Contractors / Subcontractors; Employment Practices Liability Insurance by Insurance Journal

JANUARY 14, 2013 | Vol. 91, No. 1

WEst REGION

Top 2012 Headlines In The West

selling EPLI to small businesses

2 | INSURANCE JOURNAL-WEST REGION January 14, 2013

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N10 On The Cover

WEST

Inside This Issue

Special Report: How Agents Survived A Falling Housing Market

January 14, 2013 • Vol. 91, No. 1 • West Region

N20

NATIONAL COVERAGE

WEst COVERAGE

Idea exchange

N5 Top 10 Insurance TV Brands, Ads

N1 Minding Your Business: Oak

N6 What Happens if the Terrorism Risk Insurance Program Reauthorization Act Expires? N8 Top 25 Insurers: Third Quarter Premium Written Up 4% N9 Most Commercial Buyers Accept Coverage Changes, Price Hikes: Survey N10 Special Report: How Agents Survived a Falling Housing Market

5 Idaho Inmates Sue Beer Companies Seeking $1 Billion in Damages

8 California Court: Parks Not Liable for Bumper Car Injuries 8 Montana Court: Hutterites Must Pay Workers’ Compensation

N4 The Competitive Advantage: Burand N24 Closing Quote: Obesity and Workers’ Comp

12 Worker’s Comp Reforms, Portable Persistency Top West’s 2012 Headlines

N14 Closer Look: Selling EPLI to the Small Businesses N15 2013 Insurance Industry Meetings & Conventions Directory N20 Academy of Insurance: Do You Believe in Evolution? N21 Academy of Insurance: 1Q Schedule N22 Insurance Word Find

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DEPARTMENTS 6 10 13 13 14 N3

Opening Note People Declarations Figures Business Moves MyNewMarkets

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Opening Note 4,500,000,000 AD – The World Ends

ark my words, you haven’t heard the last of the apocalyptic prophesies. The day after Dec. 21, 2012, I’ll bet a bunch of Mayans were rolling in their graves — the ones who bought into it at least. The world didn’t end — again. It didn’t end in 2000 as at least a dozen famous foretellers feared, and there were no shortage of apocalyptic dates before that. In fact all throughout history there were people calling it quits for the rest of us. According to Wikipedia, the Romans had at least two predictions a few hundred years apart that their great city would be destroyed long before the Roman Empire actually fell. The date 500 AD was chosen as doomsday by three dudes with really cool names: Hippolytus of Rome, Sextus Julius Africanus and Irenaeus. Evidently Sextus revised his date to 800 AD. The seer was likely visioning into the future and decided to copy preacher Harold Camping, whose May 21, 2011, prediction didn’t pan out. Camping offered up a new prediction for later that year. The last word on Camping, whose end-of-times dates in the midNext up is 2017, which is the 1990s also required periodic revising, was that he doesn’t date evidently passed on do that anymore. by the Prophet Gabriel evi Various Christians, includdently to the Sword of God ing Pope Sylvester II, predictBrotherhood. ed 1000 AD would be the end, and hundreds of years later reformer Martin Luther predicted the world would end by 1600. Other dates with an apocalypse attached to them include 1666 and 1700. In modern times preacher Pat Robertson offered up 1982 as the end, while a Baha’i sect founder, Leland Jenson, said Halley’s Comet would wipe out the Earth in 1988. Let’s all take solace: it seems we have a bit of a breather and a handful of good years without any solid evidence that it’s all about to head south. Next up is 2017, which is the date evidently passed on by the Prophet Gabriel to the Sword of God Brotherhood. Other judgment dates we’re heading for include 2022, 2023 and 2033. In fact, get ready for a nail-biting decade coming up. Psychic Jeane Dixon said the world will end sometime between 2020 and 2037, although like Camping and Sextus, Dixon had previously made some revisions when the end literally came to pass. My money’s on 4,500,000,000 AD (plus or minus a couple hundred million years). That is roughly when our sun is expected to grow into a red giant. In so doing our life-giving star will likely take out much of the inner solar system, including Earth. Let’s just hope the Mother Ship gets here and snatches us up in time!.

Don Jergler West Editor

E D I TO R I A L

Editor-in-Chief Andrea Ortega-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 Chris Burand, Catherine Oak, Douglas Powell Contributing Writers Robert Cruz, Brian Finch, Mary Anne Hawrylak

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

A DM I N I ST R A T I O N

Chairman Mark Wells Chief Executive Officer Mitch Dunford Accounting Manager Megan Sinclair | msinclair@insurancejournal.com

FOR QUESTIONS REGARDING SUBSCRIPTIONS: Call: 855-814-9547 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 2013 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 3618, Northbrook, IL 60065-3618

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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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News & Markets 5 Idaho Inmates Sue Beer Companies Seeking $1 Billion in Damages

ive inmates at the Idaho State Correctional Institution south of Boise are suing a handful of major beer and wine companies, contending that alcohol led to their crimes and that they should have been warned that the beverages can be addictive. The Idaho Statesman reported Keith Allen Brown, Steven J. Thompson, Woodrow J. Grant, Cory A. Baugh and Jeremy J. Brown filed the lawsuit in Boise’s U.S. District Court. The inmates

12k Tickets

The Nevada Highway Patrol says it handed out nearly 12,000 tickets last year to people using cell phones while driving. Officials say most were getting their first phone ticket, while 30 were cited for their second offense and 25 were getting their third ticket. A state law passed in 2011 bans cell phone use while driving and covers texting or reading from a cell phone, even while stopped in traffic or at a light. The ban carries a $112 fine for the first ticket, with a second offense costing $192, and a third or subsequent violation costing $352. Repeat offenders also face demerits on their driving record. Troopers recommend drivers use a hands-free device or refrain from using their phones altogether while driving. © 2013 Associated Press. All rights reserved.

say Miller Brewing Company, AnheuserBusch, E. and J. Gallo Winery and other alcohol companies should put warning labels on their products to inform consumers that they are habit forming and addictive, and they’re asking for $1 billion in damages. They don’t have an attorney, and the beer and wine companies have not responded to the lawsuit. © 2013 Associated Press. All rights reserved.

California Court: Parks Not Liable for Bumper Car Injuries

musement parks are not financially responsible for injuries suffered on bumper cars, the California Supreme Court ruled in an opinion published in January. The high court said people who ride

bumper cars under normal conditions automatically assume some risk — just as people who play football or other sports — and cannot sue after being injured. “A small degree of risk inevitably accompanies the thrill of speeding through curves and loops, defying gravity or, in bumper cars, engaging in the mock violence of low-speed collisions,” Associate Justice Kathryn Werdegar wrote. “Those who voluntarily join in these activities also voluntarily take on their minor inherent risks.”

The ruling does not absolve parks from their legal duties to maintain the safety of rollercoasters, which the court distinguished from bumper cars. The opinion reversed a state appeals court ruling in favor of Smriti Nalwa, who filed a lawsuit after breaking her wrist on the “Rue le Dodge” bumper car ride in 2005 at Great America park in Santa Clara. In its opposing opinion, the California Supreme Court said riding bumper cars carries some risk of injury, and that frees the parks from liability for those injuries. © 2013 Associated Press. All rights reserved.

Montana Court: Hutterites Must Pay Workers’ Compensation

divided Montana Supreme Court says forcing a Hutterite religious colony to pay workers’ compensation insurance for jobs outside the commune is not an unconstitutional intrusion into religion. The 4-3 decision upholds a 2009 law requiring religious organizations to carry workers’ comp insurance. The

Legislature passed the law after businesses complained they couldn’t outbid the Hutterites. The Big Sky Colony sued, saying the law targeted its religion and infringed on its beliefs. Its members have no personal property and make no wages as part of their communal living, and a member that makes a claim against the

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colony would be excommunicated. The court’s majority ruled the law did not interfere with their religious practices. Retiring Justice James Nelson says the law violates the First Amendment to appease a powerful industry. © 2013 Associated Press. All rights reserved.

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People Hali Nielson

Mark Deitchman

Ted Willis

Michael Brown

Jay Leprowse

Edgewood Partners Insurance Center named Hali Nielson senior vice president of private client services in its Irvine, Calif., office. Nielson will design, implement and manage personal insurance portfolios for high net worth individuals and serve as a personal insurance resource to other team members and clients in the Irvine office. Nielson will also be responsible for client relationship management and for growing EPIC’s book of private client business in Southern California. Nielson has 19 years of experience in insurance and risk management a high new worth people 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 and spent five years as a personal lines and private client services producer with UnionBanc Insurance Services Inc. EPIC operates from eight offices across California: Los Angeles, Irvine, Fresno, Folsom, San Francisco, San Mateo, Petaluma and San Ramon. Phoenix, Ariz.-based R.P. Ryan Insurance Inc. has made Mark D. Deitchman executive vice president. Deitchman’s primary responsibility will be to increase the agency’s market share through recruitment of new personnel and acquisitions. He will also assume operational functions in the agency. Deitchman joined R.P. Ryan in 2005 as a sales producer. He previously was agency sales manager for Allied Insurance. R.P. Ryan has two Phoenix locations. Salinas, Calif.-based Leavitt Central Coast Insurance named Ted Willis chief of operations. Willis will oversee Leavitt’s production and service teams, and will work on the firm’s risk management solutions program with a focus on claims containment and safety loss control. Willis joined Leavitt in June as senior vice president. He has 33 years of insurance experience as a broker for agriculture and commercial businesses. Stockton, Calif.-based Golden Bear Insurance Co. has promoted Michael Brown to the position of property manager. Brown has been with Golden Bear since 2002 as an executive underwriter. Brown’s promotion follows the promotion of Ed Takamoto, formerly property manager, to chief risk officer. Takamoto has more than 30 years of operational experience. Prior to Golden Bear, Takamoto was the director of underwriting quality controls for Sequoia Insurance Co. in Monterey, Calif. 10 | INSURANCE JOURNAL-WEST REGION January 14, 2013

Golden Bear has a selection of commercial lines products, including primary casualty, excess casualty, and property coverage for a variety of commercial interests. Janet D. Frank has joined Pacific Compensation Corp., a California workers’ compensation specialist and wholly-owned subsidiary of Alleghany Corp., as president and chief executive officer Frank will also be named chair of PacificComp’s board of directors. Frank was president and chief operating officer of Zenith Insurance Co. from March 2010 to September 2011. Prior to Zenith, Frank was president and CEO of San Francisco-based California State Compensation Insurance Fund from 2007 to 2009. She was executive vice president of North American field operations for CNA Financial from 2001 to 2007. In connection with Frank’s appointment, James E. Little, PacificComp’s current president and CEO, and Executive Vice President and Chief Financial Officer Ronald A. Groden, will be leaving PacificComp. Alleghany’s other property and casualty subsidiaries include: Transatlantic Holdings Inc.; RSUI Group Inc.; and Capitol Transamerica Corp. San Francisco, Calif.-based Wells Fargo Insurance named Rebecca Pearson vice president for its professional risk group’s technology, privacy and network risk practice. Pearson will advise clients on professional liability, technology errors and omissions, network security, and privacy related lines of coverage. Pearson will also provide market negotiations, policy analysis and placement, policy administration and claims advocacy services. Pearson will report to Meredith Schnur, senior vice president of the professional risk group, and will be based in San Francisco. Pearson was most recently the national subject matter expert on cyber risk and errors and omissions-related business for Hays Companies. Prior to the insurance industry, she was an attorney in San Francisco, serving as litigator in Shook, Hardy & Bacon’s national products liability group, and then Hanson, Bridgett’s insurance coverage litigation group. Wells Fargo Insurance is part of Wells Fargo & Co., a financial services company with $1.4 trillion in assets. Northern Montana Insurance Services, a Leavitt Group affiliate, has expanded operations with new offices in Helena and Butte. Jay LeProwse and Pam King have joined the agency and will work in the Butte office. Shawn Kraft and Dalena Baker have also joined the agency and will work in the Helena office. LeProwse will work as a commercial insurance agent to provide loss control services. www.insurancejournal.com

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People With more than 35 years of experience in insurance, King will work as a commercial insurance customer service agent. She will assist clients with all lines of business insurance, including workers compensation. Kraft is the managing partner of the Helena office and was most recently branch manager for Western States Insurance. With 25 years of experience in insurance, Baker will work as a personal insurance executive and office manager. The privately-held Leavitt Group provides clients with a wide-range of insurance programs, offering services in property and casualty insurance, risk management and employee benefits solutions. Heffernan Insurance Brokers named Christian Smith to its Santa Ana, Calif., office as assistant vice president. Smith will specialize in tailoring comprehensive insurance programs for large commercial lines. Smith was formerly with an underwriter, working in various niches like nonprofit organizations, entertainment and schools. Smith was also formerly a producer at a brokerage, specializing in auto and equipment dealers, petroleum risks and contractors. Walnut Creek, Calif.-based Heffernan provides insurance and financial services products to a range of businesses and individuals. Heffernan has California offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Orange County, as well as in Portland, Ore., St. Louis, Mo., and New York, N.Y. Alliant Insurance Services Inc. named James C. Peasley as first vice president in its Newport Beach, Calif. headquarters. Peasley has 20 years of experience that includes underwriting, insurance brokerage and account management, with a focus on structuring loss-sensitive and alternative risk programs specific to workers’ compensation for large national accounts in the hospitality, manufacturing, retail and temporary staffing industries. He joins Alliant after five years with a national brokerage firm, where he served as senior vice president in the firm’s Carlsbad, Calif. office. Alliant provides property/casualty, workers’ compensation, employee benefits, surety, and financial products and services to clients including public entities, tribal nations, healthcare, energy, law firms, real estate, construction and other industry groups. www.insurancejournal.com

Hull & Company has opened a new marine department at its Stockton, Calif. office and named marine risk specialist Quincy M. Schmit as commercial lines marine broker. The department will offer a variety of commercial marine exposures, as well as recreational and other miscellaneous hard to place marine accounts, including coverage for marinas, yacht clubs, boat dealers, as well as commercial vessel. Schmit has more than nine years of experience with marine insurance risks in California and the West Coast. Much of this experience was accumulated with a central California marine wholesaler, where she worked as a producer. Hull & Company has over 30 offices throughout the United States. Midwestern Insurance Alliance LLC named Keith Laughlin vice president of underwriting for its California workers’ compensation division. Laughlin will be part of MWIA’s expansion into the California workers’ comp market. Laughlin will be located in MWIA’s San Diego office. Laughlin has more than 30 years of workers’ comp underwriting experience, much of that in California. His career started with Industrial Indemnity, and he was most recently an underwriting director at Seabright Insurance Co. MWIA is predominantly focused on transportation related workers’ comp accounts.

Pam King

Shawn Kraft

Dalen Baker

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12/10/12 8:28 PM

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News & Markets Worker’s Comp Reforms, Portable Persistency Top West’s 2012 Headlines

ec. 21, 2012 came and went and the apocalypse was so lackluster as to be forgotten among the year’s myriad headlines. Now that we are all well and good, and past doomsday, here are Insurance Journal’s best headlines in the West for 2012: December Farmers Agents Sue Carrier Over Contracts, Taking Client Info A group of Farmers Group Inc. agents filed a lawsuit in Los Angeles Superior Court alleging the Los Angeles, Calif.based carrier has undercut them by sharing their data with a competing subsidiary and committing several contract violations. November Calif. Prop. 33 Defeated California’s Proposition 33, the 2012 Automobile Insurance Discount Act, was defeated with 54.6 percent voting against it, while it got 45.4 “yes” votes. Proposition 17, a similar portable persistency discount initiative in 2010, lost by 2 percent. October Calif. State Fund Board: Drop Rates 7% California’s State Compensation Insurance Fund’s board voted for a 7 percent decrease in its 2013 rates, a move that reflects State Fund’s anticipated savings from a workers’ compensation reform law that took effect on Jan. 1. September Brown Signs Calif. Workers’ Comp Bill California Gov. Jerry Brown signed a bill to increase disability benefits for For the full list visit www.insurancejournal.com

injured workers while taking a bite out of the rising cost of workers’ compensation insurance premiums. Agents, Brokers to Deal with State Fund Wholesalers California’s State Compensation Insurance Fund will now require most of the roughly 5,000 brokers and agents the entity deals with to go through one of two wholesalers. An estimated 3,500 agents and brokers will be impacted. August Workers’ Comp Deal in the Works for California In a hush-hush environment over the last several months it appears that those who seek workers’ compensation reform have been given hope, despite the looming close to California’s legislative session. July Report: Insured Losses in Colorado Wildfires Nearly $450 Million The two most destructive wildfires in Colorado’s history will cost insurers roughly $450 million, a regional insurance association said. June Colorado Fire Threatens Thousands of Residences The Waldo Canyon Wildfire in Colorado in the state’s second most populous city has reportedly destroyed hundreds of homes — and that number may get much higher. May Nevada Issues First Autonomous Vehicle Test License to Google The Nevada Department of Motor Vehicles has approved an application for a license by Google Inc. to test autonomous vehicles on Nevada public roads.

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April California State Fund Cancels Layoffs California’s State Compensation Insurance Fund is cancelling plans to lay off hundreds of workers. State Fund President and CEO Tom Rowe issued a message to staff that stated 1,300 workers have left since the state’s largest workers’ compensation insurer announced last year it would axe up to 1,800 jobs. March Lawyer Claims Highest Known Workers’ Comp Settlement in California History Attorney Christopher Asvar believes he has secured the highest known workers’ compensation insurance settlement in California history, totaling $8.9 million on behalf of a Antonio Enriquez, who suffered a traumatic brain injury in 2004 at the age of 18 after falling from a scaffold. February Electronic Proof of Insurance Gaining Steam in Some States A California legislator’s bill to enable auto insurance policyholders to issue proof of coverage verification via a mobile electronic device, such as a smartphone, is among several similar bills in at least a handful of states in various stages of passage. January California Insurance Commissioner, Insurers Settle on Iran Investments California Insurance Commissioner Dave Jones and a group of insurers have settled litigation over insurer investments in companies doing business in Iran. www.insurancejournal.com

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Declarations Cautiously Optimistic

Very Optimistic

Tsunami Debris

“I am cautiously optimistic that it’s a step in the right direction, but it’s the unknowns that concern everybody.” — Christopher Flatt, New York-based Marsh USA Inc.’s workers’ compensation center of excellence leader, said “uncertainty” is a word he hears from a number of carriers he works with when discussing the potential of California’s new workers’ comp reforms to take a bite out of growing losses carriers are experiencing.

“These reforms are engineered to reduce unnecessary costs while redirecting some of the savings to increase benefits for disabled workers.” — DIR Director Christine Baker promised that a new workers’ comp reform law, much of which took effect on Jan. 1, will save $1 billion on systemwide costs will increasing permanent disability benefits for injured workers.

“You couldn’t really walk through without stepping on some type of foam. It really did look like the debris that you see from the video footage from the tsunami.” — Jacek Maselko, a biologist with the National Oceanic and Atmospheric Administration in Juneau, Alaska, said that debris that gathered this past summer on Alaska’s Kayak Island made walking on its beaches feel like walking through a natural disaster zone.

No Cool Brees

Figures

“ISM will review that complaint and, when required, will be filing a counterclaim setting forth the acts and conduct of Mr. Brees and his agents that constitute breach of contract and misappropriation.” — David Miller, who is being sued by Saints quarterback Drew Brees and his foundation, commenting on the Brees’ lawsuit that alleges the former organizer of his celebrity golf tournament in southern California cheated benefactors of the foundation out of thousands of dollars to enrich Miller’s Integrated Sports Marketing.

.15%

Is the average blood-alcohol content of those arrested in the Arizona DUI sweep over the holidays that nabbed 4,400 suspected drunk drivers, according to the Arizona Governor’s Office of Highway Safety. The state’s legal limit is 0.08 percent.

4,400 People were arrested in Arizona on suspicion of driving under the influence between Thanksgiving and New Year’s Eve. The arrests were made by officers participating in regional DUI task forces across the state.

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2.1 Million

Is the amount of a judgment an Albuquerque, N.M., bicyclist won for injuries he received in a crash with a delivery truck. However, he will likely collect only half that amount because a jury said he was partly to blame.

3,000

That’s how many drivers were caught breaking cell phone rules during a crackdown in Sacramento County in Northern California. California was one of two states to receive grants for high-visibility law enforcement pilot programs to halt hand-held cell phone use and texting while driving, a program that was conducted in eight counties with 3.8 million residents and it took place from Nov. 30 to Dec. 9.

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Business Moves becomes one of the largest middle-market insurance brokerage firms in the Greater Phoenix metropolitan area. Briarcliff Manor, N.Y.-based USI is considered the ninth largest insurance broker in the U.S. and operates out of roughly 100 offices across the country.

EPIC, Homeplace Edgewood Partners Insurance Center entered into an agreement to acquire Ontario, Calif.-based Homeplace Insurance Brokers Inc. The Ontario team will report to Dan Ryan, EPIC’s managing principal in Orange County. Homeplace specializes in the design and oversight of risk management and insurance programs for the transportation, warehousing and logistics industries, with an emphasis in trucking coverages. The privately-held company is owned by founder Judy L. Busam. EPIC operates from nine offices across California: Los Angeles, Irvine, Ontario, Fresno, Folsom, San Francisco, San Mateo, Petaluma and San Ramon. USI, Wick Pilcher USI Insurance Services acquired Phoenix, Ariz.-based Wick Pilcher Insurance Inc. Terms of the deal were not disclosed. Wick Pilcher provides insurance programs for all facets of employee benefits, commercial and personal risk. By combining the existing USI office in Phoenix with Wick Pilcher Insurance, USI

Brown & Riding, Travis-Pedersen Los Angeles, Calif.based Brown & Riding and Chicago, Ill.-based Travis-Pedersen have inked a deal that creates a large property/casualty wholesaler. The companies began discussions about combining their complementary organizations in 2009 and reached a definitive agreement to merge effective Dec. 31, 2012. The combined company will service clients and insurance company partners from 11 office locations around the country. Jeff Rodriguez will continue to serve as chief executive officer of the combined operation and the corporate headquarters will be located in Los Angeles. R-T, IFIS R-T Specialty LLC entered into a definitive agreement to acquire West Coast workers’ compensation specialist International Facilities Insurance Services. Chicago, Ill.-based R-T is the brokerage arm of Ryan Specialty Group LLC. Los Angeles, Calif.-based IFIS became part of RT effective Jan. 1. Terms of the deal were not disclosed. A privately-held wholesaler, IFIS’ workers’ compensation specialty is complemented by general commercial liability wholesale activities with expertise in oil and gas, and in trucking and transportation risks. Ryan Specialty Group is a global holding company and a Lloyd’s insurer and other

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specialty services designed specifically for agents, brokers and insurers. Integro, The Rule Group New York-based insurance brokerage and risk management firm Integro has acquired The Rule Group of Pasadena, Calif. Terms of the deal were not disclosed. The Rule Group consists of three divisions: The Rule Co., a provider of insurance and risk management services; TRG Insurance Services, an employee benefits consultant; and Solid Waste Insurance Managers, a provider of insurance products to waste haulers. Rule Group Chairman and Chief Executive Officer Clemo and his staff will join Integro and continue providing services through Rule‘s California offices in Newport Beach, Pasadena and San Francisco. Arthur J. Gallagher, Western Benefit Solutions Arthur J. Gallagher & Co. has acquired Boise, Idaho-based Western Benefit Solutions LLC. Terms of the deal were not disclosed. Western Benefit Solutions LLC provides a range of employee benefit insurance brokerage and consultation services with a focus on group health, life, disability, retirement planning, voluntary benefits, wellness, regulatory compliance and human resource services. The firm specializes in offering self-funded and insured products to the public sector, mining, engineering and retail industries. Ronald Osborne and his associates will continue to operate in their current Boise and Idaho Falls locations under the direction of Norbert Chung, western regional executive vice president of Gallagher’s employee benefit consulting and brokerage operations. Itasca, Ill.-based Arthur J. Gallagher has operations in 17 countries and offers client-service capabilities in more than 110 countries around the world through a network of correspondent brokers and consultants.

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IDEA EXCHANGE

Minding Your Business How to Exploit Current Trends for 2013

ne needs to understand and exploit current and future trends in order to be proactive. It is easy to predicate trends by understanding recurring cycles and applying that knowledge to the current insurance marketplace. So what will 2013 be like for insurance agents, brokers and wholesalers? The following is a list of major industry trends that need to be factored into business plans. By Catherine Oak

ing of the work that is done. Paperless systems are becoming the norm in many firms today. Insurance companies will be pressured to follow the lead from agencies and become more automated, as well. It is ridiculous that carriers are not more automated. Because of this, often a lot of the burden then falls on their agents.

Agency Ownership and M&A A new twist in the mergers and acquisitions marketplace is that the national brokers are now focusing on the middle market arena and have specific capital to do so. Aside from Brown & Brown, Soft Market Not Quickly Going The current trend is toward a hardening Hub and A.J. Gallagher, which have been there already, there are market. The past hard market was firmly in some new players in the middle place from about 2000 through 2003. Prior market, such as USI and Marsh. to that almost a whole generation had lived These national brokers are acquiring under soft market conditions! The current to keep growing and adding volume. soft market has been in various lines in The pace is eventually unsustainable, various regions for a number of years. It hit but will continue through 2013. The most lines across the country since 2007, reason they are in this arena is that many and it seems to have no real end in sight. of the larger independent agencies have It was predicted to end in 2012, but until already been bought up or do not intend recently it hadn’t. to sell. A hardening market will mean a lot of Today there is also a lot of capital still work quoting for not a lot of reward in coming into the marketplace via new broincreased premiums and thus, commiskerages starting up from players that have sions. To keep revenues up, agencies will still need to sell more left agencies, especially those that sold to banks. — either cross sell or sell If agency owners new buyers have additional coverages to new understand current These customers. Value-added serthe cash to pay sellers a trends they can vices should be offered and large down payment and exploit them. offer an earn-out based on a fee charged, to increase performance or growth. revenue. Many agencies have been giving away these value-added services Private equity players wanting to get into for free for years. People don’t often apprethe insurance business are also looking for good platform agencies to expand and ciate free, nor do they see the value. become players in certain regions. Assured Partners is one example. Improved Profit Margins In addition to adding new revenue New Brokerage Players streams, agencies will become more pro There are also players, like Integro and ductive if the market hardens. This will be EPIC in the acquisition mode. Firms like done through the staff handling the same NFP (National Financial Planners) and accounts, but adding new revenue because CBIZ that have been more active in the of the increased rates. Also, there should benefits and financial services arenas are be improved automation and streamlin-

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looking to get into the property/casualty insurance marketplace and have the capital to do so. There still continues to be no shortage of buyers of independent agencies. Agency Value Declining Today’s economic conditions and the inability to get credit lines from banks has led to declining agency values. There is also a big misunderstanding about what are the “real prices” being offered. Many of the deals have a sizable portion of the “price”

based on earn-outs for future performance. This confuses the understanding of “value” on the marketplace, because “value” in the past was usually based primarily on revenue that was already on the books. Sellers are no longer getting prices from two to three times revenue (mostly from banks) like was happening before 2008 and before the stock market crash. Today, prices are more in the 1 to 1.50 range, which has been the historic “typical” price range. As a multiple of EBIDA (earnings before interest and depreciation) prices are in the 5.0 to 6.5 range. In the earn-out portion of the “price,” the seller is expected to grow the business, not just maintain it. Terms based on future growth should be discounted when determining value based on cash today. So, if in the off chance that an agency “gets” 1.75 to 2 times revenue this actually ends up being continued on page N2

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Minding Your Business Current Trends, continued from page N1

a “price” closer to 1.25 to 1.4 times revenue, Owners that are contemplating projected three years out. selling the business have two The infusion of well-capitalized buyers is choices. First, sell before impacting the ability of smaller agencies to the tax rates go up for do acquisitions. The prices being paid yesas much downterday and today do not always cash flow, payment as especially with the lower revenues from the possible to soft market. However, the buyers are more lock in lower intent on looking at cash flow when prictax rates. For ing is set. Small- to mid-size independent those that are firms will be doing fewer acquisitions. not quite ready to sell, There is still a good deal of activity withbut choose to sell now, this will in the smaller agency community in the require the acceleration of preparing the form of mergers and acquisitions. Small- to agency to sell and realigning one’s financial medium sized independent agencies merge goals and expectations. or acquire today for the purpose of being a The second option is to remain an owner “better” firm, not just to be a “bigger” firm. for now and sell after 2013. Because of The goal of some of these new stronger the higher tax rates, anyone selling their brokerages is to become a local or regional business after 2013 will need to grow the force against the national brokers. There business by more than the tax increase to could also be attempts to bring enough bronet the same amount of after tax proceeds kerages together to go public or sell out to they would have received before the tax an interested deep pocket. increase. Baby boomers have now reached around 66 to 68 years of age. This is a new tier of Small- to Mid-sized Agencies owners that needs to retire, which will Many small- to medium-sized firms peak in the next one to five years. Because cannot individually maintain the number of the competitiveness in the marketplace, of quality markets they need to compete it is getting difficult for today with larger firms. smaller agencies to perConsolidators, networks and The lack of good petuate internally. Often, clusters provide that service, producers is a it seems that the next so the agency can compete perennial problem on equal footing with the generation does not have and will remain so “big boys.” both the management and financials skills to Clusters vary in size, from now on. pull it off. These are the style, capability and appearfirms that will either merge with a peer ance. Generally speaking, the individual agency or sell to a large firm with deep agency can maintain some, if not all their pockets, and a well-structured management autonomy. These entities can also be a way team. for new people opening their own agencies to own their own firms. Some cluster Taxes Increasing in 2013 organizations even provide perpetuation It is not much of as prediction to say that for their members within the group or taxes will go up. It is widely known that umbrella entity. Congress and President Obama temporarily extended the Bush tax laws. It is probable The Producer Dilemma that the current federal capital gains rate Most agency owners will agree that it will go from 15 percent back to 28 percent, is very difficult to find good, loyal, hardor higher, maybe 35 percent when the tax working insurance producers. Producers law runs out. Personal income taxes will that are available don’t produce. The ones most likely go up, especially for the higher that do produce are unaffordable or they income brackets. want ownership in the agency. N2 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

Perpetuation plans are held in abeyance when it is difficult to find these good producer players, especially with any management talent. The lack of good producers is a perennial problem and will remain so from now on. There needs to be a shift in perception for the traditional producer role to be split into a pure sales role and an account technical service role. Many firms today are adopting the account executive role to ease the burden of the workloads of the owners and non-owner producers with large books. The account executive approach costs the agency less money and provides the service staff more room for advancement in the organization. AEs usually still have service staff to delegate day-to-day service work on an account. National Obamacare No one knows for sure the impact of the current legislation and the affect on the value of firms with health books of business due to Obamacare. There is still much uncertainty what the implementation will result in due to the ambiguities in the language of the bill that was passed and the complexity of the system. Many business owners are preparing for the worst and some are letting employees go or cutting them back to parttime all across the country. A Final Thought If agency owners understand these trends, they can exploit them. It will require planning and good communication in-house with producers and staff. Everyone needs to focus on new sales and continued expense controls. Those who plan and take action can more likely predict the future. Oak is the founder of Oak & Associates, based in Santa Rosa, Calif. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers acquisitions, clusters, sales and marketing planning as well as perpetuation planning. Phone: 707-936-6565. Email: catoak@gmail.com. www.insurancejournal.com

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MyNewMarkets Trucking Workers’ Comp Market Detail: Alternative Markets Insurance Services’ (www.amsprograms.com) program features high x-mod; no deposit; all class codes; 1/3 safety incentive; and a pay-as-you-go option. Alternative Markets Insurance Services offers access to multiple insurance programs for hard to place workers’ comp prospects and clients. Everything from high-mod to hard-toplace classes of business can be placed. Available limits: Minimum $10,000, maximum $50 million Carrier: Various, admitted and nonadmitted available States: All states Contact: Curtis Prince at 855-924-1597 or email: cprince@ amboss.com This section brought to you by Insurance Journal’s sister website, www.mynewmarkets.com

& Insurance Services (www.northstar-mga.com) has a program tailored for property managers and owners. The CIBA program entertains all types of lessor’s risk only (LRO) properties and includes coverage for: property, boiler and machinery, EQSL, general liability, pollution, wrongful eviction, non-owned and hired auto, and excess liability. Property coverage includes blanket values with full replacement cost and building ordinance. Available limits: As needed Carrier: CIBA Insurance Services States: All states except Ala., Alaska, Conn., Fla., Hawaii, La., Maine, Mass., Miss., N.H., N.J., N.Y., Pa., R.I., and Vt. Contact: Pat Lowther at 925-975-4686 or email plowther@ nortstar-ins.com

Elevator Contractors, Inspectors & Consultants

Need a Market? Find it. FAST. Hotels & Motels Market Detail: Capitol Insurance Companies. (www.capitol. net) writes property and inland marine; general and umbrella liability; commercial automobile; EPLI and identity theft; professional liability; workers’ compensation; accident and health; commercial fidelity and surety; non-construction contract surety; and liquor liability. Available limits: As needed Carrier: Unable to disclose, admitted and nonadmitted available States: All states Contact: Sales rep at 608-829-4208 or email marketing-agency@capitol.net

Market Detail: JM Associates/Burnham + Co., a division of Hub International Northeast Ltd. (www.jmassociatesltd.com) has a national general liability program with limits of $1 million/$3 million/$3 million. Features include: admitted carrier, first dollar coverage, no deductible, no SIR, blanket additional insured, per elevator/per escalator aggregate. Workers’ comp, excess, auto, professional, property and surety are available. Available limits: Minimum $1 million, maximum $3 million Carrier: The Hartford Financial Services Group States: All states except Hawaii Contact: John Tateossian at 201-585-6514 or email: john. tateossian@hubinternational.com

Vacant Building Program Market Detail: Monarch E&S Insurance Services (www.monarchexcess.com) works with an A+-rated carrier with aggressive pricing and usually provides same day quotes. General liability and property coverage are available. Property limits without FAC support is $25 million. Available limits: Maximum $25 million Carrier: Multiple, nonadmitted States: Calif. only Contact: Matt Merkle at 805-577-6800 or email: mattm@monarchexcess.com

CIBA Market Detail: NorthStar Risk Management www.insurancejournal.com

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The Competitive Advantage The Dilemma of Tiny Commercial Accounts

Agencies always want their carriers to be any advisors suggest agents simply happy, and donuts, drinks and golf just jettison small commercial accounts. don’t cut it like back in the day. These But sometimes small is good. When small agency owners feel so strongly that the accounts are processed and serviced effivolume is more important than the profits ciently, these books can be much more and E&O exposures that they will sacristable in tough times fice both to keep their companies happy. than a few large accounts. (Again, I am not writing about small More than one agency can accounts written efficiently, I am writing attest to this as the soft about tiny accounts.) Certainly a better market comes to an end. solution, a compromise between eliminat However, some ing these accounts and just leaving them on accounts are so tiny that the books, must exist. an agency cannot make By Chris Burand a profit or even break Better Solution even, regardless of how efficiently policies A better solution does exist for creating are processed. Sometimes the account is volume. An agency can make the best of special — it is an in-law, a relative of an the situation by first making sure it has important account, a referral, and so forth. offered these clients all the coverages they On a one-off basis, agencies generally need need. This is a clear win-win for everyone to accommodate these clients, but these involved. The client gets better coverage. truly special accounts make up less than 2 The agency closes the gap on its loss and percent of tiny accounts. decreases the E&O exposure. The carriers When an agency has too many exceptionget more volume. ally small accounts, it will lose too much Another solution, not legal in all states, money. These accounts often carry too is to charge fees so the agency at least is much errors and omissions (E&O) exposure not losing money on these because the client rarely buys enough insurance, An agency with too accounts. But none of the reasons a concern that is topped many small accounts I’ve identified is the real by the buyers often being may lose money. reason agency owners less knowledgeable than refuse to make the best larger account buyers. business decisions on tiny commercial This lack of knowledge, in turn, results in accounts. The real reason in many cases is more servicing time, higher servicing costs, ego. Two main subcategories exist here. and frustration. Some agencies still think The first is that these accounts create they are making money on these accounts agency volume that builds and maintains because they have cut the steps required the agency owner’s ego. to the bone, but they often do so without The second and more serious arises adequate regard for the E&O exposures when the owner personally writes these they’re creating. accounts. This is a sticky situation because Most agency owners choose not to think emotions often run very high. about this because other accounts subsidize Giving up these tiny accounts creates these losses adequately so the pain is not insecurities of mountainous magnitude. enough to force action. It is simply easier These owners’ sense of self is tied to their to ignore the problem. But why is it so difbook. So even admitting they have these ficult to eliminate tiny accounts? accounts creates a fight or flight emotional One reason is that some agency ownresponse. Letting go means evoking emoers think, right or wrong, that they need tions such as: feeling like they are not this volume to keep their carriers happy. N4 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

important, feeling like they have wasted their efforts, and feeling like they are inadequate, unaccomplished, and underachieving. I am not suggesting it means those things. I am simply listing the thoughts they would likely have. To be an agency owner with a bunch of worthless business is an unacceptable reality. So they fight or flee. Their personal value is tied to their book, so the thought of giving this business to the house (thereby creating value for the agency) is never even considered. Not only would they lose their personal value, but they may entertain thoughts such as: “What do I do with my time if I give the agency my accounts? Do I have to get out and sell again? What if I cannot sell again? I worked to a point where I would never have to sell again! By damn, I will not do it!” Motivation Emotion trumps logic in all but the direst situations. So what does an agency do, especially the partners in an agency where one of the partners fits this description? Wait for an emergency? Sometimes. Sometimes it works to just wait until the agency is sold. One of the great secrets of some serial buyers is they target sellers like this because they can afford to pay more than the agency may be worth. This makes the seller feel good without realizing the price is associated with eliminating the dead weight known as the owner. However, what happens if you are the partner who cannot wait for an emergency to motivate your partner to deal proactively with the tiny accounts? In your mind, the www.insurancejournal.com

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News & Markets Top 10 Insurance TV Brands, Ads agency already has an emergency. What happens if you don’t have an emergency but simply do not want to waste the opportunity or money? Prayer sometimes works. I am not being sarcastic or facetious. Good, positive thoughts and building the self-confidence of your partners is essential, because one way or another, owners are not going to make the right decisions unless they feel safe making them. They have to see a safe light on the other side. And most often, to see this guiding light, they must be imbued with self-confidence. If you are the rare person with the discipline and self-awareness to address this situation on your own, please consider that in today’s insurance world, an owner who builds people is often more valuable than a person who can sell insurance themselves. By building people, I do not mean being soft on producers or hiring producers who cannot sell. Agency owners who cannot sell have a far higher tendency to hire producers who cannot sell than other owners. So be careful here. But if you are that rare person with the insight to see themselves accurately and you have a book full of these tiny accounts, I encourage you to focus on your strengths and build the agency upon your strengths. With time, your confidence will build as your agency grows. Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868. Email: chris@burand-associates.com.

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ce Metrix, a California company that provides television and video analytics, announced the top TV brand advertisers and ads of 2012, with Liberty Mutual Insurance taking honors in the insurance category. Other brands rated tops include Cadillac, Ford, Blue Moon, Ocean Spray, Visa, Olive Garden, Samsung and T-Mobile. Ace assigns a score that measures ad creative effectiveness based on viewer reaction to national TV ads. The results are presented on a scale of 1-950, which represents scoring on creative attributes such as persuasion, relevance, information, attention, change, desire and watchability. Within the insurance category, Ace Metrix

rated the following as the top 10 TV advertisers: • Liberty Mutual 589 • Farmers 545 • Allstate 535 • State Farm 534 • MetLife 528 • Nationwide 527 • Progressive 518 • Aflac 516 • Esurance 507 • Geico 482 In addition, Liberty Mutual’s “Beautifully Imperfect World” television ad was rated one of the top 20 most effective spots of the year by Ace Metrix.

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News & Markets What Happens if TRIPRA Isn’t Reauthorized? With Just 24 Months to Go, Now is the Time to Prepare

he federal backstop that is widely credA Challenging Environment ited with establishing today’s robust It is impossible to predict what will terrorism insurance market may be gone happen. The political environment is difin just 24 months. The consequences could ferent than it was five years ago. The 9/11 be severe, from reduced attacks are more remote in time, and the availability of coverage to public consciousness increased premiums. The and leadership in impact would be particuWashington and key larly acute in dense metlegislative bodies, ropolitan areas like New such as the House York, Chicago and San Committee on Francisco, but would also Financial Services By Robert Cruz have nationwide implicaand Senate Banking tions. Committee, have Hearings about the changed and will future of TRIPRA — the see even more new Terrorism Risk Insurance players in 2013. Program Reauthorization There are different Act — have already fiscal demands and started on Capitol Hill. competing prioriand Brian Finch Created after the Sept. 11, ties, such as address2001 terrorist attacks, the federal backstop ing the possibility of a widespread cyber program, which is scheduled to expire on attack. Dec 31, 2014, enabled insurers to offer cover The battle lines are being drawn, and age for a risk that most carriers saw as uninCongressional hearings and related lobbysurable. The attacks on the World Trade ing are already under way. Those who supCenter alone resulted in claims of more port reauthorization and those who oppose than $40 billion. it are crafting their arguments and marshal The original program, the Terrorism Risk ing support. Insurance Act (TRIA), was established in Factions that are opposed to reauthoriza2002, extended in 2005, and reauthorized for tion argue that while TRIA and TRIPRA seven more years, in 2007, as TRIPRA. By all were necessary in the past, they are no lonaccounts, TRIPRA continues to do what it ger needed. The backstop accomplished its was intended to do goal of creating a private If TRIPRA isn’t extended insurance marketplace — provide stability and create a viable past the end of 2014, the capable of providing insurance market. terrorism coverage, and impact will be huge. Take-up rates have government support is no increased year-on-year, coverage is widely longer required. They note that the backavailable and premiums are affordable. stop was always intended to be temporary. However, TRIPRA’s future is uncertain. Opponents argue further that the insurThe earlier reauthorization was controverance industry now has the knowledge it sial and the act was modified to shift more needs to assess risk and price terrorism costs to the insurance industry. Now, there’s coverage, and has even developed a sura real possibility that TRIPRA will not be plus, which can absorb risks. Opponents reauthorized and will end entirely or be also maintain that taxpayers should not be significantly altered. For those who will be responsible for paying insurance losses on impacted, the time to prepare is limited. private property. N6 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

On the other side, proponents, including the insurance industry and a number of large property owners, say TRIPRA is still essential to sustaining a workable terrorism insurance marketplace. The need has not diminished, and it’s still difficult to model and price risk. Moreover, the United States is rife with possible terrorism targets and multiple terrorist attacks were thwarted in just the last year. In addition, as the federal backstop has been extended and modified, financial responsibility has shifted more decisively to insurers. They have become responsible for covering a greater share of potential losses; substantial thresholds and deductibles have been implemented; and the entire program is capped at $100 billion. To trigger TRIPRA funds, for example, a terrorism event must result in aggregate industry insured losses of at least $100 million, up from just $5 million in the original act, and $50 million in losses required by the extension. All-Risk Markets Will Shrink If TRIPRA isn’t extended past the end of 2014, the impact will be huge. There is already insufficient capacity and aggregation limits have been reached in some highrisk markets, such as New York City and other major metropolitan areas. A failure to reauthorize will affect virtually every property owner or business that chooses or is required to carry terrorism coverage. Many of these insureds now have embedded coverage, which is typically much less expensive than stand-alone coverage. www.insurancejournal.com

All-risk markets willing to provide coverage will be limited, and while the standalone market is likely to be sufficient to meet demand, prices will rise. Reinsurance capacity for these risks will also be limited. In light of all these factors, what are the next steps for businesses, their insurance advisers and producers? First, many businesses, especially those that are obligated to carry terrorism coverage, will have no choice but to navigate this new world. Publicly traded companies must have catastrophe coverage and it’s also a requirement in many loan covenants. Some carriers that currently provide embedded coverage may choose to discontinue offering coverage. Coverage will be less available and could be prohibitively expensive. Some businesses may be unable to meet their insurance requirements or take a heavy financial hit from escalating premiums. The repercussions could be wide-ranging, from stalled expansions or acquisitions to the divesting of real estate in high-risk markets. Meet with Clients, Begin Planning Now Whatever ultimately happens with TRIPRA, planning should begin now. Agents and brokers should be meeting with clients to apprise them of possible scenarios, help them identify and analyze risks and exposures, and begin reviewing coverage now, while there are more options. Clients may want to secure capacity by locking in long-term stand-alone coverage. They may also want to revisit and possibly lower limits. Producers and other advisers can also help clients develop risk management plans and recommend clients open discussions with lenders or their board of directors, among others. Some insurance professionals may also want to advocate for TRIPRA by taking the issue to Washington and their elected officials. They can meet Congressional members and staff on their own, or work through a trade association to express their concerns. For any of these actions, whether it’s www.insurancejournal.com

getting up to speed on the issues, advising will bring. The time to act is now. clients or getting involved in public policy, there’s no time to delay. Cruz is the product head for Hiscox Terrorism While 24 months may seem remote, in Underwriting in the United States. Finch, a partner in practical terms it’s right around the corner. Dickstein Shapiro’s Washington, D.C., office, is head of R1_I J_Half_Ins Journal 12/14/12 9:20 AM Page 1 And no one knows what the next two years the firm’s Global Security Practice.

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News & Markets P/C Direct Premium Written Up 4% Through Third Quarter 2012

he direct premium growth for property/casualty insurance companies continues to be encouraging. Overall, P/C insurance companies continued to serve their clients during catastrophic events, difficult economic conditions and even political uncertainty. Despite these challenges, through the third quarter of 2012, P/C insurance companies as a whole have increased direct premium written (DPW) growth to a level not seen since 2006. Through the third quarter of 2012, total DPW for By Douglas A. all P/C insurers is up more Powell than 4 percent compared to DPW through third quarter 2011. This increase in DPW represents nearly $15.3 billion in premium growth, of which approxi-

mately half is attributed to the Top 25 P/C insurers in terms of growth. For the nine months ending Sept. 30, 2012, P/C companies comprising the Top 25 insurers in terms of direct premium growth leveraged their experience and increased their DPW nearly 9.6 percent over the nine months ending Sept. 30, 2011. The Top 25 accounted for 48.3 percent of the total DPW growth for the P/C insurance industry. The remainder of insurers reported an increase in DPW of only 2.6 percent, or $7.9 billion, period-over-period. In total, DPW for the P/C industry grew more than 4 percent, nearly $15.3 billion. Although the market continues to exhibit signs that indicate a firmer market and DPW continues to increase, P/C insurers should not expect a traditional hard market any time soon.

P/C insurers have reported average annual premium growth of 2.2 percent since 2002. In five of those years, DPW growth exceeded reported annual inflation rates and there was not a wide variance between DPW growth and inflation during the other five years in this period. Also, only twice during the past 10 years did total DPW decrease year-over-year. It is more realistic that expectations should relate to gradual, stable growth. If P/C insurers hold to 10-year historical patterns, gradual, stable growth would lead to the highest level of year-end DPW ever reported by the P/C industry, estimated at $525 billion for 2012. Powell is a senior financial analyst with Demotech Inc. Email questions and comments to dpowell@demotech. com or follow him on Twitter, @powdoug.

Top 25 Property/Casualty Companies

Based Upon Dollar Amount of Direct Premium Written (DPW) Growth Year-to-Date Results September 30, 2012 Versus September 30, 2011 DPW Company Name

Continental Casualty Co. GEICO Casualty Co. Allstate Fire and Casualty Insurance Co. State Farm Fire and Casualty Co. LM General Insurance Co. ADM Insurance Co. State Farm Mutual Automobile Insurance Co. Atlantic Specialty Insurance Co. QBE Specialty Insurance Co. Travelers Property Casualty Co. of America ACE American Insurance Co. Factory Mutual Insurance Co. GEICO General Insurance Co. Liberty Mutual Insurance Co. QBE Insurance Corp. United Services Automobile Association Zurich American Insurance Co. USAA Casualty Insurance Co. LM Insurance Corp. USAA General Indemnity Co. Liberty Insurance Corp. Foremost Insurance Co. Grand Rapids, Michigan Texas Farmers Insurance Co. Erie Insurance Exchange Nationwide Affinity Insurance Co. of America Top 25 by DPW Growth All Other P/C Companies Total

9/30/2012

3,741,796,882 979,869,936 3,434,012,183 12,990,452,724 531,938,735 380,870,183 23,378,777,099 338,736,203 778,826,986 3,257,762,645 2,723,401,295 2,085,331,553 4,991,468,588 3,765,243,444 947,817,326 4,871,862,826 3,665,678,368 3,270,269,233 566,234,398 996,507,179 1,473,674,744 1,197,506,438 481,538,545 2,859,851,955 632,189,041 84,341,618,509 306,758,915,890 391,100,534,399

DPW 9/30/2011

3,179,142,292 472,154,540 3,012,904,317 12,594,798,824 149,126,163 - 23,036,281,196 978,317 466,492,627 2,961,376,643 2,432,667,002 1,797,595,165 4,708,583,100 3,498,751,680 692,171,478 4,630,289,563 3,427,742,669 3,054,706,473 355,450,210 787,724,687 1,267,829,481 1,006,309,946 295,260,557 2,680,643,077 460,945,367 76,969,925,374 298,860,685,309 375,830,610,683

$ Growth

562,654,590 507,715,396 421,107,866 395,653,900 382,812,572 380,870,183 342,495,903 337,757,886 312,334,359 296,386,002 290,734,293 287,736,388 282,885,488 266,491,764 255,645,848 241,573,263 237,935,699 215,562,760 210,784,188 208,782,492 205,845,263 191,196,492 186,277,988 179,208,878 171,243,674 7,371,693,135 7,898,230,581 15,269,923,716

% Growth

17.70% 107.53% 13.98% 3.14% 256.70% NA 1.49% 34524.38% 66.95% 10.01% 11.95% 16.01% 6.01% 7.62% 36.93% 5.22% 6.94% 7.06% 59.30% 26.50% 16.24% 19.00% 63.09% 6.69% 37.15% 9.58% 2.64% 4.06%

Data Source: The National Association of Insurance Commissioners, Kansas City, Missouri, by permission. Information derived from an SNL product. The NAIC and SNL do not endorse any analysis or conclusion based upon the use of its data.

N8 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

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NATIONAL COVERAGE

News & Markets Most Commercial Insurance Buyers Accept Coverage Changes, Price Hikes: Survey

he vast majority of commercial insurance buyers renewing their policies appear willing to accept coverage adjustments, moderate price increases, or both, according to a new survey. Still, the survey of risk managers and other corporate insurance buyers by Hanover Stone Partners finds some firms looking for ways to sidestep higher premiums by adjusting retentions, accepting restrictive policy wording, or changing their insurers or brokers. “In the face of modest price increases, most buyers are choosing to maintain both their level of insurance protection as well as their relationships with incumbent insurers,” said John J. Kelly, managing partner, Hanover Stone Partners, a Jersey City, New Jersey-based network of risk management advisors and specialized risk management services firms. “Should pricing continue to rise, however, we may see more buyers looking for alternatives, both in terms of program structure and their insurance providers.” The survey was conducted during the third quarter of 2012. The results are based on responses from approximately 5 percent of the Fortune 500 that renewed their insurance policies. Among the casualty insurance lines, half the buyers saw their general liability premiums rise by 1 to 5 percent, one in 10 saw increases of 6 to 10 percent, three in 10 had flat renewals, and one in 10 saw rates drop by up to 5 percent. Nine in 10 made no changes to their program, while one in 10 changed brokers. In auto, one-third of the survey participants saw rate increases of 1 to 5 percent, one in eight (12 percent) saw increases of 6 to 10 percent, one-third had flat renewals, and one in five (22 percent) saw rates drop by over 15 percent. While more than three in four (78 percent) made no change, 11 percent changed brokers and the same percentage changed insurers. Nearly six in 10 (58 percent) reported their workers’ compensation insurers sought rate increases that ranged up to 10 percent, www.insurancejournal.com

while 14 percent had flat renewals, and 28 percent saw rates drop by 6 to 15 percent. While three in four made no changes, 13 percent changed brokers and an equal portion changed insurers. In umbrella and excess liability, 70 percent renewed their coverage with rate increases ranging as high as 15 percent, one in five had flat renewals and one in 10 saw rates decrease by as much as 15 percent. Among the buyers, 30 percent changed insurers while 70 percent left relationships unchanged. With respect to property, 57 percent reported their insurers were willing to renew all-risk primary layers with terms and conditions “as expired”; however, 29 percent sought to impose higher retentions or deductibles and 14 percent sought both more restrictive terms and higher retentions. While 14 percent of buyers agreed USA12043.qxd 1/4/08 2:26 PM toPage the more restrictive terms, an equal percent-

age changed retentions or deductibles. Most buyers (72 percent) saw premiums rise on their renewals with 14 percent experiencing increases of more than 15 percent. In the all-risk excess layers, half the buyers indicated their insurers were willing to renew these programs “as expired” with respect to terms and conditions, all reported being charged higher premiums and one in three saw their rates rise by 15 percent or more. While nearly one in 10 buyers of directors and officers liability (D&O) indicated their insurers sought higher retentions or deductibles on renewal, 55 percent experienced rate increases of as much as 10 percent. Nearly one in five (18 percent) saw their rates decrease by up to 5 percent. Among EPLI buyers: 54 percent saw rates increase from 1 to 10 percent and just over one in four had flat renewals. Meanwhile, one in five had rate decreases, with nearly 1one in 10 seeing rates drop by 15 percent or more.

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SPECIAL REPORT

Contractors/Subcontractors

By Andrea Wells

t has not been easy being an insurance agent specializing in the homebuilders insurance market during one of the worst economic recessions in U.S. history. Survival in the recession meant change and a lot of hard work. “I’ve worked harder in the last three or four years than I have in the 30 years I’ve been in business,” says one survivor of the downturn, Ronny Robinson, CEO of Home Builders Insurance Services (HBIS) based in Waxahachie, Texas. Robinson, an independent agent who specializes exclusively in the homebuilders and contractors insurance market, works with more than 600 homebuilders throughout the state of Texas. He’s seen down cycles and up cycles in construction during his three decades in the business.

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But nothing has come close to the dismal market conditions he saw during the Great Recession of 2008-2010. Survival required doing more than just the norm. It meant changing the way he did business. “Everybody really has had to learn a different way of living, spending and buying with the recession,” he says. While some of his competitors downners, including Bush Rudnicki sized employee size when the construcShelton, a Texas-based law firm with a tion market contracted, Robinson’s agency focus on homebuilders. “We’ll do seminars upsized. The customer service issues that together. They’ll talk about the contracts, developed in competitor offices gave him an subcontractor agreements, and we talk “in” with new clients. about the insurance piece of it,” Robinson “We actually added staff so that we says. could stay ahead of the curve on service,” And of course maintaining solid relationRobinson says. The focus on service didn’t ships with carrier partners played a key role go unnoticed either. “These new clients in survival. were glad that they came over to us.” “We also have very close relationships The recession also meant traveling wherwith our underwriters,” Robinson says. ever he could to generate new homebuilder “They trust our ability to know the builder business. “I’d go to El Paso, Houston, market and competitors and to know what Austin, San Antonio — wherever I could coverage requirements are important and write a guy that was building two houses a where the premiums need to be. This also year,” he says. “To survive I had to continue translates into very favorable loss ratios, to write new business whether there was which is not common in the builder marnew business going on or not.” kets.” He also didn’t hold back spending on So favorable that HBIS boasts a 29 percent advertising even when the agency’s bottom loss ratio in general liability. Robinson says line suffered. that’s good for most any insurance market, “We also continued our advertising and much less contractors and email campaigns so that the builders would know ‘Everyone really homebuilders. His hard work and dedwe were continuing our has had to learn ication to his homebuilder level of service regardless of the economy,” Robinson a different way of clients paid off. Sales are up about 25 percent in says. living, spending 2012 over 2011, according to Robinson knew he had Robinson. While those figto remain active in the and buying.’ ures are up from a historic homebuilder market during down cycle, Robinson feels satisfied with the recession to stay relevant and known the growth. with current and future clients. “We really felt good because we had heard “We belong to every major homebuilder’s that other agencies that write builders had association in Texas. We’re really active and as much as a 65 percent decrease in one we’re known. We’ll do seminars for buildagency and 80 (percent) or so in another,” ers to talk about the builder’s risk, general he says. liability, worker’s comp, and how all that Given the dire conditions of construction relates to a residential builder,” Robinson homebuilding in recent years, Robinson says. feels fortunate to have any growth at all. He also teamed up with industry partwww.insurancejournal.com

“We consider ourselves pretty lucky,” he says. But it wasn’t just luck that helped his agency persevere — success came with a lot of hard work from everyone in his agency. Diversify Surviving in a falling housing market meant some agents had to diversify their book of business. Many left homebuilders all together. For California, one of the hardest hit states in the recession, everything changed, according to independent agent Rob Dutto, principal for California-based EPIC, a retail property/casualty and benefits brokerage firm. California’s construction market took a huge hit 10 years ago in construction defect litigation. “That really shut down the insurance industry for residential construction,” Dutto says. Then when the economy started to slow, construction took another huge hit. “Residential construction was the engine running the California economy. It really affected everything,” Dutto says. Dutto saw his large book of business for residential framers shrink dramatically. To survive, Dutto looked into diversifying his book of business. “Looking for more non-construction or commercial construction. Looking into more wrap up opportunities — urban in-fill type business, apartment construction, condominium construction, things like that,” he says. Dutto also found opportunities for growth in the construction workers’ compensation market. “Workers’ comp still continued to create an opportunity. As the economy improved there was more payroll.

continued on page N12

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SPECIAL REPORT

Contractors/Subcontractors Falling Housing Market, continued from page N11

That’s something we have definitely been focusing more on.” HBIS’ Robinson also found diversifying a good option. Robinson’s focus remained on construction, but he expanded outside of the homebuilding market. During the heart of the recession, in late 2009, Robinson launched the Builders & Contractors Insurance Services, a division focused on serving commercial builders, trade contractors and suppliers. “The fact is when the homebuilders were trying to figure out how to pay rent for another month, a lot of them dropped their general liability and other insurances,” Robinson said. So by putting a focus on the subcontractor market during that time, Robinson was able to generate new business. Troy Stanton, senior vice president of Schaumburg, Ill.-based Assurance Agency Ltd., says at one point the homebuilders market was considered a big specialty for his agency. But when business dried up, the focus moved more to heavy construction, underground contractors, street and roadtype contractors to survive. “The growth in the homebuilding is not as traditional as it used to be,” Stanton says. Opportunities in insurance come mostly from wrap-ups or project-specific programs, a change from before the recession. In the Chicago-land area, homebuilders are building homes using mostly discounted labor. “The union labor is basically dried up,” Stanton says. “There has been very little union labor in Illinois. It’s all non-union, smaller contractors that are servicing the homebuilders.” That change in the construction labor force creates some concern for builders when it comes to making sure the subcontractors they use have appropriate insurance protection, Stanton explained. “There’s an inherent concern as far as being able to provide the appropriate coverages needed in order to protect the homebuilders.” Wrap-ups or project-specific insurance programs have helped to alleviate homebuilder coverage concerns for subcontractors. “Project-specific or wrap-up programs

will protect the actual project itself,” he says, including subcontractors hired to work on the specific project. “The homebuilder is guaranteed the appropriate coverage and protection while the houses are being built,” he says. Builders and their insurance partners then allocate a cost back to the subcontractors. The project-specific insurance program makes sure that those contractors have adequate insurance coverage, while also saving builders money as well, Stanton says. “They’re (builders) trying to be as economical as they can when building homes,” he says. Stanton says, as an example, a builder in the Chicago suburbs may have built a home in 2008 for $325,000. Today that same home has to be built for about $250,000. “How is that being done?” Stanton asked. One way is by using discounted labor. Project-specific insurance programs are helping to make sure the builder remains protected when making such a change. Project-specific coverage typically includes the workers’ compensation insurance, general liability and excess liability for the entire project. Trends in Homebuilding The good news for agents and brokers working in the homebuilding construction market is that the worst may be over. “There’s no question that on the ground we are seeing an uptick in builder confidence as to what 2013 and 2014 are going to bring,” says George Dale, director of U.S. operations, Cove Programs, a managing general agency with a focus on U.S. homebuilders. Dale describes builder confidence as moving from just “hanging on from a year and a half ago” to “cautiously optimistic” early in

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2012 to feeling confident enough in improving market conditions “to bet in terms of buying insurance and staffing up” that 2013 and 2014 will be good years. Several market indicators in recent months have shown a recovery in the housing market. Slow but steady growth continued throughout 2012 despite challenges in home lending, reported the National Association of Home Builders (NAHB) in late December. “Consistent, positive reports on housing starts, permits, prices, new-home sales and builder confidence in recent months provide further confirmation that a gradual but steady housing recovery is underway across much of the nation,” says David Crowe, chief economist for the NAHB. Kevin Hastings, managing director, Cove Programs, says overall the demand for new homes is increasing, with some pockets stronger than others. “Our book is looking at a predictive 10 percent growth year-overyear in terms of unit numbers.” The NAHB estimates that single-family home starts rose to 534,000 units in 2012, up 23 percent from 2011. The NAHB forecasts single-family new-home production will post a 21 percent gain in 2013 to 647,000 units, and that starts will continue their upward climb in 2014, posting a further 29 percent rise to 837,000 units. Even with the rise in new home starts, the housing industry is nowhere near normal. Crowe says the single-family market stands at only 40 percent of what is considered a typical market. www.insurancejournal.com

Opportunities One area where builders and agents are finding some success is in custom, local homebuilding. Jett Abramson, senior vice president and director, complex casualty for Redondo Beach, Calif., based Bliss & Glennon Inc., is seeing an uptick in activity from the 50 or so custom homebuilders he writes in the Southern California market. “I don’t know if I’d say huge uptick, but a decent uptick in new starts for custom homes over the past six to nine months,” he says. And that trend seems to be continuing for 2013. “We have a homebuilder client in Orange County that has 12 custom homes on his plate that are going to begin [construction] in the next three months,” Abramson says. That builder’s normal annual turnover is about six new custom home starts. “So he’s seeing double the activity.” That’s a huge change from the bottom of the recession, he says. “Between 2008 and 2011 we had a lot of our clients significantly drop in their gross receipts,” Abramson says. “On average, I’d say, between that three year span, we saw most of our clients lose half of their gross receipts. … Now, we’re seeing that pick back up. We’re seeing it actually, at least recover back to 2007 levels, if not higher.” Now is the ideal time, he says. “All the ingredients are right for people to get back into building themselves custom homes.” Outside of Southern California, Cove Program’s Dale says some areas of the southeast, including the Carolinas have fared

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well. Texas and the Phoenix area seem to be rebounding pretty strong, he says. “Builders are telling us they see growth it in the western area — not so much Las Vegas although people are starting to think about building in Las Vegas as well,” Dale says. Even some of the recession’s hardesthit areas are starting to come back in housing, he added.

not want to assume coverage for residential work. The exclusions typically exclude all ‘residential work.’ The primary intent of these exclusions is to eliminate property damage on an on-going and completed operations basis. However, the majority of these policies will also exclude bodily injury claims. Some carriers might allow residential work but will include high deductibles in order to write the coverage.” Availability In that regard, the excess and surplus When it comes to insurance availability lines (E&S) industry has been a very most of the same homebuilder markets important partner in securing coverage for remained consistent throughout the recesa homebuilders today, Stanton says. sion, says HBIS’s Robinson, at least in Texas. Bliss & Glennon’s Abramson says capac “Because there ity has the biggest impact on pricing are so few players ‘We’re probably and coverage availability in the marin the market, it’s close to, if not, ketplace. very competitively “The capacity for homebuilder driven, coverage out of the dark insurance has declined precipitously wise and premium in the past three years,” he says. period of wise,” Robinson says. “It’s actually a very tight market “Everything really has homebuilding.’ for excess casualty on homebuildstayed pretty much ers. On primary casualty for custom the same. Pricing has. The coverage has.” homebuilders, there’s still a decent amount In Stanton’s view, standard markets have of capacity, but the rates have risen quite a turned their back on the residential indusbit in the past three years,” he says. try in several ways. “From a coverage stand Despite capacity concerns, Abramson point, the exclusions that are put on some and other specialists seem optimistic for of the (standard company) policies have prospects in homebuilding. been problematic,” he says. “But fortunately, “We’re probably close to, if not, out of the the E&S marketplace has been solid in that woods on the dark period of homebuildthey can include some of the coverages that ing,” Abramson says. But the industry may the traditional markets cannot.” never return to its heyday. “I don’t think Stanton says residential exclusions can we’re ever going back to where we were, now be found on many insurance policies. but we should be back to some sort of “These policies have typically been written homeostasis where maybe we’re seeing a by ‘contracting’ insurance carriers that do bit of a surge in 2013.”

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Closer Look

Employment Practices Liability Selling EPLI Coverage to the Small Business a Challenge, but Necessary By Amy O’Connor

fter almost five years of continuous claims in the employment practices liability insurance (EPLI) segment, rates have started going up and agents and brokers now have another hurdle when it comes to convincing small and medium-sized businesses to buy the coverage. “There is a higher cost of defending claims. Defense attorneys are asking for higher rates to defend them,” says Lynette Lyngaas, vice president of employment practices liability and management liability for Monitor Liability Manager in Rolling Meadows, Ill. “In addition to that fact, I think in this economic environment the investment income has not been there for companies to offset their loss ratios. So I think that has been a driving factor as well.” The rate increase is still only a modest six to seven percent according to those who specialize in this industry, but because small and medium-sized enterprises (SMEs) are still in recovery or survival mode, any increase does not help the cause for agents who focus on this segment. “Companies with 500 employees buy EPLI,” says Glenn Clark, CEO and president of Rockwood Programs Inc. in Wilmington, Del. “A smaller business is struggling for every nickel and EPLI coverage is not something they have to have to be in business. They have to be convinced of the need.” Clark says this is why part of Rockwood’s focus with its new EPLI product is to teach insur-

ance agents how to methodically sell the coverage to the SME segment. The MGA launched the new program in June 2012 with Protective Specialty after its one year non-compete clause with Houston Casualty expired in April. Clark, who has specialized in EPLI since 1996, says Rockwood has built a completely new policy form that features an expansive definition of what an employee is — including full-time, parttime, independent contractors, volunteers, and interns. Limits are available starting at $250,000 going up to $5 million and there are multiple deductible options. Rockwood also created an online quoting engine that features six questions and provides a quote in less than a minute to simplify the selling process for agents. The MGA also offers tools like claims scenarios and com-

‘The biggest mistake agents make is they don’t finish the sale.’ mon exposures that are not covered to help agents show clients why they need the coverage. “About 25 percent of companies that are eligible to buy EPLI actually buy it,” says Clark. “People say, ‘I am never going to get sued,’ and the reality is that you are.” Clark says if more agents followed a process that explained what a client’s EPLI exposures

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are and that those exposures are not covered by their general liability or business owners policy, clients would be better informed and more likely to buy EPLI coverage. Taking those steps also helps an agent protect their own E&O exposure. “The biggest mistake agents make is they don’t finish the sale. They think offering the coverage is selling the coverage,” says Clark. “Selling the coverage would best be done through a risk management process. Go through the exposures and show them this is not covered.” Lyngaas says with new trends like workplace bullying, social media, and transgender type claims, it’s important for agents to address these issues with their clients and carriers to adjust their policy forms as needed. Providing specific educational resources to agents about the SME segment is also crucial because of the “it won’t happen to me” attitude that these businesses have, says Lyngaas. “Giving [agents] claims scenarios and other tools like webi-

nars and educational pieces is definitely going to help them sell the coverage,” she says. Clark says the pressure that small businesses currently face actually makes it vitally important for them to carry EPLI coverage because even if an accusation is unfounded, it still needs to be defended — a huge cost to an SME. He says the average claim begins at about $30,000 but a policy premium is only about $1,200. The MGA is also working on a policy form specifically for California that features a high deductible and a more restrictive insuring clause to make the coverage more affordable there, where EPLI claims are the highest. Considering the high number of people on disability and unemployment, Clark says it is likely that EPLI claims will continue to go up, which should be enough to get the coverage conversation started. “[Agents] need to make the impression that everyone is going to get accused of something sooner or later,” says Clark. www.insurancejournal.com

2013

Insurance Industry Meetings & Conventions Directory

Welcome to Insurance Journal’s 2013 Insurance Industry Meetings and Conventions Directory. The information in this directory is taken from a larger database containing additional information on these and other meetings, including industry-related seminars, conferences and workshops. The online Insurance Journal events database can be found at www.InsuranceJournal.com/events. Meeting planners are invited to add new meetings, conventions and seminars to the database free of charge, all year long. P/C Insurance Joint Industry Forum Jan 15 Waldorf Astoria Hotel New York, NY Insurance Information Institute www.iii.org

NIIA 5th Annual Trade Show Jan 31 The Tuscany Las Vegas, NV NIIA Nevada Independent Insurance Agents www.niia.info

Houston Insurance Day 2013 Feb 19 Marriott Houston Westchase Houston, TX IIAH Independent Insurance Agents of Houston www.iiah.org

2013 Big ‘I’ Winter Meeting Jan 16-20 The Westin Mission Hills Resort & Spa Rancho Mirage, CA Independent Insurance Agents & Brokers of America www.independentagent.com

Earthquakes: Mean Business Feb 1 Busch Student Center; Saint Louis University St. Louis, MO Saint Louis University - Parks College of Engineering, Aviation, & Technology www.parks.slu.edu

NAMIC Claims Conference Feb 19-21 Hyatt Regency Atlanta Atlanta, GA NAMIC National Association of Mutual Insurance Companies www.namic.org

Joe Vincent Management Seminar Jan 27-29 Renaissance Hotel Austin, TX IIAT Independent Insurance Agents of Texas www.iiat.org

ABA Insurance Risk Management Forum 2013 Feb 3-6 Ritz-Carlton Grande Lakes Orlando, FL American Bankers Association www.aba.com

IIANC’S InsurEXPO13 Feb 20-21 Sheraton Imperial Hotel & Convention Center Durham, NC IIANC Independent Insurance Agents of North Carolina www.iiaba.net

World Captive Forum 2013 Jan 28-30 Turnberry Isle Miami Aventura, FL World Captive Forum www.worldcaptiveforum.com

IIAN Winter Conference Feb 6-7 Ramada Inn Kearney, NE IIAN Independent Insurance Agents of Nebraska www.iian.org

Windstorm Insurance Conference 2013 Jan 28-31 Renaissance Orlando SeaWorld Orlando, FL Windstorm Insurance Network Inc. www.windnetwork.com

PLUS 2013 D&O Symposium Feb 6-7 Marriott Marquis Hotel New York, NY PLUS Professional Liability Underwriting Society www.plusweb.org

IIABNY’S Capitol Day Jan 29 The Capitol Albany, NY IIABNY Independent Insurance Agents & Brokers of New York Inc. www.iiaba.net

Professional Insurance Marketing Association (PIMA) 2013 Annual Meeting Feb 7-10 Hotel Del Coronado Coronado, CA Professional Insurance Marketing Association www.pima-assn.org

2013 Larry Magill Small & Rural Agents Conference Jan 29-31 Courtyard by Marriott Geary Co. Convention Center Junction City, KS KAIA Kansas Association of Insurance Agents www.iiaba.net

IIAG YAC Sales & Leadership Conference Feb 7-8 Classic Center Athens, GA IIAG Independent Insurance Agents of Georgia Inc. www.iiaba.net

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IIAMT Leadership Conference 2013 Feb 20-21 Holiday Inn Downtown Helena, MT Independent Insurance Agents’ Association of Montana www.iiamt.org PIA of Florida Agent Expo 2013 Feb 21-22 Wyndham Lake Buena Vista Resort Orlando, FL PIA of Florida www.piafl.org Lone Star Legends of the IICF Feb 21 Hilton Anatole Dallas, TX IICF The Insurance Industry Charitable Foundation www.iicf.org 2013 NAPSLO Mid-year Leadership Forum Feb 25-28 Miami Beach, FL NAPSLO National Association of Professional Surplus Lines Offices Ltd. www.napslo.org

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2013 Insurance Industry Meetings and Conventions Directory MAIA Michigan Association of Insurance Agents Convention Feb 26-28 Soaring Eagle Casino and Resort Mt. Pleasant, MI MAIA Michigan Association of Insurance Agents www.michagent.org

2013 IICF Blazing the Trail Benefit Dinner Mar 14 Palmer House Hilton Chicago, IL IICF The Insurance Industry Charitable Foundation www.iicf.org

2013 AAIS Main Event Apr 7-9 Ponte Vedra Inn & Club Ponte Vedra Beach, FL American Association of Insurance Services (AAIS) www.aaisonline.com

NAMIC Commercial Lines Seminar Feb 27-Mar 1 Renaissance Chicago Chicago, IL NAMIC National Association of Mutual Insurance Companies www.namic.org

IAIP Region IX 2013 Annual Conference Mar 14-16 The Oxford Suites Boise, ID International Association of Insurance Professionals www.internationalinsuranceprofessionals.org

PLUS 2013 Professional Risk Symposia Apr 10-11 Hyatt Regency Chicago Chicago, IL PLUS Professional Liability Underwriting Society www.plusweb.org

PLUS Foundation Women’s Leadership Network Feb 28-18 University of Massachusetts Club Boston, MA PLUS Professional Liability Underwriting Society www.plusweb.org

2013 Annual Convention of the Louisiana Surplus Line Association Mar 20-22 Beau Rivage Resort Biloxi, MS Louisiana Surplus Lines Association www.lasurpluslines.com

San Diego Association of Insurance Professionals Glow Ball Golf Tournament Mar 1 Sail Ho Golf Course San Diego, CA San Diego Insurance Women www.sdinsurancewomen.com

MAIA 2013 Small Agency Conference Mar 21-22 Holiday Inn Columbia, MO MAIA Missouri Association of Insurance Agents www.iiaba.net

AAMGA Automation and Technology Conference Mar 2-5 Scottsdale Plaza Resort Scottsdale, AZ AAMGA American Association of Managing General Agents www.aamga.org

IICF 9th Annual Club100 Dinner Mar 21 The California Science Center/Shuttle Pavilion Los Angeles, CA IICF The Insurance Industry Charitable Foundation www.iicf.org

Los Angeles I-Day Mar 7 The Westin Bonaventure Downtown LA Los Angeles, CA IIABA-Los Angeles iiaba-la.com

Independent Insurance Agents of West Virginia, Inc. - 2013 Insurance Day Mar 24-25 Charleston Marriott Town Center Charleston, WV IIAWV Independent Insurance Agents of West Virginia Inc. www.iiawv.org

IAIP Region III 2013 Annual Conference Mar 7-9 Renaissance Ross Bridge Golf Resort & Spa Birmingham, AL Birmingham Area Insurance Professionals www.orgsites.com VIAA Mid-Year Meeting & Ski Day Mar 13-14 Sugarbush Warren, VT VIAA Vermont Insurance Agents Association www.iiaba.net IIABNJ Technology Day Mar 13 Sheraton Edison Hotel Raritan Center Edison, NJ IIABNJ Independent Insurance Agents & Brokers of New Jersey www.iiabnj.org

IIAO Hypopanty 2013 Apr 3-4 Embassy Suites Norman, OK IIAO Independent Insurance Agents of Oklahoma www.iiaba.net IIAO 2013 Young Agents Leadership Conference Apr 4-5 Embassy Suites Norman, OK IIAO Independent Insurance Agents of Oklahoma www.iiaba.net IAIP Region I 2013 Annual Conference Apr 4-7 Four Points Sheration Norwood, MA Massachusetts Association of Insurance Women www.maiw.org

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PLUS 2013 Medical PL Symposium Apr 10-11 Hyatt Regency Chicago Chicago, IL PLUS Professional Liability Underwriting Society www.plusweb.org NAMIC Personal Lines Seminar Apr 10-12 Hyatt Regency Chicago Chicago, IL NAMIC National Association of Mutual Insurance Companies www.namic.org PIA 2013 Federal Legislative Summit Apr 10-11 Crystal City Marriott Arlington, VA National Association of Professional Insurance Agents www.pianet.com IAIP Region V 2013 Annual Conference Apr 11-14 Marriott Hotel and Resort Cedar Rapids, IA International Association of Insurance Professionals www.internationalinsuranceprofessionals.org IAIP Region VIII 2013 Annual Conference Apr 11-12 South Point Hotel, Casino & Spa Las Vegas, NV International Association of Insurance Professionals www.internationalinsuranceprofessionals.org FIWT Leadership & Education Mid Year Expo Apr 12-13 Holiday Inn Riverwalk San Antonio, TX FIWT Federation of Insurance Woman of Texas www.FIWT.com San Diego ‘I’ Day Trade Show Apr 16 Town & Country Mission Valley San Diego, CA Insurance Brokers & Agents of San Diego www.ibasandiego.com

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2013 Big “I” Legislative Conference Apr 17-19 Grand Hyatt Washington Hotel Washington, DC Independent Insurance Agents & Brokers of America www.independentagent.com

IIAC Young Agent’s Spring Conference May 8 Wethersfield Country Club Wethersfield, CT IIAC Independent Insurance Agents of Connecticut Inc. www.iiaba.net

RIMS 2013 Apr 21-24 Los Angeles Convention Center Los Angeles, CA RIMS www.rims.org

IIAW Annual Convention May 8-9 Madison Marriott West Madison, WI IIAW Independent Insurance Agents of Wisconsin www.iiaw.com

IIAG 116th Annual Convention - 45th YAC Annual Conference Jun 6-8 Omni Amelia Island Plantation Resort Amelia Island, FL IIAG Independent Insurance Agents of Georgia Inc. www.iiaba.net

The 4th Annual B.I.G. Convention and Trade Show Apr 25-26 Pomona Fairplex Pomona, CA B.I.G. Brokers Insurance Group www.mybigins.com

MIIAB/Trusted Choice Convention May 8-9 Minneapolis Convention Center Minneapolis, MN MIIAB Minnesota Independent Insurance Agents & Brokers www.iiaba.net

LAAA 14th Annual Convention Jun 6-8 San Diego, CA LAAA Latin American Agents Association www.latinagents.com/home.html

2013 CPCU Society Leadership Summit Apr 25-27 Phoenix, AZ CPCU Society www.cpcusociety.org

UAIIA 94th Annual Convention May 15-17 Zermatt Resort & Spa Midway, UT UAIIA Utah Association of Independent Insurance Agents www.iiaba.net

2013 MIAA Annual Convention Apr 29-30 DoubleTree by Hilton Hotel Augusta, ME MIAA Maine Insurance Agents Association www.iiaba.net 27th Annual Blue Ribbon Conference May 5-9 Mauna Lani Bay Hotel & Bungalows Kohala Coast, HI IIABC Independent Insurance Agents and Brokers of California www.ibawest.com 2013 ACORD LOMA Forum May 6-8 MGM Grand Las Vegas Las Vegas, NV ACORD LOMA www.acordlomaforum.org/2013/ 2013 TMPAA Mid-Year Meeting May 6-8 Hilton Baltimore Baltimore, MD TMPAA Target Markets Program Administrators Association www.targetmkts.com NAMIC Directors Education Series: Boot Camp &Advanced Courses May 6-8 The Royal Sonesta Harbor Court Hotel Baltimore, MD NAMIC National Association of Mutual Insurance Companies www.namic.org

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112th IIAAR Big ‘I’ Annual Convention Jun 3-5 Hilton Beach Front Hotel Pensacola, FL IIAAR Independent Insurance Agents of Arkansas www.iiaba.net

NCCI’s Annual Issues Symposium May 16-17 Hyatt Regency Grand Cypress Resort Orlando, FL National Council on Compensation Insurance (NCCI) www.ncci.com

International Association of Insurance Professionals 72nd Annual Convention Jun 6-8 Caribe Royale Orlando Orlando, FL International Association of Insurance Professionals www.insuranceprofessionals.org IIAM Annual Convention and Trade Show Jun 9-12 Sandestin Beach Hilton Destin, FL IIAM Independent Insurance Agents of Mississippi www.iiaba.net Bermuda Captive Conference Jun 10-12 Fairmont Southampton Hotel Southampton, Bermuda Bermuda Captive www.bermudacaptiveconference.com

AAMGA Annual Meeting May 19-22 New Orleans Marriott Hotel New Orleans, LA AAMGA American Association of Managing General Agents www.aamga.org

115th IIAC Annual Membership Meeting & Installation of Officers Jun 11 Wethersfield Country Club Wethersfield, CT Independent Insurance Agents of Connecticut www.iiact.org

PIA of OR/ID 2013 EXPO May 20 DoubleTree Lloyd Center Portland, OR PIA Western Alliance www.piawest.com NHAIA Mid-Year Management & Education Conference and Trusted Choice Golf Tournament May 21-23 Church Landing Meredith, NH NHAIA New Hampshire Association of Insurance Agents www.iiaba.net

IICF Women in Insurance Global Conference Jun 12-14 Marriott Marquis Times Square New York, NY IICF The Insurance Industry Charitable Foundation www.iicf.org IIAV 115th Annual Convention & Exhibition Jun 16-18 Virginia Beach Hilton Oceanfront Virginia Beach, VA IIAV Independent Insurance Agents of Virginia Inc. www.iiaba.net

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2013 Insurance Industry Meetings and Conventions Directory AWIA Annual Convention Jun 18-19 Cheyenne Holiday Inn Cheyenne, WY AWIA Association of Wyoming Insurance Agents www.iiaba.net

2013 PIA of Georgia 75th Annual Agents Convention Jul 21-24 The Ritz Carlton Lodge Greensboro, GA PIA of Georgia www.piaga.com

VIAA 107th Annual Convention Sep 12-13 Hilton Burlington Vermont Burlington, VT VIAA Vermont Insurance Agents Association www.iiaba.net

2013 CIWA Summer Forum & Annual Meeting Jun 20-21 Silverado Resort & Spa Napa, CA CIWA California Insurance Wholesalers Association www.ciwa.net

TSLA 2013 Mid-Year Meeting Jul 21-24 Four Seasons Resort Vail, CO TSLA Texas Surplus Lines Association www.tsla.org

NHAIA Annual Meeting Sep 16-18 Mt. Washington Hotel Bretton Woods, NH NHAIA New Hampshire Association of Insurance Agents www.iiaba.net

FAIA 109th Anniversary Convention & Education Symposium Jun 20-23 Orlando World Center Marriott Orlando, FL FAIA Florida Association of Insurance Agents www.faia.com

2013 IIABI 89th Annual Convention Aug 4-7 Coeur d’Alene Resort Coeur d’Alene, ID IIABI Independent Insurance Agents & Brokers of Idaho www.iiaba.net

NAMIC 118th Annual Convention Sep 22-25 Washington State Convention Center Seattle, WA NAMIC National Association of Mutual Insurance Companies www.namic.org

2013 IMCA Annual Conference Jun 23-26 Philadelphia, PA IMCA Insurance Marketing and Communication Association www.imcanet.com

45th Trusted Choice Big ‘I’ National Championship Aug 5-8 Country Club of North Carolina Pinehurst, NC IIABA Independent Insurance Agents & Brokers of America www.independentagent.com

2013 Big ‘I’ Fall Leadership Conference Sep 25-29 Grand Hyatt San Antonio San Antonio, TX Independent Insurance Agents & Brokers of America www.independentagent.com

NAMIC Management Conference Jun 23-26 La Costa Resort & Spa Carlsbad, CA NAMIC National Association of Mutual Insurance Companies www.namic.org IIAT Annual Conference & Trade Show Jun 26-28 Dallas, TX IIAT Independent Insurance Agents of Texas www.iiat.org The 43rd Annual LAAIA Convention Jul 16-20 Miami, FL LAAIA Latin American Association of Insurance Agents www.laaia.com 2013 Western States Surplus Lines Conference Jul 17-19 Canyons Resort Park City, UT Surplus Line Association of Utah www.slaut.org MAIA Missouri Leadership Conference Jul 17-19 Tan-Tar-A Resort Osage Beach, MO MAIA Missouri Association of Insurance Agents www.iiaba.net

IIABNJ 2013 Golf Outing Aug 6 Mercer Oaks Golf Course West Windsor, NJ IIABNJ Independent Insurance Agents & Brokers of New Jersey www.iiabnj.org NAMIC Leadership Development Workshop Aug 7-8 The University of Chicago Gleacher Center Chicago, IL NAMIC National Association of Mutual Insurance Companies www.namic.org 2013 Arizona Big ‘I’ Convention 79th Annual Convention & Trade Show Aug 21-23 Glendale Renaissance Glendale, AZ IIABAZ Independent Insurance Agents & Brokers of Arizona www.iiaba.net IIABO 2013 85th Annual Convention & Trade Show Aug 25-27 Sunriver Resort Sunriver, OR IIABO Independent Insurance Agents & Brokers of Oregon www.iiaba.net

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2013 Alliance Convention & Expo Sep 26-29 JW Marriott Desert Springs Resort & Spa Palm Desert, CA American Agents Alliance www.agentsalliance.com NAPSLO 2013 Annual Convention Sep 30-Oct 3 San Diego, CA NAPSLO National Association of Professional Surplus Lines Offices, Ltd. www.napslo.org IIAN 106TH Annual Convention Oct 2-4 Embassy Suites Lincoln, NE IIAN Independent Insurance Agents of Nebraska www.iiaba.net PIA of Montana Producer Seminar Oct 3-4 Bozeman Holiday Inn Bozeman, MT PIA Western Alliance www.holidayinn.com/hotels/us/en/bozeman/ bznmt/hoteldetail IIAWV West Virginia Annual Convention Oct 6-8 The Resort at Glade Springs Daniels, WV IIAWV Independent Insurance Agents of West Virginia www.iiaba.net

www.insurancejournal.com

IIANC 116th Annual Convention Oct 6-9 Marriott Grand Dunes Resort Myrtle Beach, NC IIANC Independent Insurance Agents of North Carolina www.iiaba.net

IIAMT Annual Convention 2013 Oct 13-15 Best Western Plus GranTree Inn Bozeman, MT Independent Insurance Agents’ Association of Montana www.iiamt.org

IBA West Kern County Trade Show and Golf Tournament Nov 6-7 Double Tree Hotel Bakersfield, CA IBA West Kern County www.ibawest.com

IIABNJ’s Annual Business Meeting & Networking Event Oct 6-8 Crystal Springs Resort Hamburg, NJ IIABNJ Independent Insurance Agents & Brokers of New Jersey www.iiaba.net

NAMIC Communications & Marketing Workshop Oct 14-16 The Conrad Indianapolis Indianapolis, IN NAMIC National Association of Mutual Insurance Companies www.namic.org

117th IIAK Annual Convention & Trade Show Nov 6-8 The Brown Hotel Louisville, KY IIAK Independent Insurance Agents of Kentucky www.iiaba.net

IIASD 2013 Convention & Tradeshow Oct 6-8 Best Western Ramkota Sioux Falls, SD IIASD Independent Insurance Agents of South Dakota www.iiaba.net IIABNJ Annual Business Meeting & Networking Event Oct 6-8 Crystal Springs Resort Hamburg, NJ IIABNJ Independent Insurance Agents & Brokers of New Jersey www.iiabnj.org IBA Sacramento Big ‘I’ Day Oct 8 Sacramento, CA Insurance Brokers and Agents of Sacramento www.ibasacramento.com IIABC West Emerging Leaders InsureFest Oct 8-13 TBA, CA IIABC Independent Insurance Agents and Brokers of California www.ibawest.com IIA of Illinois Annual Convention Showcase Oct 9-10 Embassy Suites East Peoria, IL IIA Independent Insurance Agents of Illinois www.iiaofillinois.org IIABSC South Carolina Annual Convention Oct 13-15 Grove Park Inn Asheville, NC IIABSC Independent Insurance Agents & Brokers of South Carolina www.iiaba.net

www.insurancejournal.com

Insurors of Tennessee 120th Annual Convention Oct 19-20 Harrah’s and Horseshoe Casino Hotels Tunica, MS Insurors of Tennessee www.insurors.org PCI Annual Meeting Oct 20-23 Boston Marriott Copley Place Boston, MA PCI Property Casualty Insurers Association of America www.pciaa.net 2013 PIA of WA/AK and IIABW Joint Conference Oct 20-22 Seattle Sheraton Hotel Seattle, WA PIA of WA/AK and IIABW www.waconference.com

TSLA Annual Meeting Nov 10-11 Four Seasons Hotel Austin, TX TSLA Texas Surplus Lines Association www.tsla.org IIAC 2013 Mid-Year Convention Nov 14 Aqua Turf Plantsville, CT IIAC Independent Insurance Agents of Connecticut Inc. www.iiaba.net 115th IIAI Annual Convention Nov 17-19 Westin Hotel Indianapolis, IN IIAI Independent Insurance Agents of Indiana www.iiaba.net

13th Annual TMPAA Summit Oct 21-23 Westin Kierland Resort Scottsdale, AZ Target Markets Program Administrators Association www.targetmkts.com FIWT 69th Annual Convention Oct 25-27 Moody Gardens Hotel Galveston, TX FIWT www.FIWT.com 2013 CPCU Society Annual Meeting and Seminars Oct 26-29 New Orleans, LA CPCU Society www.cpcusociety.org PLUS 2013 International Conference Nov 4-6 Orlando, FL PLUS Professional Liability Underwriting Society www.plusweb.org

January 14, 2013 INSURANCE JOURNAL-NATIONAL REGION | N19

Do You Believe in Evolution?

o you believe in evolution? No, I don’t mean the theory espoused by Charles Darwin; I mean the idea that change is inevitable and even necesBy Christopher sary in business. Do you believe that evolution is Boggs required for any business to take advantage of its strengths to benefit its customers? We do! And in 2013, The Insurance Journal Academy of Insurance is applying this belief and evolving, radically according to some, to take advantage of and build on our strengths to better serve you. We think you are going to like the result. What to Expect So, what can you expect in 2013 as a result of the Academy’s evolution? Fewer live classes. In the past three academic years, the Academy has averaged 90 live class days each year. While this might sound like a good plan and schedule, presenting this many live classes was actually counterproductive. Many, in fact most, of the classes were “new” rebroadcasts of previously conducted classes. New material was rarely provided because of the request to conduct specific classes over and over again. There was not much new training material, at least not as much as you would think based on the number of class days. Also, many Academy followers, students and potential students complained that there was not enough advanced notice of the classes. Each class was advertised only once and in the same week they were being presented. To remedy both challenges created by conducting so many live classes we reduced the number of live class days to 26 in 2013. The

vast majority of these classes are new to the Academy so you have more opportunity to access new training. Also, at least two weeks, and in most cases three weeks, notification of each class will be provided, giving you ample time to put the class on your schedule. Improved access to and information on our extensive library of existing classes. The Academy has more than 200 hours of training and education ready to access right now. You don’t have to wait for a replay of a previously taught class; you can download any of these classes anytime. All of our most popular classes are there for your use and on your schedule. New and original immediate access classes. Many of our top instructors agreed to provide several hours of new, original material to the Academy’s immediate access library. These new classes are recorded in our studio and made available solely as an immediate access class. This allows the Academy to add new and relevant material without having to wait for an open day in the educational calendar. You gain much quicker access to timely information. And like other immediate access classes, you can download them anytime and listen anytime — so these, like the existing library of immediate access classes, fit into your schedule.

N20 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

New Features Even during this time of evolution, certain aspects and features of the Academy are not changing — key features that set us apart and continue into 2013 and beyond include: Everyone is invited. Invite your entire office to any Academy class you purchase — live or immediate access. If there are 10 professionals in your office who could benefit from a particular class, bring them to the meeting. The single registration fee covers one or 100 students (provided everyone is in the same building). “Forever” access. When you register for a class, you can access it anytime, as often as you want. Use this feature for a refresher or to train new staff members. Your access to a class never goes away once you pay for it. Satisfaction guaranteed. The Academy’s goal is to provide you with highly relevant, immediately useful information. If you feel a particular class (live or immediate access) does not meet this goal and your needs, we will gladly refund your full purchase price. Tour of Insurance Journal’s Academy of Insurance and learn what we have to offer. You can find us at www.ijacademy.com. Boggs is the director of education for Insurance Journal’s Academy of Insurance. Email: cboggs@ijacademy.com. www.insurancejournal.com

10 Things You (Probably) Didn’t Know About the Academy! Once you purchase a webinar, it’s yours FOREVER! There’s no expiration, or “must see by” date.

All our webinars are hosted from sunny San Diego, Calif.

Every class is recorded so if you see a class on sale… buy it! You’ll be sent the recorded link within three business days after the live course.

Our instructors are from all over the country and have varied backgrounds.

We’re on LinkedIn and you should follow us!

The Academy was launched in 2010. Since then we’ve had more than 4,000 students.

Our Membership program is the best value around for (virtually- no pun intended!) unlimited training sessions.

We have four skills tests that are uber hard! Think you can pass them? Give them a try.

You can share access with others in your office. Smarter employees = improved business!

We all love chocolate!

2013 Schedule Mark your Calendar with the Academy’s 2013 schedule! You will NOT want to miss any of these opportunities. January 16, 2013 January 30, 2013 February 14, 2013 February 28, 2013 March 20 & 27, 2013 March 28, 2013 www.insurancejournal.com

April 3 & 17, 2013 May 1 & 8, 2013 May 23, 2013 June 6, 2013 June 26, 2013 July 11, 2013

July 25, 2013 August 14, 2013 August 28, 2013 September 11, 2013 September 26, 2013 October 9, 2013

October 23, 2013 November 7, 2013 November 20, 2013 December 4 & 11, 2013 December 18, 2013

January 14, 2013 INSURANCE JOURNAL-NATIONAL REGION | N21

DN T N VE AL

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ALEATORY Advertisers Index

COMPENSATORY EXCULPATORY FRAUD FREQUENCY HAZARD INDEMNIFY NEGLIGENCE PERIL Readers, browse, contact, or do product searches on any of our full page advertisers at: http://www.insurancejournal.com/adshowcase/ REDLINING RISK SEVERITY TORTFEASOR VOID WAIVER Agency Ideas IIA of Houston Tejas American General Agency www.agencyideas.com N3 Applied Underwriters www.applieduw.com W7, W40, SC7, SC40 SE7, SE40, E7, E40, M7, M40 Brecht & Associates www.brechtassoc.com SC13 Burns & Wilcox Ltd www.burnsandwilcox.com SE3 Catlin US www.catlinus.com W2, SC2, SE2, E2, M2 Century National www.cnico.com W9

www.iiah.org SC14 JM Wilson www.jmwilson.com SE11, M12 M.J. Hall & Company, Inc. www.mjhallandcompany.com W11 McClelland & Hine www.mhi-tx.com SC12 Monarch E & S Insurance Services www.monarchexcess.com W3 PersonalUmbrella.Com www.personalumbrella.com W5, SC5, SE5, E5, M5

N22 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

www.taga1.com SC3 Texas Mutual Insurance Company www.texasmutual.com SC11 United Contractors Insurance Agency www.ucisg.com N13 Universal Service Agency, Inc. www.universalbonds.com N9 Volunteers Insurance Services Association, Inc. www.cimaworld.com N5 Westrope www.westrope.com N7

www.insurancejournal.com

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Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS is the Director of Education with Insurance Journal’s Academy of Insurance. With more than 21 years insurance and risk management experience, Boggs’ background includes loss control, insurance production, consulting, and teaching.

Available in Print or Digital Format at

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Closing Quote

Obesity and Workers’ Comp Costs

employees as part of a risk reduction initiative: • Obese workers filed twice as many comp claims. • Obese workers had seven times higher medical costs. • Obese workers lost 13 times more days of work. • Body parts most prone to injury for obese individuals included lower extremities, wrists or hands, and the back. Most common injuries were slips and falls, and lifting. The U.S. Department of Health and Human Services said the costs to U.S. businesses related to obesity exceed a shocking $13 billion each year. Diabetes and smoking are right behind an expanding waistline in their impact on workers’ comp claims. Diabetes is directly correlated with obesity and affects the woundhealing process. Smoking, in addition to all of its well-publicized health risks, also affects surgery to repair fractures. A smoker’s bones take longer to knit, and there is a higher risk of re-fracture. In fact, there is a growing trend for physicians to delay or avoid surgery on a heavy smoker because of potential complications.

Wellness Programs It behooves employers to look carefully at their employee population and offer wellness programs as part of an overall benefit package. Medical costs are rising, a hard truth that cannot be changed. But what we can change is why the ealth care reform has been at the top of the political employee population is getting hurt, how badly employees agenda through the past two presidential elections, get hurt and the length of time it takes to recover. That’s why and with it has come greater awareness of the need for case management firms are increasingly becoming part of the wellness and prevention to counter growing medical probworkers’ compensation risk management team. lems such as obesity. This need extends to the workplace, The key is to reach an employee population early because where employees with pre-existing health conditions drive once the proverbial horse up workers’ compensation Workers with ‘co-morbidities’ are more is out of barn, it’s more costs. difficult to control. When Simply put, workers with likely to hurt themselves on the job. the health of the employcertain health conditions, ee population and its impact on comp claim costs are undercalled “co-morbidities,” are more likely to hurt themselves stood, the situation can be handled in a preventative way. You on the job, require more time and money to treat and heal, have to dig deeper when you want to impact cost. and take more time to get back to work. These issues may not have seemed as imperative in the past several years, but with a rise in both workers’ comp rates, Co-Morbidities increasing non-renewals and tightening capacity, it’s time for Leading the way is obesity, a health problem that has agents, brokers and other insurance partners to discuss obedrawn national attention in recent years but not showsity and other wellness issues with their clients — and help ing signs of slowing. In fact, a recent Duke University/RTI these employers find solutions to improve worker health and International/Centers for Disease Control and Prevention control medical and workers’ comp costs. study estimates 42 percent of U.S. adults will become obese by 2030. Obesity increases the healing times of fractures, strains Hawrylak is president of The Kingstree Group Inc., a case management firm servand sprains, and complicates surgery. According to another ing self-funded workers’ compensation programs. Email: mahawrylak@kingstree. Duke University study that looked at the records of 11,728 net. Phone: 610-254-9050. Website: www.kingstree.net.

By Mary Anne Hawrylak

N24 | INSURANCE JOURNAL-NATIONAL REGION January 14, 2013

www.insurancejournal.com

January 14, 2013 INSURANCE JOURNAL-WEST REGION | 39

Expect big things in workers’ compensation. Expect to save a third of your clients 30% or more. Expect broad acceptance and few class limitations nationwide. Expect competitive commissions. For information call (877) 234-4450 or visit auw.com/ca.

41 | INSURANCE JOURNAL-WEST REGION January 14, 2013