweigh the excuses. One of my favorite sayings is, “Don’t mind the mule, just load the wagon.” In other words, don’t talk about what you cannot control and get involved in what you can control.

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Commissioner’s Desk From the

rowing up on a small family-owned dairy and tobacco farm, there was no room to hide. It was quite obvious if our assigned chores did not get completed. If not, there was the price to pay. This life experience taught me about ownership, including taking responsibility for my actions.

When I was first appointed Commissioner by Governor Steve Beshear in July 2008, I met with the entire staff at the Department and spoke with them about my work philosophy. One of the three tenets I gave them was to “take responsibility for your actions or lack of actions.” I continued with the statement, all of us make mistakes, but it is OUR responsibility to take ownership of that mistake. You should always notify the appropriate people promptly and correct your mistakes. Hopefully, the positive aspect of making mistakes is learning from them. It is a philosophy I continue to embrace, not only in my professional life but also in my personal life. As Commissioner, I feel the weight of ownership since the action or inaction of the Department comes back to rest on my shoulders. I try not to micromanage, but I think my DOI family will tell you I am very involved, and I do not like surprises. As insurance professionals, you also have a weight on your shoulders. You serve as financial advisors to your customers and not just “salespeople.” Insurance is complicated—strange terminology and multi-syllable words that are not part of the everyday vocabulary. Yet, your customers depend on you to interpret that terminology and to make recommendations to them. You must take the time to educate your customers so they can make the best decisions for themselves. Hopefully, they will do so but if they don’t, you have performed to the best of your professional ability. Take ownership of your actions as a financial professional. I have faith in you to do so.

OFFICERS Ray A. Robertson, CIC

DIRECTORS Philip Anderton

Chair, Mt. Sterling 859.498.3410

Lousiville, 502.585.3277

Kevin T. Desmond

Edmonton, 270.432.3491

Chair-Elect, Bellevue 859.491.5100

Whitney L. Floyd, CIC

Vice-Chair, Henderson 270.827.3543

Allen J. Crawford, CIC, CSRM

Mark Linkous, CIC

John Purdom

Murray, 270.753.4751

Carolyn Reynolds

Richmond, 859.623.8485

Eric Schumacher

Treasurer, Somerset 606.679.6311

Maysville, 606.759.5663

George Atkins III

Emerging Leader Chair, Somerset 606.679.6311

Aaron LaRue

Bowling Green, 270.781.2020

National Director, Louisville 502.585.3600 Immediate Past Chair, Bardstown 502.348.0050

Adam Sheridan

STAFF Tara T. Purvis

President & CEO

Amy Good

Financial Services Director

Katie Hines

Membership Services Director

Taylor A. Lee

Communications Director

Kristie Weyer, CISR

Insurance Services Director

Cassie Young

Workforce Development Director

Chris J. Wiseman, CIC

Laura Yount, CIC, CISR

London, 606.878.0100

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We are licensed in all 50 states. But our roots are Midwest-based. We are family-owned and we are here, where you are. As a managing general agency and wholesale insurance broker, we have access to over 200 markets, and we are licensed to do business in all 50 states. Though we have nationwide capabilities, our roots, focus, knowledge and proficiency lie in the Midwest. We are not a large national chain or bank-owned organization, meaning you will receive excellent service with a personal touch.

Managing General Agents | Wholesale Insurance Brokers

Let us help you find the right solutions.

800.878.9891 ArlingtonRoe.com

OWNER

What is something unique you’re doing in your agency, and how has it impacted your agency’s operations and success?

I strive to give personalized customer service. We mail cards for all occasions, especially birthdays! This allows us to stay in communication with every client, small and large.

RUTH KIRKPATRICK

As the pandemic restrictions are lifted, we are attempting to interact face-to-face with customers we haven’t seen in over a year. We have managed electronically over that time, but our agency was built on personal connections.

Boontucky Insurance Service

STEVE KINKADE

Working with experienced Life and Health insurance agents who refer Property and Casualty insurance business into our agency. This has been an engine of new growth for both personal and commercial lines. We have worked hard builidng a solid referral network of CPA’s, Mortgage Lenders, Attorneys, Real Estate Agents and Bank Loan Officers who have referrred business to our agency.

Our client base covers all age brackets, so effectively managing the use of technology while maintaining a personal relationship has been key. I don’t know that this is unique, but the ability to communicate and work with clients across all platforms (text, chat, email, phone, face-to-face, etc.) has been a major reason for our success. Our staff is also proficient at communciating both in-person and online.

JOHN ISON

AARON LARUE

Ison Insurance Agency, Inc.

Kinkade-Cornell Insurance Agency, Inc

LaRue-Carey Insurance Group, LLC

I’m not sure it’s unique, but we focus heavily on retention. Once a customer decides to do business with us, we want all of their business and their family/friend’s business, forever. So, our agents take the time to personally handle each insured’s renewal, regardless of the size or type of the account. Luckily, the majority of our accounts simply require a quick text message or email letting them know we’ve reviewed the renewal and still believe it is the best fit. We also use the renewal as an opportunity to re-establish our value to the insured and cross sell any products we don’t have or ask for ferals. It really seems to go a long way with our insuread and is currently manageable for our agents at roughly an hour a month. Thanks to the Leadership Conference, I also plan to invest in a CRM to further enhance our renewal management and on-boarding.

PAUL BAKER

Baker Insurance Group

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OWNER

Where do you see your agency in the next five years?

I see my agency in the hands of someone else in the next 5 years. 2022 will mark my 30th year in business and I think it will soon be time to explore my options. I enjoy being part of a business that I can help my customers in their time of need.

In the next five years, we hope to have an agency full of young, enthusiastic and energetic forward-thinking individuals. Talent recruitment is crucial to the future of our industry. We need more young people in this industry, especially as Baby Boomer’s retire.

STUART BOWLING

JAY HALL

Bowling Insurance Agency

Insurance Associates - New Castle

The new CRC Indianapolis office is your Midwest insurance solution. Aimee Stumler

Joni Denny (Garage)

P 317.581.3243 E astumler@crcgroup.com

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Indianapolis Office

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UPCOMING EVENTS Scan the QR Code below to register for any of our upcoming events.

ROAD SHOWS

Virtual | August 18, 2021 Bowling Green | September 1, 2021 Lexington | September 2, 2021

CLAYSHOOT

August 12, 2021 Bluegrass Sportsmen’s League 2500 Handys Bend Rd Wilmore, KY 40390

LOUISVILLE CE DAY

August 31. 2021 University of Louisville ShelbyHurst Campus 440 N Whittington Pkwy Louisville, KY 40222

KEENELAND TAILGATE

EMERGING LEADER SUMMIT

ANNUAL CONVENTION & TRADESHOW

October TBD

November 10-12, 2021 Galt House Hotel 140 N Fourth Street Louisville, KY 40202

September 21-23, 2021 University of Kentucky Gatton College of Business 550 S Limestone Lexington, KY 40506

ATTENTION EMERGING LEADERS

BIG I NEWS

under 40

NEW MEMBER WELCOME AGENCY

Foundation Risk Partners Signature Insurance Covenant Insurance Agency The Roark Insurance Agency

Submit answers to the following questions to be featured in the Fall 2021 magazine: 1. Why did you choose to pursue a career in insurance? 2. What obstacles did you face when you first started, and how did you overcome them? 3. How has this industry impacted your life? Deadline: September 3, 2021 Email your answers to Taylor Lee, Communications Director at tlee@bigiky.org.

IN MEMORIUM

MICHAEL GREGORY JOHNSON 1973-2021 Michael Gregory Johnson, 48, passed away unexpectedly from natural causes on June 6, 2021 at Williamstown Lake while spending time with his family, friends, and his beloved dog, Cosmo. Mike was born in Cincinnati, OH on Jan. 16, 1973. He grew up in Aurora, OH and attended Bowling Green State University. He and his wife, Ali, moved to Lexington in 2000 where he joined Al Torstrick Insurance Agency. He spent his career in the Insurance Industry and was Vice President of Al Torstrick Insurance Agency. In addition, Mike served as chair of both the Kentucky Young Insurance Professionals and the Independent Insurance Agents of Kentucky. He also served on the board of Bluegrass Crime Stoppers. 10 | Kentucky IA - Summer 2021

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Hear from our experts. Want to learn more about what SECURA has to offer? Scan the QR code or visit secura.net/ky-agents for more information about the SECURA team.

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By: Chris Boggs

12 | Kentucky IA - Summer 2021

ith the availability of the COVID vaccine, many discussions revolve around the legality of an employer requring a vaccine. If the employer is allowed to require the vaccine, what are the insurance implications if an employee gets ill or even dies as a result of the vaccine? Is there a policy that will respond?

INSURANCE IMPLICATIONS OF REQUIRED VACCINES

Questions swirl around the available COVID vaccines. Some are medical questions and some are legal questions. The most common legal question is, “Can employers require the vaccine?” An employer’s legal ability to require the vaccine is outside the scope of this article; employment attorneys are the most qualified to answer this question. This article’s focus is the insurance implications if the vaccine is mandated by the employer. Even if the employer can legally require employee vaccinations, employers must consider all relevant factors arising from the decision before making a final decision. Insurance and the availability of coverage is a financial reality that must be considered as part of the discussion.

WHO IS TO BLAME

Manufacturers can be subject to strict liability and are thus charged with producing a product that is not defective and/or does not have an unreasonable risk of causing harm. Pharmaceutical (vaccine) manufacturers are subject to the same standards. But there is one caveat regarding COVID vaccine manufacturers, vaccine manufacturer’s are immune from legal liability – at least temporarily – under the PREP Act. More detailed information on the PREP Act is available from the Congressional Research Service. Further, it is unlikely the government will accept legal liability for any injury or death resulting from the vaccines. Additionally, some states have extended immunity to include those who administer the vaccine (doctors, pharmacists, etc.). If the injured person cannot go after the manufacturer, the government or the

administrator, who is next? If the employer required the vaccinations – the answer is somewhat obvious, the employer. An employer that required the vaccine may be the only party that CAN be sued and potentially held liable for the near future.

IS COVERAGE AVAILABLE

If, as a provable result of the vaccine, an employee dies or becomes seriously ill in the next few months or years (while the liability protection is in place), the employer that required the employee be vaccinated may find themselves on the defendant end of a lawsuit. Employers mandating vaccinations may find themselves in court. If an employer does end up in court, is there any insurance coverage available to cover the defense and/or any award granted? Three possible coverage options come to mind immediately:

• Workers’ Compensation; • Employers’ Liability; and • Employment Practices Liability

How might these coverages respond to a vaccine-related death or injury of an employee if the employer requires the vaccine? Let’s undertake a quick overview of each.

WORKERS’ COMPENSATION

To be compensable under workers’ compensation the injury must arise out of and be in the course and scope of employment. Further, an occupational illness or disease that causes death or injury is compensable only if the illness, disease or resulting is peculiar to the industry or job. More detail on compensability in workers’ compensation is available within the VU article, “Occupational Illness and Compensability.” 13 | Kentucky IA - Summer 2021

Can death or severe injury/illness from an employer-required vaccine meet the requirements for compensability? Although getting the vaccine was FOR work, it does not appear to arise out of and in the course and scope of THE work. Additionally, the illness or death is not peculiar TO THE WORK, the result is one to which members of the entire population (members of the general public) may be subject. (Specific details on each of these requirements for compensability is found in, “Occupational Illness and Compensability.”) Clearing the hurdles necessary to create a compensable injury under workers’ compensation coverage may prove extremely difficult. Given the application of and requirements for compensability currently applied in workers’ compensation, there does not appear to be protection provided by the workers’ compensation policy.

Proving negligence by requiring a vaccine may be difficult. The manufacturer has the duty to produce a safe vaccine, safety of the vaccine is not within the employer’s control. It seems unlikely the employers’ liability key trigger is tripped and thus it seems unlikely employers’ liability coverage will respond. Additionally, there are other limitations with employers’ liability coverage that may also preclude coverage.

EMPLOYMENT PRACTICE LIABILITY

Because there is no standard Employment Practices Liability (EPL) coverage form, anticipating how an EPL policy may respond to an employer requiring the vaccine could be more complicated, but then again, maybe not. EPL is a type of “named peril” coverage. Although the term “named peril” is most commonly associated with and applicable to property coverage, it can be used to describe some liability coverages, especially management EMPLOYERS’ LIABILITY liability coverages. An EPL policy responds only Part Two of the workers’ compensation to “Wrongful Acts,” “Wrongful Employment policy is employers’ liability. This is an often Acts” or whatever the subject policy calls the acts overlooked or even ignored gap filler between covered by the policy. What qualifies as a covered workers’ compensation and general liability act is specifically listed in the policy. Thus, it’s a few agents understand. An Employers’ Liability “named act” or named peril coverage. primer is available within the Big I’s Virtual If the act leading to the lawsuit is not University research library. named, the policy is not triggered and there is Employer negligence and an ultimate no coverage. Add to this a specific “Bodily Injury” finding of legal liability on the part of the exclusion found in most EPL policies and the employer are key requirements before EPL does not appear to provide any coverage if employers’ liability coverage is triggered. If the the employee develops an illness or dies from a employer is not negligent in causing the injury or required vaccine. illness, employers’ liability does not respond. To However, the EPL policy may be triggered be considered negligent, the injured party must if the employee is fired for refusing to take the prove: vaccine. Further, most EPL policies provide coverage for hostile work environments, so even 1. The employer owed a duty; if the employee isn’t fired, but the employer 2. The employer breached the duty; shames, withholds promotions or commits 3. An injury occurred; and other such actions, the EPL may respond if the 4. The employer’s breach of duty was the employee sues. proximate cause of the injury. EPL may respond to a suit related to the taking or not taking of the vaccine, but it most (Note: A more detailed explanation of legal likely will not respond to any injury or death that liability is available in the article, How Does a results from a required vaccine. Person Become Legally Liable.)

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INSURANCE REALITIES

Whether an employer can require the vaccine and under what conditions are topics that must be addressed by employment attorneys. But if the decision is made to require vaccines for employment, the business owner must consider the possible financial consequences if an employee is sickened by or even dies as a result of the vaccine. Considering the requirements and provisions of the most relevant insurance policies discussed in this article, the employer may have NO insurance protection if they are sued and ultimately held responsible for any illness or injury an employee suffers as a result of required vaccinations.

Employers must make a business decision regarding vaccines. One factor that must be considered during the decision-making process is the potential financial consequences from the seeming lack of any insurance protection. The reality of this lack of insurance protection could prove very expensive for the employer.

DISCLAIMER: This information is to be

construed as an opinion only based on a current understanding and application of the various policies. This should not be taken as legal advice or a definitive response by the various insurance carriers and policies. Laws vary and may be modified over time.

CHRIS BOGGS Author

Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS, is Executive Director Risk Management and Education for the Independent Insurance Agents and Brokers of America (Big “I”) Virtual University.During his career, Boggs has authored more than 1,000 insurance and risk managementrelated articles on a wide range of topics as diverse as Credit Default Swaps, the MCS-90, and enterprise risk management. In addition to this, Boggs has written 15 insurance and risk management books

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BIG I KENTUCKY EDUCATION The following events are FREE except for Louisville CE Day. If you attend each event listed bvelow, you have the opportunity to get 15 CE hours.

ROAD SHOWS (4 HOURS)

Virtual | August 18, 2021 Bowling Green | September 1, 2021 Lexington | September 2, 2021

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It shouldn’t take a storm of immense proportions to find out who your customers can count on.

BUT SOMETIMES IT DOES. And that’s the Silver Lining®.

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State Representative Bart Rowland

s the principal of Rowland Insurance Agency in Tompkinsville and Glasgow, Big I Kentucky member and State Representative Bart Rowland has been an invaluable assset to our association since first being elected to the Kentucky House of Representatives back in 2012. Representative Rowland represents House District 21, which includes Hart, Metcalfe, Monroe Counties and part of Hardin County. He currently serves as Chairman of the Banking and Insurance Committee.

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HOW HAS POLITICS CHANGED OVER YOUR CAREER AS A LEGISLATOR?

When I was first elected, I served in the minority. But in 2016, the House flipped and I became a part of the Majority Caucus. That shift has given me a seat at the table when decisions are made that affect every Kentuckian. I hope I have used that position to advocate for my district and to help people from all walks of life. There are always slightly different priorities each session, but the core focus is always improving our business climate, protecting our shared values and giving Kentucky families a handup. We continue building on that momentum each year. I think people would be surprised to know that there are a lot of issues where legislators from across the political spectrum can find common ground. People view the work we do in Frankfort as hyperpartisan, but the majority of bills we pass receive both republican and democrat votes. People think there are deep divisions and there are many times when we debate contentious issues. But there is still a sense of comradery and friendship, even with those who I might disagree with politically. That is something that has stayed pretty consistent since I was elected.

HOW HAS BEING CHAIRMAN OF BANKING AND INSURANCE AFFECTED YOUR CAREER AND OUR INDUSTRY?

HOW HAVE YOU MANAGED SERVING AS A STATE LEGISLATOR AND RUNNING AN INSURANCE AGENCY?

I believe serving as the Chairman of the Banking and Insurance has helped advance our industry. As someone who works day in and day out in the insurance field, I understand the issues that people in the industry face, and I can serve as their voice in Frankfort. As Chairman, if I see a problem with the way something is handled, I can bring together stakeholders and industry experts and come up with a solution. So many times there are overregulation or rules that hinder growth and the Banking and Insurance Committee is constantly evaluating the effectiveness and merit of these policies. As Chairman, I also work closely with my counterparts in other states to see what they are doing. If there is an opportunity to implement strategies that other states use, we try our best to ensure Kentucky can stay competitive and continue to grow.

It certainly can be difficult juggling multiple

WHAT LEGISLATION HAVE YOU responsibilities but that’s exactly how our state SPONSORED THAT MADE THE BIGGEST constitution dictates it should be. We are a part-time DIFFERENCE IN PEOPLE’S LIVES? legislature, meaning we are in session for roughly

House Bill 1 during 2021 Session.

26 | Kentucky IA - Summer 2021

four months out of the year and then we return home. Being ‘part-time’ allows us to stay connected to our local communities and ensure we are representing the views and values of the people in our districts.

However, there isn’t a lot of downtime when serving in the legislature because we are constantly working on behalf of the people who sent us to Frankfort. Sometimes that means following up on a constituent’s request for help with a government program, like unemployment, or working to get projects or roads built in the district. In between sessions, we also hold meetings, hear legislative updates and prepare for the next session. We hear testimony from Cabinet officials on how legislation is being implemented, and what the areas of concern are in state government.

WHAT IS THE MOST IMPORTANT PART OF SERVING YOUR STATE?

I think everyone should be a part of the political process but knowing that the work I do will hopefully make Kentucky a better place to live and work is extremely fulfilling and very important. I think it’s important to work for a cause bigger than yourself and be engaged. Government and politics impact nearly every aspect of our lives, and I believe it’s my job to make sure that the policies we are implementing are helping people. If I can lend my professional and personal experience to helping others, then I know I have done my job.

WHY IS IT IMPORTANT FOR AGENTS TO BE INVOLVED IN THE POLITICAL PROCESS/ ADVOCACY?

Agents have a real-world perspective when it comes to how proposed legislation will affect them and their business. People who will be most affected by policy decisions must make their voices heard and get involved in the political process. That is true for every industry but it’s especially important for the insurance field. No one understands the dayto-day workings of our field better than our agents do and when we stand united and work collectively we can make a real difference. There is no doubt that we need to build bridges between the insurance community and Frankfort and I hope agents will want to advocate for the issues that are important to them and their chosen profession. 2021 JM Wilson KY Indep Agent.indd 2

1/20/21 10:37 A

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MARKETPLACE SUMMARY

Kentucky Property-Casualty Insurance Marketplace Report JULY 2021

This report provides a summary of the 2020 property-casualty (p-c) insurance marketplace. Unlike most industry watchers of insurer proﬁtability and insolvency, we used direct written premiums - not net written premiums. This is to be consistent with our member agent’s view of the insurance world. Data source and tips on how to read the data can be found on the last page. © 2020, Big I Kentucky. All rights reserved.

P-C Insurance Industry Analysis Provided by: Real Insurance Solutions Consulting, LLC Paul A. Buse, Principal realinsurancesc.com 301.842.7472

_________________________________

BIGIKY.ORG 29 | Kentucky IA - Summer 2021

Kentucky vs. National Agent Premiums, by Line

Source: © A.M. Best Company — used by permission.

The top chart shows independent agent premium in Kentucky for 2020, totaling $3.9 billion of $8 billion sold by all forms of distribution in Kentucky. In contrast, the bottom chart shows IA premium in the U.S. in 2020. 30 | Kentucky IA - Summer 2021

Kentucky vs. National Total Premiums, by Line

Source: © A.M. Best Company — used by permission.

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Kentucky Total - All Lines of Business (LOB)

2020 - Kentucky - TTL Grps I+II (All Typical Lines) Average Penetration: 47.3% All Distribution Trend (DPW)

Ind. Agent Trend (DPW)

5 yr. Loss Adj. Ratio

5 yr. Combined Ratio

Domestic Surplus Lines ÷ ALL DPW

3.2%

4.8%

58%

90%

3.23%

Active Groups |Pol. Issuing | S.L. | RRGs =>

Groups: 177

Aﬃl+Unaﬃl: 806

S.L. Insurers: 124

RRGs: 58

2020 DPW

2020 Adj. Loss Ratio

2020 Commission

Group Name or ALL L.O.B. DPW

Kentucky Farm Bureau Group (G) [13.2%]

Top 5 Groups or Unaﬃl. [Mkt Share%]

$1,055,405,000

61%

N/A

$1,055,405,000

State Farm Group (G) [13.1%]

$1,051,635,000

60%

N/A

$1,051,635,000

Liberty Mutual Ins Cos (G) [7.5%]

$597,583,000

49%

N/A

$597,583,000

Progressive Ins Grp (G) [5.6%]

$446,164,000

53%

N/A

$446,164,000

$301,113,000

44%

N/A

$301,113,000

$8,012,312,000

53%

11.7%

$8,012,306,000

Allstate Ins Grp (G) [3.8%] L.O.B. Total or Industry Ave.

Top 10 IA Insurers Progressive Casualty Ins Co

$170,047,000

56.8%

11.2%

Progressive Ins Grp

Cincinnati Ins Co

$142,625,000

44.2%

18.6%

The Cincinnati Ins Cos

Auto-Owners Ins Co

$130,820,000

47.4%

17.7%

Auto-Owners Ins Grp

Kentucky Employers’ Mutual Ins Authority

$122,305,000

54.4%

10.8%

...

Erie Insurance Exchange

$108,344,000

73.2%

14.3%

Erie Ins Grp

Safeco Ins Co of Illinois

$108,024,000

54.0%

12.9%

Liberty Mutual Ins Cos

Continental Casualty Company

$85,001,000

40.1%

13.6%

CNA Ins Cos

Safeco Ins Co of America

$69,829,000

40.0%

19.8%

Liberty Mutual Ins Cos

Standard Fire Ins Co

$65,952,000

50.0%

13.7%

Travelers Group

Zurich American Ins Co

$63,516,000

45.8%

7.0%

Zurich Insurance US PC Group

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IA Penetration All Lines of Business

Here we see the percentage of p-c industry premiums that are going to independent agents. This highlights the room for IA growth in several lines. This measure is attained by dividing the total direct written premiums for each line of business written by insurers that use independent agents by the total of all premiums for all insurers in that line of business.

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Commissions

Commission Rates are a calculated based on a page in insurer Yellow Books called “Exhibit of Premiums and Losses (Statutory Page 14).” Once a year, insurers break-out all LOBs by state and provide 12 columns of data on each based on direct written premiums by state. Along with direct premiums written, direct premiums earned and direct incurred losses also provided is commissions and brokerage expenses. By dividing commissions and brokerage expenses by direct premiums written for each of the above LOBs, the average commission paid in Kentucky is obtained. We’ve shown top lines of business in Kentucky.

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Behind the Report DATA SOURCE The source of the data presented is A.M. Best and its Financial Suite, a system that offers a view of industry data via various industry and custom reports. In this report for you, standard industry reports and customized reports are combined and manipulated to arrive at the various agent-focused presentations of data. A.M. Best obtains this data on individual insurers from the required filings with state regulators. You may be familiar with the term “Yellow Book” for the annual statement required to be made by p-c insurers with their primary regulator. That is where this data comes from. Historically, insurers in different insurance categories had a designated color for their annual reports—such as yellow for p-c or blue for life.

READING THE DATA An aspect of U.S.-based insurer filings is the required delineation of data by “Lines of Business” (LOBs). These LOBs are standardized for all insurers. LOBs are also often grouped by similar LOBs as they are tracked as part of annual statements. As some LOBs are overly specific (for example, automobile physical damage is separate from automobile liability), it is logical to combine some of these lines. In other cases, the individual lines are often so small they have been combined with other smaller lines in the results. Fire & Allied lines is a good example of that sort of LOB combination. In all cases, the goal of this summary is to present the LOBs data to align with insurance agency operations, marketing strategies or staff assignments. If a combined LOB represents important subsidiary LOBs or another analysis of a more specific LOB is needed it is broken out at the end of this report as an appendix. For the most significant LOBs, five years of premiums and adjusted loss ratios is provided with all Kentucky premiums written in the state contrasted with premiums written through insurers using independent agents. The designation of an insurer as using independent agents is as determined by A.M. Best. Total premiums for the LOB in the state is dark blue and the independent agent portion of those premiums is shown in light blue. Loss ratios for the LOB are shown in red. It should be noted that the loss ratios shown are adjusted calendar year loss ratios. That means for each LOB the losses used in the ratio of losses to earned premiums are the paid losses that year, plus any estimates of future losses that will be paid from claims that year (also known as “reserves”) plus any changes in “reserves” from prior years. The “adjusted” part is if dividends are paid out under an LOB, the loss ratio is adjusted for that cost.

QUESTIONS? ASK THE EXPERT INDUSTRY ANALYSIS PROVIDED BY:

VIRTUAL LUNCH AND LEARN

Real Insurance Solutions Consulting, LLC Paul A. Buse, Principal realinsurancesc.com 301-842-7472

October 14, 2021 Paul Buse will discuss the data provided in this report to help answer your questions. 35 | Kentucky IA - Summer 2021

12/2020

37 | Kentucky IA - Summer 2021

POST-PANDEMIC

Leadership HOW MANAGING A BUSINESS IS CHANGING IN TIMES OF COVID-19

By: Paolo Gallo Most traditional companies are over-managed and under-led. This premise is based on the assumption that management is about reducing risk and complexity, which can be done by meticulously managing operations and defining processes. Processes which, by their very nature, tend to minimize the margin for randomness and generate economies of scale, scope and learning. Following this line of reasoning, leadership instead has to do with change, with transformation. And it’s crucial when the evolutionary stages of current business scenarios give rise to the need for a new vision. In recent years we’ve seen a momentous paradigm shift which is often simply defined as ‘digital transformation.’ This has forced all the companies born in the industrial age to undertake a Darwinian process of adaptation, which has been anything but painless. Clearly, as “legacies” grow (jumbles of intangible and tangible resources, processes, values and customs that are typically embedded in consolidated companies), so does the challenge of changing course when we catch sight of a storm brewing on the horizon.

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And even though the sea was already stormy and the wind blowing hard, the digital transformation we mentioned above has given rise to an even bigger storm. Many wouldn’t hesitate to call it the perfect storm, in fact. Over the past few decades we’ve seen precarious periods of recession due to crises in demand (for example with the concentration of consumption we saw after 9/11), crises in supply (just think of times when service prices would periodically skyrocket because of upsurges in the cost of oil), or financial crises (for instance the 2008 crisis triggered by the Lehman Brothers default). But what none of us has ever experienced is a simultaneous shock in all three of these areas. And added to this are all the operational criticalities that countless companies were already contending with to adapt to the new digital paradigm. Like they say, the perfect storm. The feeling we get is that the magnitude of the event that we’ve been experiencing over the past year has produced a permanent “climate change,” at least in some spheres. So we wanted to take a closer look at this question, with the people who’ve been called to take the helm of their respective ships, because of their roles and responsibilities, during this complicated transition. We had the privilege of talking to over 50 top managers about this very topic, and what came up in our conversations is truly fascinating. What emerges quite clearly is that this period of crisis demands an ample supply of “leadership,” more so than “management.” In other words, now is the time when managers need to put into play their ability to give expression to a new vision for their business and for their operational model, which in some ways needs to differ from the previous one. Companies have to be able to go back and put down roots in the “new normal,” whatever that may be. Specifically, at least five recurring themes came up, which we wanted to sum up in five principles. We’re proposing them here with the intention of expressing an indication of the route to follow.

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BE PHYGITAL

In Italy, in “normal” times, between 800 and 900 thousand people per year made an online purchase for the first time. In the 100 days of the fist lockdown (from February to March 2020), over 2.1 million people opted for ecommerce solutions. This shows that Italians overcame a series of psychological barriers which inevitably ripples out into other sectors, bringing changes there as well. These consumers - phygital rookies - are testing the waters with their first experience of digital, both the convenience (in the broadest sense of the word) and the solutions it can offer. They’ll quickly learn how to use the digital wallet function on their smartphones and how to scan barcodes to make smart payments. They’ll choose the self-checkout more and more often wherever it’s available in stores; they’ll start enjoying the on-demand options in the various services they use, and so on. For some time now many experts and analysts have resorted to the metaphor of the mangrove to describe the hybridization of digital and physical. This tree can thrive in brackish water that flows between rivers and the sea. And we’re getting the sense that this process of contamination and hybridization has overflowed to the point of completely “washing away” the dichotomous perception of fresh water and salt water. An enormous number of immigrants of the digital age are trying to make the best of it: they’ve learned to sink their roots in this brackish water. This is an irreversible process, as the CEO of one of the major players in Italy’s large-scale distribution adamantly asserted.

BE AGILE

Smart working is possible, and the benefits are undeniable, but we need to build use cases that strike a balance between going to the office and working from home. The aim here is to mitigate the inevitable side effects linked to the obvious fact that co-workers can’t interact in person when working remotely. Most of the managers we talked to stressed that there is no instruction manual; they can’t replicate solutions from other companies or reapply previous models. Which means that leaders have to embrace agile, flexible planning. The CEO of a multinational in the service industry told us that you have to take the same approach you would typically use for a startup: you have to be humble, and with determination and perseverance, you follow the right organizational model and carve out your value proposition, day by day, continuously improving. Obviously the main criticality is having to move toward the future while respecting the roots that have empowered the company to grow and thrive in the past. The general manager of a food & beverage multinational pointed out that we’ll have to rethink learning processes, relationship dynamics, and hierarchical relations that we were accustomed to finding in the workplace.

BE ANTI-FRAGILE

As Nassim Nicholas Taleb tells us, there are situations in which resilience (the capacity to keep the system up and running when a shock occurs) is not enough. Companies need to strive for antifragility (the ability to prosper in the midst of chaos, rising above the fray to create a competitive advantage). Chaos is a Greek word that denotes the resultant of speed and uncertainty. The CEO of a mass market multinational, the President of an automotive industry giant, and the CEO of a utility company all told us that in the midst of the Covid-19 crisis, they set up special task forces to formulate a number of different post-lockdown scenarios. The ambition of these companies was to search for a sort of dynamic inertia with the potential to accelerate the relaunch of their companies as soon as circumstances would allow. 40 | Kentucky IA - Summer 2021

BE EXPONENTIAL

Because of the dizzying speed of change today, fueled by this umpteenth acceleration, companies can’t count on their own strengths alone to innovate. The CEO of a mobility services company reminded us how crucial it is at this stage to build eco-systems, resisting the temptation to reduce them to ego-systems. We have to collaborate with third parties (be they universities, research centers, startups, or other companies) to build systems in which the individual parts function as a single entity, in a more or less continual way to provide high-value-added services to final customers. Two leaders in the automotive sector said that in some cases this might mean turning to co-optation, i.e. temporary cooperation with one or more competitors, joining forces for the common good. We believe that this has to be a time for construction, and only in part for reconstruction. A time when there is little room and little appreciation for individualism. Companies and institutions have to see themselves as fluid platforms, capable together of providing a value proposition that is exponentially bigger than what they could offer alone.

BE CURIOUS

All of the professionals we interviewed agreed that the capacity to embrace change, the inclination to experience uncertainty, not with anxiety but in a constructive way, and passion for your job: these are all essential ingredients, now more than ever before. Specifically, two CEOs from the world of FMCG underscored that in this case hybridization will be essential. A mix of soft and hard skills. The fusion of intuition, passion, entrepreneurship, creativity, data and technology. Above any other, one word came up with extraordinary regularity in all our conversations: curiosity. These seismic shifts propel us to rewrite the handbook on leadership models from cover to cover. New leaders will have to act by pursuing what we call the 5C Model: CARE (about people); CAUSE (a purpose that goes beyond short-term financial results); COLLABORATION (with stakeholders inside and outside the company, including management and the workforce, institutions and competitors); CREATIVITY (times like these call for a generous dose of improvisation, applying creativity in the broadest possible sense); COURAGE (take action, questioning everything you know to be true, even if you have no way to calculate all the risks, and you can’t know all the variables). Today’s leaders have to act with the ambition of offering those who come after us the prospect of posterity which, at the moment, is sadly reserved for a privileged few. The Pandemic is reminding us that globalization must be experienced holistically, acknowledging the benefits but without ever forgetting the responsibilities that we are called on to shoulder. Pablo Neruda once wrote: “Being born is not enough. It’s to be born again that we were born.” Now it’s up to us. No excuses.

PAOLO GALLO Author

Paolo Gallo is a Futurist and recognized Global Expert in Human Capital, Future of Work, Leadership 4.0, Energy Management and is ICF certiﬁed Executive Coach. Paolo is Adjunct Professor in Leadership & Organizational Behavior at SDA Bocconi Universi- ty, Milan. He is the Founder of “Compass Consulting” and has been the Executive coach of more than 100 Senior Executives from 20+ countries including several CEOs.

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