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NATIONAL
On The Cover
Inside This Issue
Special Report: What to Expect in 2013
December 17, 2012 • Vol. 90, No. 24 • National Region
10
23
NATIONAL COVERAGE
30
IDEA EXCHANGE
10 Continued Drought, More Tornados
20 Prospects for Insurance Regulation
23 E&O Insights: Pearsall on New Players and Markets
14 New Insurance Laws Taking Effect
20 Insurance Industry to Add Jobs in 2013
25 2013 Buyer’s Guide
14 16
Large Retailers Rediscover Wholesale
21 New Leaders to Expect Next Year
Special Report: What to Expect Double-Digit Returns Absent From Year-End, 2013 Financial Forecasts
22 Spotlight: New Players
28 Growing Your Property Casualty Agency: Shulman
DEPARTMENTS 8 Opening Note 12 People 30 Closing Quote
6 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
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NATIONAL COVERAGE
Opening Note Cyber Threats in the New Year
T
his issue identifies certain developments insurance professionals can expect in the new year. Beyond those mentioned in the articles in this issue, there is one thing everyone can expect that would require its own magazine to cover. Nothing will have more practical effect on the property/casualty insurance industry and its customers in 2013 and likely for years to come than technology and, specifically, the risks associated with technology. The year ahead will feature increasingly sophisticated means to capture and exploit user data, escalating battles over the control of online information and continuous threats to the U.S. supply chain from global sources. According to the Georgia Tech Information Security Cyber criminals will Center (GTISC) and the continue to find new ways Georgia Tech Research Institute (GTRI) there are to attack in 2013. specific threats on the horizon, which they outline in their report, the “Georgia Tech Emerging Cyber Threats Report for 2013.” Cloud-based Botnets: The ability to create vast, virtual computing resources will further convince cyber criminals to look for ways to co-opt cloud-based infrastructure for their own ends. Search History Poisoning: Cyber criminals will continue to manipulate search engine algorithms and other automated mechanisms that control what information is presented to Internet users. Mobile Browser and Mobile Wallet Vulnerabilities: While only a very small number of U.S. mobile devices show signs of infection, the explosive proliferation of smartphones will continue to tempt attackers. Malware Counteroffensive: The developers of malicious software will employ various methods to hinder malware detection. Wenke Lee, director of GTISC, says to expect the continued movement of business and consumer data onto mobile devices in and into the cloud in 2013, which will lure cyber criminals into attacking these relatively secure, but extremely tempting, technology platforms. “The security community must remain proactive, and users must maintain vigilance, over the year ahead,” he warns. The insurance industry has wrestled with the best way to respond to the many privacy and security exposures businesses face. Since the beginning of cyber-related insurance coverage in the late ‘90s, insurance products have continued to evolve. And just as cyber insurance products have changed so have the threats from cyber criminals, Lee says. Every year, security researchers and experts see new evolutions in cyber threats to people, businesses and governments. Clearly, cyber risk will increase in 2013 and for the foreseeable future, making it imperative that the industry continue its valu- Andrea Wells able work in understanding, improving and refining Editor-in-Chief cyber insurance.
EDITORIAL
Editor-in-Chief Andrea Wells | awells@insurancejournal V.P. Content Andrew Simpson | asimpson@insurancejournal.com East Editor Young Ha | yha@insurancejournal.com Southeast Editor Michael Adams | madams@insurancejournal.com South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor Charles E. Boyle | cboyle@insurancejournal.com Senior Editor Susanne Sclafane | ssclafane@insurancejournal.com ClaimsJournal.com Editor Denise Johnson | djohnson@claimsjournal.com MyNewMarkets.com Associate Editor Amy O’Connor | aoconnor@mynewmarkets.com Columnists Curtis Pearsall, Alan Shulman Contributing Writers Cynthia Ramnarace
SALES
V.P. Sales & Marketing Julie Tinney (800) 897-9965 x148 jtinney@insurancejournal.com West Dena Kaplan (800) 897-9965 x115 dkaplan@insurancejournal.com South Central Mindy Trammell (800) 897-9965 x149 mtrammell@insurancejournal.com Midwest Lauren Knapp (800) 897-9965 x161 lknapp@insurancejournal.com Southeast Howard Simkin (800) 897-9965 x162 hsimkin@insurancejournal.com East Dave Molchan (800) 897-9965 x145 dmolchan@insurancejournal.com New Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classifieds, Jobs, Agencies Wanted/For Sale (800) 897-9965 x125 Ly Nguyen | lnguyen@insurancejournal.com
MARKETING/NEW MEDIA
Marketing Administrator Gayle Wells | gwells@insurancejournal.com Advertising Coordinator Erin Burns | eburns@insurancejournal.com (619) 584-1100 x120 New Media Producer Bobbie Dodge | bdodge@insurancejournal.com Videographer/Editor Matt Tolk | mtolk@insurancejournal.com
DESIGN/WEB
Vice President/Design Guy Boccia | gboccia@insurancejournal.com Vice President/Technology Joshua Carlson | jcarlson@insurancejournal.com Design and Marketing Executive Derence Walk | dwalk@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com
IJ ACADEMY OF INSURANCE
Director of Education Christopher J. Boggs | cboggs@ijacademy.com Online Training Coordinator Barbara Whiffen | bwhiffen@ijacademy.com
ADMINISTRATION
Chairman Mark Wells Chief Executive Officer Mitch Dunford Accounting Manager Megan Sinclair | msinclair@insurancejournal.com
FOR QUESTIONS REGARDING SUBSCRIPTIONS: Call: 856-380-4176 or You may subscribe or change your address online at
insurancejournal.com/subscribe Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semimonthly by Wells Publishing, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2012 Wells Publishing, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Publishing, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 9049, Maple Shade, NJ 08052
8 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
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ARTICLE REPRINTS: For reprints of articles in this issue, contact Rhonda Brown at 1-866-879-9144 ext. 194 or rhondab@fosterprinting.com. Visit insurancejournal. com/reprints for more information.
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NATIONAL COVERAGE
News & Markets Continued Drought, More Tornados Forecasted
“The El Niño is very weak,” said Jack Boston, a long-term forecaster for AccuWeather. “We really don’t expect a strong one this winter so far.” Boston said he expects the polar jet stream to flow into the Northwest and across the northern United States, and the southern jet stream to flow south of Southern California and across to Baja, Calif.; Texas; and the Southeast. Translation: “It’s bad news for the drought conditions,” Boston said. “Nationally, right now we think the drought conditions are probably not going to be relived much in the Plains, which is the worst area of drought right now.” The Plains region has been plagued by drought since last spring, and the Corn Belt, the central Plains, eastern Colorado and the central Rockies can
expect no relief from those conditions. Dennis Feltgen, a spokesman for the While 2012’s tornado season was rela- National Hurricane Center. “Most of tively quiet in terms of total tornado the clues to the Hurricane season really counts, with the exception of Isaac and don’t show themselves until we get to Sandy, don’t expect the same quiet seaspring.” son in 2013, according to Boston. Perhaps not, but historical climatologist Evelyn Browning-Garriss told “We expect more tornados than last a crowd of several hundred in the year, and I would think it will end up insurance industry that the weather a little bit above average for tornados,” phenomenon that generated the nearly he said. “With all the rain that we’re 1,000-mile wide Superstorm Sandy that expecting to experience in the southslammed into the East Coast is here to ern United States in the winter stay for a while. and this spring, that’s completely different than last year.” In October, Browning-Garriss spoke That means those areas will at the Property Casualty Insurance Association of American meeting in likely have moister soil condiDana Point, Calif., tions come the severe weather season, which could amplify the According to Browning-Garriss, this impact of tornados, he added. year not only was the water in the Atlantic warmer than normal, but the “It’s going to be quite a bit warm water arrived about six weeks more active severe weather early, yielding coastal temperatures in season from the Southern Plains May that were more like the temperato the Southeast,” Boston said, tures seen around July. adding that he expects severe weather to spread to the Ohio Sandy drew its energy from that Valley and the Central Plains in warm water, and the East Coast can late spring. expect more severe weather this winter and the next several seasons over Additionally, Boston said, “Next the next 20 years, as a long weather tropical season if the El Niño is comcycle plays itself out, Browning-Garriss ing back stronger next year as we said. think it will, that will mean it will be a less active season for “We have never ‘It’s going to be seen the waters off the hurricanes and tropical storms [to] occur.” But quite a bit more East Coast as hot as it’s “kind of a crapshoot” they’ve been this year,” active severe to figure out how many she said. weather will actually reach U.S. Browning-Garriss season from the noted that warm coastlines next year, he added. Southern Plains waters will magnify It’s such a crapshoot to the Southeast.’ the size of any storm that reaches the East that the official voice Coast. And when a storm comes, it on hurricanes — the National Oceanic will be slower to leave the East Coast and Atmospheric Administration’s because of wind being brought in by a National Hurricane Center won’t comchange in the historical climate cycle, ment on next year’s outlook — at she said. least not until next year. “NOAA doesn’t issue any season out “We’re going to see slow, wet storms, look until the middle of May,” noted and a lot of them,” she added.
10 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
www.insurancejournal.com
By Don Jergler
E
xtreme weather events in 2013 may look much the same as this year — but different. The weather is difficult to predict, but if the weak El Niño forecast for next year holds, it brings with it the promise of continued drought in the Great Plains and nasty winter weather on the East Coast.
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VFORP
Let’s get to work. Hurricane Sandy hit with unequaled force, but thanks to people like you, families and businesses everywhere are starting to rebuild. We’re here to help you help them, with support for all of the Vertafore products you rely on everyday. There’s work to be done – and we’re ready.
Learn how to put Vertafore products to work helping your clients rebuild. Visit www.vertafore.com/sandy 2012-12-17 NATIONAL.indd 11 VFORP16278.indd 1
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NATIONAL COVERAGE
People Joshua Herz
Max Schrayer
Hali Nielson
Michael F. McDonald
Associated Agencies Inc., based in Rolling Meadows, Ill., has promoted Joshua Herz to president, making him the fourth person in the same family to hold the position. Herz succeeds his cousin, Max (Skip) R. Schrayer, who was recently named CEO. As president, Herz will maintain his current client base and actively mentor new salespeople within the company. As CEO, Schrayer will continue to maintain his own client base and oversee operations. Herz has been vice president of the company since 2009. He also sits on the executive boards of Associated Agencies and one of its affiliates, Auto and Home Insurance Agency. Prior to joining Associated Agencies, Herz worked at General Electric for four years. A producer of large accounts, Schrayer manages the largest book of business in the office. He also serves as sales manager and as a member of the board of directors. Schrayer remains president of Auto and Home Insurance Agency in Downers Grove, Ill. Edgewood Partners Insurance Center named Hali Nielson senior vice president of private client services in its Irvine, Calif., office. Nielson has 19 years of experience in insurance and risk management for high net worth clients with significant property and liability exposures. Prior to EPIC, Nielson was personal lines manager for Hamilton Brewart Insurance, where she also specialized in individual risk management and insurance programs for high net worth private clients. Earlier in her career, Nielson managed a State Farm office in Huntington Beach, Calif., and spent five years as a personal lines and private client services producer with UnionBanc Insurance Services Inc. EPIC has offices in Los Angeles, Irvine, Fresno, Folsom, San Francisco, San Mateo, Petaluma and San Ramon, Calif. Delaware-based commercial insurance brokerage and
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employee benefits consulting firm Lyons Companies appointed Michael F. McDonald a risk management advisor. McDonald specializes in risk management, alternative risk financing and corporate insurance programs. He is experienced in property/casualty insurance program design and implementation for middle market and complex risk clients. His client expertise includes the construction and real estate industries, public sector entities, professional service firms and manufacturers. Prior to joining Lyons Companies, McDonald worked with several national insurance brokers, most recently Wells Fargo Insurance Services. He has more than 16 years of industry experience, much of it working with complex risk and alternative finance solutions. McDonald has earned both the Certified Insurance Counselor (CIC) and Construction Risk and Insurance Specialist designations. Lyons Companies has offices in Wilmington and Rehoboth, Del. Kemper Corp. announced that Denise I. Lynch has been named property/casualty group executive. She will report directly to Donald G. Southwell, Kemper’s chairman, president and CEO. In her new role, Lynch will be responsible for Kemper Specialty, Kemper Direct and Kemper Services Group, in addition to continuing to lead the Kemper Preferred business. Lynch replaces James A. Schulte, who announced his resignation as property/casualty group executive, effective November 30. Lynch joined Kemper Corp. in January 2009 and is based in Jacksonville, Fla. Before joining Kemper, she served as vice president of sales and marketing excellence for the property and casualty insurance operations of The Hartford.
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NATIONAL COVERAGE
News & Markets
New Insurance Laws Taking Effect
system deals with PD, and how medical liens and billing disputes are handled.
By Young Ha
A
number of states have new insurancerelated laws slated to take effect in 2013. Here’s a peek. Visit InsuranceJournal.com for more coverage.
Florida: The Sunshine State’s HB 119 Motor Vehicle Personal Injury Protection (PIP) Insurance was signed into law by Gov. Rick Scott last May. The bill, which has been described as the most significant auto insurance law in years, seeks to clamp down on alleged abuse and fraud, and improve the state’s no-fault PIP system. The medical benefits provisions of the law will take effect on Jan. 1, 2013. They include the requirement that accident victims report an auto-related injury and seek treatment within 14 days. Policyholders could receive up to $10,000 in benefits for emergency medical care, and $2,500 for less serious injuries.
California: The California workers’ comp benefit delivery system will undergo changes in 2013 as part of SB 863, the Workers’ Compensation Reform Package, which passed in the 2012 legislative session. SB 863 is intended to reduce system costs as a setoff for increased worker indemnity benefits. SB 863 is designed to contain costs in several ways, while increasing permanent disability (PD) benefits for workers. Two goals of the bill were to change the way in which the
New Jersey: The Garden State is planning to implement new rules regarding motor vehicle PIP insurance on Jan. 4, 2013. Proposed chang-
es include adding more procedures to the physicians’ fee schedule to slow rising auto insurance costs. Critics say the new fee schedule limits the types of procedures that could be reimbursed at ambulatory surgery centers (ASCs), and sets hospital outpatient surgical facility fees higher than ASC fees for certain services. The N.J. Association of Ambulatory Surgery Centers is seeking a stay from the court on the implementation of the new rules. Illinois: Beginning in January, SB 0275 will allow state agencies that issue occupational or professional licenses to provide expedited temporary licenses to service members and their spouses who meet certain requirements. This could make it easier for military veterans to enter the insurance profession.
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14 MIDRE16283.indd | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012 1
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t was in 2005 at the height of the Spitzer investigations when Aon, Marsh and Willis divested their wholesale brokerage operations to avoid appearances of conflict of interest with their retail side. But 2013 might be the year they re-enter the wholesale segment. Insurance mergers specialist Kevin Donoghue, president of Mystic Capital Advisors Group, said he sees some large retailers creating new specialty programs “on the side [that] really [have] the look and feel of what they had but not having that specific wholesale unit separately branded. They have specific programs, specific niches that they’re developing. If they’re ever to bring those niches together, they could certainly stamp a new wholesale brokerage name on it.” Aon, which formerly owned Swett & Crawford, said it has “no plans to re-enter the wholesale business.” Willis, which sold wholesaler Stewart Smith, wouldn’t comment. Former Crump owner Marsh said, “If at some point is makes sense, from a client perspective, for Marsh to operate its own wholesale business, then it might be considered.” www.insurancejournal.com
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SPECIAL REPORT
16 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
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www.insurancejournal.com
12/12/12 9:21 AM
Double-Digit Returns Absent From Year-End, 2013 Financial Forecasts expect insurers to use Sandy to support continued rate increases for 2013 for the property lthough analysts following the lines,” he said. property/casualty insurance Turning to commercial liability lines, industry expect underwriting Cooper noted that 2012 was the first year results for 2012 to be better than where price increases were “high enough to 2011 when full-year numbers are tallied, more than offset loss cost trend.” double-digit overall returns-on-equity are “As a result, we expect the combined ratio still not visible on the near-term horizon, for accident-year 2012 to fall for the first time they say. in six years,” he said. Industry analysts who supplied combined Moody’s predicts accident-year commercial liability combined ratios (including ratio estimates to Insurance Journal for 2012 workers’ compensation) of 107.5 for 2012 and have pegged them in the 104-to-108 range. 104 for 2013, down from 110 in 2011, assuming Even though the numbers reflect a two-tocontinued price increases four point impact from $15-$25 bilInsurance prices would in 2013. (See accompanying “Combined Ratios lion of insured need to increase north textbox, By Line” for by-line details.) losses from Superstorm Sandy, of 20 percent in one Investment Returns they represent year to get the industry Low Fuel Pricing an improvement As for ROEs, through six from the 108.2 back to a low-to-midmonths, the average for the figure recorded teens average return P/C industry was 6.9 perfor 2011 for U.S. P/C insurers when on investment in 2013. cent, according to figures published by ISO and the catastrophe losses Property Casualty Insurers Association of for the group were bigger ($38 billion of US America in October, rebounding from a 3.5 insurers). percent ROE for 2011. Separately, David Paul, In 2013, the underwriting result could a research analyst and principal for ALIRT in improve to a breakeven combined ratio, said Windsor, Conn., calculated a 6.4 percent preJames Auden, managing director for Fitch tax ROE for a group of largest 50 P/C insurRatings in Chicago, who provided the most ers through nine months, and an 8.2 percent optimistic combined-ratio forecast for next average pretax return on earned premiums. year. But even Auden, who factored “continBoth metrics, while better than 2011 levels, ued pricing momentum” into his favorable fall below 17-year pretax averages and “are assessment, said the price hikes that started slowly migrating to profitability levels last in mid-year 2011 are not enough to drive ROEs into double-digit territory. In addition, reported in the period 1998-1999, toward the end of the last soft market cycle,” he said. he questioned whether pricing discipline would even last past mid-year 2013. Gregory Locraft, an executive director for “We were a bit surprised that the momenMorgan Stanley Research, explains that low tum this year has been sustained this long,” investment yields are the anchor weighing he said. Sandy, especially in commercial ROEs down below 10 percent. “Net investproperty and other catastrophe-affected segment income accounts for more than 80 ments, should help sustain pricing in the percent of P/C profitability,” Locraft wrote first-half of 2013, he said. in a third-quarter research note, adding that “the secular decline in interest rates has long Jasper Cooper, associate analyst, Moody’s U.S. Insurance team, echoed the view. “We continued on page 18 By Susanne Sclafane
A
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What To Expect: Premium Growth
P
utting together views on the economy and pricing momentum, analysts forecasted a 3-5 percent range in premium growth for 2013. • Conning: Vice President Jerry Theodorou supports a 4.6 percent forecast for net premium growth. He said the firm’s forecast was shaped by two main drivers — the economy and the insurance market. “The second [driver] appears to be generating more uplift,” he said. “Reports of commercial insurance rates rising 4-5 percent and mid-single digit personal lines rate increases in recent months, in combination with mild economic growth” underpin the Conning forecast, he said, noting that 2013 economic growth is expected to be 2 percent, down slightly from 2.2 percent projected for 2012. • Fitch: Managing Director James Auden expects 4 percent premium growth for 2012, and roughly 3 percent in 2013. “There are plenty of questions about the economy” — such as whether a slower growth economic recovery is sustainable and related to uncertainty surrounding tax and funding issues at the start of the year. “If we go back to a recession, we can get also back negative premium growth. While historically pretty unusual, we had three consecutive years [of declines] from 2007 through 2009, he recalled. Auden also thinks competitive forces within the industry could mean price momentum starts fading as early as the second half of 2013, he said. “You may still see positive rate increases, but I think the increases will decline from what we’re seeing currently.” “Workers’ compensation [pricing] has been going up 8 percent or so. I don’t think you’re going to get 8 percent on top of 8 percent. That momentum is likely to fade.” • Moody’s: While not providing an overall premium growth forecast, Alan continued on page 19
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2013 FInancial Forecasts, continued from page 17
been a headwind.” mid-to-upper single digits, depending on the these terrible results.” “We see it continuing,” he said. Locraft “So if we’re going to have bad results anycompany,” he said, noting that he expects an overall industry return in that range for 2012 added, however, that low investment income way, then we’re better off with rising rate levels. But it’s a lot of cloud and very little and 2013. might be “a harbinger of higher pricing.” ALIRT’s Paul, who said that “What we are not seeing is compathe average net investment yield Combined ratio for 2013 is breakeven nies taking more asset risk to boost yield or widening duration or taking fell to 3.4 percent in the first nine at best, and pricing momentum could more credit risk,” Fitch’s Auden said. months of 2012, compared to “Overall, that’s a good thing. But nearly 4.0 percent for the full year end by mid-year, one analyst says. when the investment contribution to 2012 for his 50-company composearnings is a lot lower, there’s only one place ite, agreed. “It is likely that lower net investsilver lining,” he said. to make it up — the underwriting side.” ment yield is one of the primary drivers of Shields expects a 2012 combined ratio of firming rates, especially in the longer-tail roughly 107, including about 3.5 points for Like Shields, however, Auden doesn’t commercial lines,” he said. Sandy. “We’re expecting fairly weak underbelieve the magnitude of underwriting and writing results. Depending on the company, pricing improvements needed to get ROEs As investment returns decline, “carriers some will be disguised by reserve releases; past 10 percent are achievable in 2013. will be forced to raise prices simply to hold some will not be.” ROEs constant,” Locraft said, characterizing “To get to a 10 percent return on surplus this as a possible “silver lining in what is a “The bigger issue is that investment given current yields, the industry would gloomy outlook for P/C investment income.” have to be at a 95 combined income has historically been much more ratio,” Auden says, noting that stable than underwriting income. As inter Meyer Shields, a managing director of Fitch expects a 103 or 104 est rates continue to decline, and there is a equity research for Stifel Nicolaus, gave a calendar-year combined ratio greater reliance on underwriting income to half-hearted nod to that line of reasoning. for 2012. On an accident-year fill that gap, then insurance companies are “I do think it will force [insurance] rate up basis, which excludes the replacing more predictable or higher-quality because that’s the only lever companies can impact of changes in priorearnings [that used to come from investcontrol — and they need to,” Shields said. year loss reserves, the ments] with less predictable, more volatile “On the other hand, we’re talking about figure moves to 105 — 10 [underwriting] earnings,” he said. really bad results. The only way we’re going points above the needed to get from here to there is by going through Jerry Theodorou, a vice president for 95, he said. Conning, noted that net investment income was “We could see What Do Financial Analysts Expect? down 4.7 percent through returns-on-surplus in the third quarter, adding an average catastrophe • 2012 industry combined ratio: 104-108 that Conning expects a year getting to 7 percent next year. Maybe it • 2013 industry combined ratio: 100-105 slightly larger decline for gets back up to 8 or so” at best, he said. • 2012 industry premium growth: 4 percent the full year. “We also proj• 2013 industry premium growth: 3 percent Like Auden, Shields distinguishes ect modest declines in net • Year-end 2012 surplus: slightly higher than year-end 2013 between accident-year results and calendarinvestment income in 2013 year results as he details some of the factors • 2012, 2013 industry average returns-on-equity: mid-toand 2014,” he said, noting underlying his forecasts: a calendar-year upper single digits that with the low interest combined ratio of 107 for 2012, a 104-105 range • Reserve takedowns: fading in 2012 rate environment expected for 2013 and single-digit ROEs in both years. • Reserve additions: possible in 2013 to continue, maturing bonds Referencing a recent analysis by his firm, are rolling over to signifihe notes that prior-period reserve releases, Combined Ratios By Line cantly lower-yielding instru- which have been improving reported ments. calendar-year results in recent years, “are Moody’s Investors Service, in a report published in slowing down pretty dramatically” for the September 2012, provided combined ratio forecasts for comROEs in Single Digits overwhelming majority of commercial lines mercial lines. Analysts told IJ in December that they have not significantly changed their views, summarized below. Shields said that targeted of business. overall returns-on-equity • Workers’ Compensation: 110 for 2012; 104 for 2013 “As that leg of the earnings stool falls would have been between • Commercial General Liability: 106.5 for 2012; 104.5 for 2013 away, we’re just left with particularly dis12 and 15 percent in a higher couraging accident-year results,” he said, • Commercial Auto Liability: 103.5 for 2012; 101 for 2013 interest rate environment. adding that slightly higher medical cost • Commercial Multiple Peril: 106 for 2012; 104 for 2013 Now, actual returns are inflation will also hurt underwriting profits. (assuming normalized catastrophe losses) “hovering somewhere in the “I’m not talking about skyrocketing numbers. • All Commercial Liability Lines: 107.5 for 2012; 104 for 2013 18 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
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It’s certainly within control, just worse than it had been,” he said, noting that the external catalyst of inflation, “in addition to normal cyclical factors translating into smaller reserve releases,” will push reserve development “to a worse, more adverse scenario.” In general, he predicts reserve additions, not takedowns in 2013, but offers a combined ratio forecast that’s two-to-three points lower than for 2012. “Rate increases that started last year and are now compounding themselves should start to improve accident-year numbers,” he said, noting that the expected pricing improvement should outweigh deterioration in the reserve-development numbers. Still, “I don’t think we’re close to double-digit [ROEs] for 2013,” he said. Are such returns gone for the foreseeable future? “I’m inclined to say that, yes — because such dramatic increases would be needed to compensate for the loss of investment income,” Shields said. “This is still a very overpopulated industry, which would make it very difficult for that level of price discipline to show up.” William Wilt, president of Assured Research, offers some back-of-the-envelope calculations indicating that insurance prices would need to increase north of 20 percent in one year to get the industry back to a lowto-mid-teens average ROE in 2013, assuming
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that loss cost trends remain as benign as they have been in recent years. Alternatively, two years of price hikes above 10 percent or three years near 7 percent could similarly lift returns to the low-to-mid teens. But is a low-teens ROE the right target, given the low level of interest rates for the near-to-medium term future? Wilt posed that question in a November research note, which compared P/C insurers to other risk-bearing financial institutions that are similarly “mired in the middish-single digit range.” Wilt suggests that P/C insurer ROEs are comparable if not better than other financial firms, as price hikes lift the P/C insurer ROEs trend into the upper-single-digit range and beyond. In contrast, analysts surveyed for a report by Accenture earlier this year have greater expectations of P/C insurers. The survey of 68 insurance equity analysts from North America, Asia Pacific, Europe, Africa and Latin America performed in March and April, reveals that they expected “superior” global insurers — those they recommend with “Buy” ratings — to deliver an average pre-tax ROE of 14.2 percent in 2012. Half of the analysts expect higher returns from these insurers in next three years. Carving out just North American analysts, the expectation drops to 13.7 percent. Auden noted that while double-digit ROEs are not achievable across the industry, “pricing has gotten to a point where if you look at some of the better underwriters, they were producing 10-12 percent returns.” John Del Santo, global managing director of Accenture’s insurance practice, said that 38 of the 68 analysts surveyed focus exclusively on P/C, adding that the P/C group’s
double-digit ROE expectations have been consistent in three studies published since 2008. According to the survey, the analysts expect average annual growth of 6.4 percent (organic or through acquisitions) from the P/C insurance companies they recommend to investors. Premium, continued from page 17
Murray, senior vice president for Moody’s U.S. insurance team, said the rating agency expects pricing improvement to continue in 2013 — and “it needs to,” he added. For certain lines, especially workers’ comp, which is getting significant rate increases, the accident-year combined ratios suggest substantially more are needed to get just to a breakeven point, he said, referring to a Moody’s analysis that forecasts a 104 ratio for 2013. Turning to the macro economy, he describes it as stabilizing. “While unemployment is still high compared to historical norms, it’s not on par with the most stressed European countries. “All things considered, we expect a sustained muted economic recovery, but that’s not going to fill the hole of rate inadequacy in certain lines of business.” Contrasting the situation today with the end of the last down cycle, Murray said the healthier financial positions will keep price increases moderate. Ten years ago, “you also had multiple years of rate deterioration in commercial lines, but then you had massive holes in the reserve adequacy and festering asbestos and environmental liabilities,” prompting sharp increases when the market turned, he said.
December 17, 2012 INSURANCE JOURNAL-NATIONAL | 19 11/30/12REGION 10:49 AM
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NATIONAL COVERAGE
News & Markets Prospects for Insurance Regulation in 2013 By Charles E. Boyle
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rogress in making insurance regulatory changes has been slow, and there’s nothing to indicate that this situation will change in the future. The United States has, however, made relevant changes. Although it has 50 different regulators, there is a common language and legal system, overseen by the U.S. Constitution, as well as a common accounting system. The Non-Admitted and Reinsurance Reform Act (NRRA) has worked reasonably well in harmonizing surplus lines legislation. But further federal insurance reforms — part of the Dodd-Frank Act — are still held up by Congressional constipation. The International Association of Insurance Supervisors (IAIS) is making progress, albeit slowly, toward protocols that will enable re/insurers to more easily conduct business on a global basis, and will hopefully lower their costs. Europe, however, faces larger hurdles, as it must harmonize different legal and accounting systems, as well as 20 or so different languages. The first Q.I.S. questionnaire on Solvency II was distributed to the insurance industry in 2004. The start date envisioned was 2007; that date has been constantly pushed back. Until
recently it was 2013, then 2014. The scope of the regulations has become so immense that the European Insurance and Occupational Pensions Authority (EIOPA) Chairman Gabriel Bernardino, on Nov. 21, 2012, made the following statement: “Even if a credible timetable will probably point out to an implementaEurope faces large hurdles tion date not earlier than 2016, when it comes to modernit should be posizing insurance regulation. sible in an interim phase to start to incorporate in the supervisory process of some of the key features of Solvency II, namely some elements related to Pillars 2 [risk management] and 3 [disclosure and transparency]. EIOPA is exploring this possibility, based on its powers under the EIOPA Regulation.” There are many issues still to be resolved: How are captives to be treated? What steps can, or should, be made to lighten the regulatory burden for smaller, mostly mutual, insurers? Should there be “too big to fail” provisions for larger insurers? And, in some quarters, should Solvency II even be applicable to property/casualty insurers? EU regulators, alarmed by the scope of the financial crisis (which really only hit one insurer — AIG), are like the proverbial hammer bearer, who sees everything as a nail. They have tried to provide for too much, when less would do. And, they have made the process so complicated that 2016 may even be too early for implementation.
Insurance Industry to Add Jobs in 2013
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he insurance industry job outlook for 2013 looks good. Hiring appears to be steady, with 54.5 percent of companies saying they intend to increase staff, and 77.4 percent expect to grow revenue in the next year, a survey reveals. If the industry follows through on its plans, there will be a 1 percent increase in industry employment during the next six to eight months, according to the “Mid-Year Insurance Labor Market Study” conducted by The Jacobson Group and Ward Group, and published in August. The finding that 54.5 percent of companies polled intend to increase staff represents an improvement of 3.3 points higher than in January 2012 when the last poll was taken. Technology, underwriting and claim positions are expected to grow the greatest during the next 12 months, the study found. “The average unemployment rate for the insurance industry this year is 4.4 percent, well below 2011’s average of 5.8 20 | INSURANCE JOURNAL-NATIONAL REGION December 17, 2012
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percent and 2010’s average of 6.2 percent,” Greg P. Jacobson, CEO, told Insurance Journal. “Following this trend, we can expect to continue low unemployment figures in 2013.” “Next year, insurers will find that talent is a strong differentiator — and the skills gap is still real. To combat difficult to fill vacancies and high turnover among Millennials, insurers will want to brand themselves as an employer of choice. Flexibility, competitive compensation and aligned incentives will be top concerns for the labor force.” www.insurancejournal.com
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New Leaders in 2013
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he year 2012 brought news of industry leadership changes taking effect in 2013. Some of the people to watch in 2013 include: Brian Duperreault, retired as president and CEO of Marsh & McLennan Cos. Inc. at the end of 2012. Daniel S. Glaser, currently the company’s group president and chief operating officer, succeeds Duperreault as president and CEO. Upon his retirement as president and CEO, Brian Duperreault Duperreault will also retire from the company’s board of directors. Glaser will join the board as a director, also effective Jan. 1, 2013. Glaser previously served as chairman and CEO of Marsh Inc.
CEO in 2002, succeeding his father, James Maguire, Sr., who founded the company 50 years ago in 1962. Under the younger Maguire’s leadership, the insurer’s revenues grew from $460 million to $2 billion. Look for a new chief executive officer at the National Association of Insurance Commissioners (NAIC) in 2012. Dr. Therese M. Vaughan stepped down from that position effective Nov. 30. Andrew Beal has been selected as acting CEO while the NAIC conducts a national search for a new top executive. Vaughan has served as NAIC CEO since February 2009. Greenwich, Conn.-headquartered W.R. Berkley Corp. named Gregory A. Douglas its president of its B F Re Underwriters unit. Douglas succeeds Daniel L. Avery, who
served as president of B F Re Underwriters since it was established in 2002. Avery will continue to oversee other activities within the W.R. Berkley Corp. group of companies. Douglas joined B F Re as executive vice president and chief operating officer in 2010. Houston-based HCC Insurance Holdings Inc. CEO John N. Molbeck, Jr. stepped down as the company’s chief executive in December and Christopher J.B. Williams, president, moved into the CEO’s office. Molbeck will remain actively involved with the company through his planned retirement date of May 31, 2013, and is expected to continue to serve on the HCC board. Along with the appointment of Williams’ as CEO, Chief Operating Officer William N. Burke, Jr., was promoted to president and chief operating officer for the new year.
Dominic Casserley, currently a senior partner of McKinsey & Co., will serve as the new CEO of global insurance broker Willis Group Holdings. Also, Steve Hearn, currently the chairman and CEO of Willis Global, will serve as deputy CEO and Joe Plumeri, who has served Dominic Casserley as chairman and CEO of Willis Group since 2000 and led the company back to public ownership and steered its global expansion during his 12-year tenure, will serve as non-executive chairman through July 2013. Bala Cynwyd, Penn.-based Philadelphia Insurance Cos. said Chairman and CEO Jamie Maguire is stepping aside as CEO. He will remain as chairman of the board. Sean Sweeney, currently the company’s president and chief operating officer, is assuming the title Sean Sweeney of president and CEO effective January 2013. Maguire was named www.insurancejournal.com
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SPOTLIGHT
New Players Start-Ups and More The headlines always report merger and acquisition activity on big name insurance industry players, but start-up organizations don’t always make the news. Here’s a partial list of some of the new players and groups to enter the industry in the past two years. We know there are more newbies out there, but here’s what we found on InsuranceJournal.com. Midwest • East • Southeast • South Central • West • National • International
GMI in Pennsylvania Launches Norman Specialty Insurance Group
Service to Retail Agencies Is Aim of Texas Wholesale Insurance Group
ProWriters Acquired; Opens as Independent Managing General Underwriter
Northern United Agents Alliance Launches New Agency in Massachusetts
New Underwriting Agency Assure Space to Cover Satellite Risks N.Y. Brokerage Frank Crystal & Co. Rebranded as Crystal & Co.
Tejas American General Launches TAGA Program Managers
Kingsway Startup to Sell Homeowners Insurance in Louisiana
OneBeacon Announces New Surety Group
University of Pennsylvania Launches New Risk and Insurance Program
Insurance Associates Launches F&W Insurance Company
Charlotte Insurance Professionals Form Group to Support Local Charities
Va.-based IT Firm CSC Launches Insurance Cybersecurity Council
Eurler Hermes and MAPFRE Form ‘Solunion;’ A New Credit Insurance Venture
California AG Announces Creation of eCrime Unit
GJS Re Opens Facultative Reinsurance Unit
Brandmovers Launches Promotional Risk Management Insurance Co.
Michigan’s Davenport University Introducing Insurance Education Specialty
Jansen and Hastings Launch Cove MGA
Jones Announces Joint Effort to Fight California’s ‘Underground Economy’
The Hanover Furthers Its West Reach With New Pacific Region
Global Federation of Insurance Associations Launched
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IPFS Corp. Combines Companies to Launch New Premium Financing Brand
Torus Enters U.S. Surety Market
EPIC Launches National Public Entities Practice Core Programs Established in New Jersey
New Texas MGA to Focus on Residential Properties RiskPoint Insurance Advisors Launches in Oregon www.insurancejournal.com
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IDEA EXCHANGE
New Players E&O Insights: Placing Business with New Markets? Proceed with Your Eyes Open
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ew entrants into the insurance industry are often triggered by the market showing signs of hardening. After all, these “newbies” have a better chance of securing a healthy rate by not having to pay for “past sins.” In addition, while some existing carriers are revising their By Curtis M. Pearsall underwriting appetites, new markets with a solid product offering could have a greater ability to grab some market share in a hard market. For agents, the emergence of new markets also could be a positive development, providing another viable option for their clients. While much of this sounds positive, it is critical for agents to exercise a significant degree of caution before placing business with these new markets. This due diligence will hopefully give you the confidence that this new market is real and worth pursuing. It may also identify some concerns that prompt you to pass on the opportunity. Ask Lots of Questions When a new market emerges, it is important to totally understand its structure. Is this a brand new company, or is the new market actually some new products from one of your existing carriers? Will the new
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market do business on an admitted or non-admitted basis? Because a new market probably will not have a financial rating from one of the various rating agencies, agents should try to ascertain the carrier’s financial strength. As agents look to understand the market, a strong focus should also be on the management team. Do they have the experience and expertise to have “staying power” or will they be a “flash in the pan,” essentially here today, gone tomorrow? There have been many markets over the years that made a big splash as they entered the marketplace only to fizzle out over time. As these new carriers come knocking at your door, don’t hesitate to ask questions, and a lot of them. For example, if this new carrier indicates they will pursue professional liability, what is their experience in this line of business? Do key personnel have prior experience in professional liability? Do they know how to underwrite the business? What about their claims-handling ability? What will their claims process look like? In
other words, is this class of business a good fit for the carrier or could this be a nightmare just waiting to rear its ugly head? An appropriate question to ask the carrier’s representatives is how will the carrier attract business. Will their policy form be better than any of the carriers in the market or is pricing their niche? As the adage states, “if the premium sounds too good to be true, it probably is.” What is their underwriting criteria? Is it continued on page 24
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New Players E&O Insights, continued from page 23
conservative or fairly liberal? What is their focus on loss control? What are their expectations of you as the agent? Bottom line, by better understanding the carrier’s business model, you can better understand whether the carrier is a good fit for your agency. An Ounce of Prevention Reach out to other resources in performing due diligence. Contact the state agents’ association to see whether it has any information. Checking with the state insurance department might also provide some solid input. For those agents pursuing business with these new markets, once again proceed cautiously. Is the business professionally underwritten? Is policy issuance taking forever? Are claims being handled professionally and paid promptly? Typically, there will be some signs that agents need to be alert to when dealing with a new market. Moreover, as problems develop, what is
the carrier telling you? While much of this probably sounds somewhat negative, the reality is that new carriers enter the industry frequently, and many have been extremely successful and provided a solid alternative for your clients — and that can mean additional business for your agency.
It is critical for agents to exercise a significant degree of caution before placing business with new markets.
In the 1980s, the hard market prompted the emergence of risk retention and risk purchasing groups. While many of the risk retention groups have been successful, many others didn’t make it. Because the insolvency of risk retention groups is typically excluded by the various errors and
Classifieds
Insurance Journal East • 3570 Camino del Rio North, Ste. 200 • San Diego, CA 92108-1747 Fax: 619/584-1200 • Phone: 800/897-9965 x125 • classifieds@insurancejournal.com For Ad Rate and Information
December 17, 2012 Build America Mutual Assurance Company 1 World Financial Center, 27th FL 200 Liberty Street New York, NY 10281 The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
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omissions (E&O) carriers, agencies must understand if this is the structure for this new market. The last thing an agent needs is to face liabilities when one of their markets becomes insolvent. Asking key questions will better enable you to know whether this market is a good fit and worth pursuing. Without asking these questions, you are trusting that the carrier is viable, professional and will be around for the next 25 years. Trusting them is fine, but be sure to “trust and verify.” Don’t wait until it’s too late to find out that the carrier is not what they painted themselves to be. Remember: An ounce of prevention is worth a pound of cure. Pearsall is president of Pearsall Associates Inc., a risk management consulting firm specializing helping agents protect themselves. He is also a special consultant to the Utica National Agents E&O program. Phone: 315-768- 1534. Email: curtis@pearsallassociates.com. Visit his blog at: www.agentseotips.com.
Advertisers Index Readers, browse, contact, or do product searches on any of our full page advertisers at: http://www.insurancejournal.com/adshowcase/ Applied Underwriters www.applieduw.com 2, 32 Astonish Results www.astonishresults.com 12 Burnett & Company www.bcoinc.com 21 Catlin US www.catlinus.com 15 Demotech www.demotech.com 13 Midlands Management Corporation www.midlandsmgmt.com 14 Oak Street Funding www.oakstreetfunding.com 3 PersonalUmbrella.com www.personalumbrella.com 7 SIAA www.siaa.net 9 Texas Mutual Insurance Company www.texasmutual.com 4, 5 United Contractors Insurance Agency www.ucisg.com 23 Vertafore www.vertafore.com 11 Volunteers Insurance Services Association, Inc. www.cimaworld.com 19
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l page
2013 BUYER’S
GUIDE Welcome to Insurance Journal’s Annual Buyer’s Guide, your A-Z for P&C.
Looking for insurance services, products, and solutions? Save this valuable directory - it’s listed by category so it’s easy to find what you’re looking for. Search our companion online Buyers Guide, a comprehensive directory including thousands more products for the property/casualty industry, at www.insurancejournal.com/buyers. To be included in our Markets or Premium Finance Directories, contact Kristine Honey at: khoney@insurancejournal.com or visit www.mynewmarkets.com Please feel free to reach out and send us your comments and suggestions to lnguyen@insurancejournal.com.
Associations International Society of Appraisers Chicago, IL 60606 (312) 981-6778 www.isa-appraisers.org International Association of Insurance Professionals Tulsa, OK 74133 (918) 294-3700 www.internationalinsuranceprofessionals.org
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Professional Liability Underwriting Society (PLUS) Minneapolis, MN 55416 (800) 845-0778 www.plusweb.org
Aragon Investigations, LLC Phoenix, AZ 85050 (602) 300-5667 www.aragoninvestigations.com CityWide Public Adjusters Harbor City, CA 90710 (310) 212-7210 www.helpingtheinsured.com
Claims Antique & Personal Property Appraisals San Diego, CA 92123 (619) 670-4455 www.personalpropertyappraisals.com
Engle Martin & Associates Atlanta, GA 30342 (404) 303-7160 www.englemartin.com
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2013
BUYER’S
GUIDE NW Claims Service Portland, OR 97282 (503) 305-8230 www.northwestclaims.com VSP Engineering Coralville, IA 52241 (319) 625-6036 www.vspeng.com
Construction All Pro Roofing Plano, TX 75075 (972) 596-7777 www.allproroof.com Flood Masters San Diego, CA 92101 (619) 546-6034 www.flood-masters.com KbH Consulting, Inc. North Port, FL 34286 (727) 992-4687 www.kbhconsultants.com OHM Garment Restoration Plymouth, MI 48170 (734) 207-7614 www.ohmgarmentrestoration.com Peak Paint Company Silverthorne, CO 80498 (970) 389-2757 www.peakpaint.com Perrysburg Painting Perrysburg, OH 43551 (419) 376-8300 www.perrysburgpainting.com
Education
Insurance Recruiting & Executive Search (IRES) Charlotte, NC 28271 (704) 243-2110 www.iresinc.com
Insurance Journal’s Academy of Insurance San Diego, CA 92108 (800) 897-9965 x166 www.ijacademy.com facebook.com/IJAcademy Twitter @IJAcademy LinkedIn Group – Academy of Insurance Possibly the broadest ranging training resource for P&C insurance professionals nationwide. Training courses, conducted online, focus on four major disciplines within the industry: * Sales Training * Agency Management * Coverage Analysis * Personnel Management The Institutes Malvern, PA 19355 (800) 644-2101 www.aicpcu.org Linda Faulkner Attleboro, MA (774) 203-3157 www.lindafaulkner.com Ringwood Consulting Group, Inc. Pompton Lakes, NJ 07442 (973) 616-1800 www.ringwoodconsulting.com
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Human Resources
LowRateWorkComp Destin, FL 32451 (850) 625-5190 www.lowratecomp.com The Star Intermediary Orangevale, CA 95662 (916) 721-5511 www.starintermediary.com
Marketing Allan Pilger Telemarketing Mission Viejo, CA 92692 (949) 701-7476 www.allanpilgertelemarketing.com AllMedia, Inc. Plano, TX 75024 (800) 466-4061 www.allmediainc.com Hit Rate Solutions (855) 887-1892 www.hitratesolutions.com Signature Marketing Orange, CA 92867 (866) 222-9191 www.signaturemktg.net
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2013
BUYER’S
GUIDE Technology Applied Systems University Park, IL 60484 (800) 999-5368 www.appliedsystems.com Clear Data Strategies Danbury, CT 06811 (866) 897-6968 www.cleardatastrategies.com Direct Mail Partners Carrollton, TX 75006 (972) 446-3671 www.directmailpartners.com Pyramid Squared Danbury, CT 06811 (866) 897-6968 www.pyramidsquared.com Insurance Technologies Consultants, Inc. Santa Ana, CA 92705 (714) 442-8702 www.itc-systems.com Insurance Technologies Corporation (ITC) Carrollton, TX 75007 (800) 383-3482 www.getitc.com
The Wedge Group Frisco, TX 75034 (214) 446-3209 www.thewedge.net
Underwriting Services Associated Insurance Services (888) 443-3528 www.associatedinsvcs.com MarketScout Dallas, TX 75251 (800) 500-8720 www.marketscout.com Safety & Risk Control Services Metuchen, NJ 08840 (732) 906-2244 www.safetyrisk.com WIAA Insurance Services Rancho Cordova, CA 95670 (916) 443-4221 www.wiaainsurance.com
Leads360 El Segundo, CA 90246 (310) 765-7531 www.leads360.com
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Growing Your Property Casualty Agency 25 Ways to Grow Your Independent Agency in 2013
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s the calendar flips to 2013, growthminded independents must decide how to build their agencies over the upcoming year. The options are endless, and they straddle both the physical and digital worlds. Here are 25 ideas for growth. There are plenty more, as well.
Personnel Establish a full- or partBy Alan Shulman time position tasked with managing the agency’s digital and traditional marketing programs. Hire a marketing major straight out of college, or reassign a salesdriven CSR with solid communication skills. Add an inexperienced producer. Hire an aggressive greenhorn or attract a skilled salesperson from another industry and teach them the business. Hire a veteran producer away from a competing agency when it is legally and fiscally feasible. Establish quarterly prospecting and production goals for all seasoned producers and track their results. Don’t let costly veterans sit on renewals and sell only by referral. Accept quality brokerage business from carefully selected producers when your carriers are agreeable. Expansion Open a virtual office where you sell exclusively online. A company service center (or a dedicated team of in-office CSRs) handles client service. Open a sales-only office in a neighborhood or town where you want to grow. Perform most service functions through your main office or a company service center. Buy a local agency and roll its book of business into yours — or maintain it as a separate operation. Web and Social Marketing Evaluate the contemporary nature of your agency website. Update its appearance and
content as needed. Consider adding visitorcentric features like real-time personal lines rating and all-hours client service. Establish a viable and continuous social media presence on Facebook, Pinterest, and Twitter. Post creative and interesting content that leads back to your website. Have every agency producer activate a LinkedIn profile, post meaningful updates, and explore the network for viable new business leads. Record brief informational and promotional videos, and post them on your own YouTube channel. Don’t confuse random social networking posts with actual marketing. It’s merely a feel good activity that takes scarce time away from more productive efforts. In-Office Marketing Promote personal lines sales to commercial lines-only accounts, particularly to your top clients and their management teams. This adds business and helps keep rival agents at bay.
Open a sales-only office in a neighborhood or town where you want to grow. Offer flood insurance to every eligible homeowner and commercial property insured. Establish an actively monitored program to promote personal lines CSR lead identification, cross-selling and upselling. Feature direct mail/email/social media campaigns to attract “missing” auto and homeowners policies. Routinely request referrals and testimonials from quality insureds. Systematically re-solicit desirable lost policies and failed new business proposals. Run contests between CSRs and producers to see which group uncovers more salable leads.
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Organize a renewal review program for personal and small commercial lines. Use print and web-based client-completed surveys, in addition to face-to-face and voice-tovoice reviews. Start or expand your financial services department. Cross-sell life insurance to every salable insured, and offer retirement planning to baby boomers. Additional Marketing Promote umbrella policies to new personal lines prospects. This sells umbrellas plus gathers marketing information on the person’s underlying policies. Open the doors of new commercial lines prospects with undersold but important contracts like cyber-liability, data breech and flood. Match up viable commercial target markets with specialized programs and policies. Engage and attract prospects in conjunction with supportive carriers and managing general agencies. Take full advantage of company co-op advertising programs. Don’t waste this generous subsidy. Shulman is the publisher of Agency Ideas, a subscriptiononly sales and marketing newsletter. He is also the author of the many tools posted on the Agency Ideas Instant Download Store. Phone: 800-724-1435. Email: alan@ agencyideas.com. Website: www.agencyideas.com. www.insurancejournal.com
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IDEA EXCHANGE
Closing Quote
Houseless After Sandy, Until the Insurance Money Kicks In
I By Cynthia Ramnarace
t took one day for Superstorm Sandy to destroy my house. So far, it’s taken more than a month for insurance to help me get back in. The last time I slept in my own home was October 27, two days before Superstorm Sandy slammed into my Rockaway Beach, N.Y., neighborhood and poured four feet of water into my living room, dining room and kitchen. We’re among the 330,000 people in New York waiting on insurance settlements. Like many others, we’re staying with family. Lucky for us, we have flood insurance. Not so lucky: While we filed our claim the night after the storm hit, we had to wait until December 1 for our adjuster to do the inspection. So when New York Gov. Andrew Cuomo chastises insurance companies for being too slow to process claims, I can say this is one smackdown I can fully support. Right now my floor is a concrete slab. I have no kitchen. Half the drywall is gone. After 20 days in the dark, we finally got power back. And last week the new furnace was hooked up. My contractor is ready to start hanging drywall, the step necessary for us to move back home. But until the adjuster shows up, he can’t. And until that insurance check comes, we have to continue to drain bank accounts and, soon, start leveraging ourselves. So far we’ve shelled out close to $20,000 — from our own
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savings, help from family and some Federal Emergency Management Authority (FEMA) housing assistance money. If the cash runs out before the insurance check arrives, we’ll likely look to 0 percent interest credit cards to get the cash we need to green-light our contractor. It’s a risk worth taking when all you want for Christmas is to have your children sleeping in their own beds. We have a $250,000 flood insurance policy. We have homeowner’s insurance, too. But as soon as you utter the word “water,” you hear “we don’t cover that”. Everything regarding our reconstruction is hanging on getting a fair flood insurance settlement. And quickly. I have a fantasy where the adjuster comes with a check in hand. I start to weep and initiate a group hug. I realize how delusional that thought is, but it is indicative of how desperately I need the insurance part of this to be sorted out. I wish I could say my story is unique. Most people I know in Rockaway are still not living in their homes and instead are in rented apartments, borrowed basements and, for a time, FEMA-paid hotel rooms. Those who have returned are doing so with the help of space heaters as they wait for their back-ordered furnaces to arrive, or the overworked plumbers to show up. Of those with flood insurance, many have received advance payments and are starting to rebuild. Those without flood insurance are in the worst state, in my opinion. They have to wait on FEMA to approve payment for repairs; wait on New York City’s oxymoronically named While we filed our claim “Rapid Repair” the night after the storm program to send a hit, we had to wait until contractor out to Dec. 1 for our adjuster shore-up supporting walls or fix to do the inspection. electrical boxes; or like us, simply wait for adjusters to do their measuring so that we can green-light the drywall and insulation that will ensure the house is warm enough to live in (even if it does mean living there during construction). We’re a tired bunch. We miss home. I long for the days when I can make a mess and not worry I’m being inconsiderate to my host. I can’t wait to turn this double mattress in for my pillowtop king. And I can’t wait for a long, hot bath in my own tub, the one I used to complain about and always hated scrubbing. Oh, to have walls — and an insurance check in hand. Ramnarace is a freelance writer that frequently contributes to O, the Oprah Magazine; AARP Bulletin; Prevention.com; American Baby; Kiwi; iVillage.com and EverydayHealth.com, and others. Copyright 2012 Reuters. www.insurancejournal.com
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