AUGUST 15, 2011 | VOL. 89, NO. 16
SATIRE ISSUE
Happy Shall You Be! Service, a smile and “happy too quote� is Debbie’s mantra. Access these lines out of the Monarch Arizona office, serving Arizona, Nevada and Hawaii: tractors s Artisans & General Contractors s Apartments and Homeowner wner / Condo Associations s Bed & Breakfast Operations, ons, Hotels and Motels s Special Events s Vacant Land s Farming Operations s Environmental - Contractors, ctors, Consultants and Site Liability ability s Excess and Umbrella s Inland Marine Debbie enjoys what she does and you will enjoy what she does for you!
One Who Serves Debbie Perry, ASLI Senior Commercial Underwriter !RIZONA /FFICE debbiep@monarchexcess.com
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Wade Reece Chairman & CEO, BB&T Insurance Services
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The LexisNexis® Insurance Exchange saves us time and money. We have improved the quality of submissions through a secure, repeatable process—and that’s why we’re making the Insurance Exchange happen.
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BB&T Insurance Services is the sixth largest insurance agency in the United States, with more than $1 billion in revenue. Without an industry standard, we had multiple ways of communicating with our carriers, which was confusing and inefficient. At BB&T, we knew there had to be a better way. The Insurance Exchange cuts down on the repetitive nature of the process and gives us one way to do things very well. It enables us to standardize the way we submit business, improve the quality of submissions and enhance customer service. It’s here and it works. Keep up. With us. Email insurance.exchange@lexisnexis.com or visit www.lexisnexis.com/KeepUp
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On The Cover
Inside This Tissue August 15, 2011 • Vol. 89, No. 16 • Satire Issue
N8
Industry Keeps Up With Older, Wider America
N24
NATIONAL COVERAGE
N26 Top 10 Innovative P/C Insurance Products
N8 Exclusive Interview: P/C Hard Market Returns
N31 China Buys U.S. Surplus Lines Industry
N9 AIG Offers Bail Out to U.S. Government
N39 IRS Applauds P/C Insurers’ Excess Profits
N9 Lloyd’s of London Moving to Des Moines
N40 25 Fears That Can’t Be Insured Against
N10 Baseball Standings: Insurers Trail Banks, Liquids
Special Report: Diversity in the P/C Industry
REGIONAL COVERAGE
N10 Hackers Hack Cyber Insurance Site
N16 Cat Models Compete for Top Crown
N10 Agency to Sell Insurance
N16 California Allows Homeowners Coverage for Cars
N22 Democrats, Republicans Close Flood Program N22 Poll: Democrats Tops in Disasters Special Report: Diversity in the P/C Insurance Industry N18 Industry Keeps Pace as America Gets Older, Wider How P/C Industry Hiring Reflects Changing America N18 Would You Like Risotto with That Auto Policy? Openly-Gay Insurer Has 4-Star Recruiting N20 Easy Steps to Diversify the Insurance Workforce N20 The New Fireperson’s Fun Insurance Co.
N4 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
N16 Texas Bans Windstorms N16 California Insurers Call for Carmageddon II N16 Florida Windfields to Steer Hurricanes N17 Florida’s Citizens’ Sweet Plan to Cover Losses N17 N.C. Trial Lawyers Seek Malpractice Cap N17 Indiana Votes to Privatize State Farm N17 Oklahoma Contractor Gives Tornado Victim Honest Deal N17 Oregon Medical Marijuana Costs Too High, Say Insurers
N32
N42
IDEA EXCHANGE N24 Stranger Than Truth Man with Tongue Stuck to Peacock Falls Off Burning Bike with No Shorts On, Is Then Saved by Umbrella N32 The Competitive Advantage: Burand Increase with Little or No Effort N34 Growing Your P/C Agency: Shulman One Agent’s Bid to Off the Gecko N36 Commercial Property Coverage: Boggs The New Injudicious Exclusion N37 Erors & Omisions: Pearsall How to Guarantee an Agency E&O Claim N38 Minding Your Business: Oak and Schoeffler Managing Company Relations the Easy Way... and More Ideas N42 Closing Quote: van Aartrijk and Amrhein Got Regional? The Real Reasons Agents Love Regional Carriers
DEPARTMENTS N6 Opening Note N10 N12 N14 N14 N28 N30 N46 N52 N61 N63 N64
Sports People Declarations Figures MyNewMarkets Business Moves Lottery Winners Insolvencies Comics Weddings Crossword Puzzle www.insurancejournal.com
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Opening Note PR Catastrophe
N
obody has time to issue a press release about it but the property/casualty insurance industry is in the middle of a public relations catastrophe. The industry’s PR machine just can’t seem to get people buzzing about insurance. P/C PR pros have not manufactured a crisis or successfully inserted the industry into a tantalizing scandal for a long time. With the exception of Hurricane Katrina, the P/C insurance industry has been missing in action from most of the major news stories of the past decade. The industry nearly caught a break with the bailout of AIG — but almost immediately the media realized it was the financial product division of AIG and not the P/C segment that screwed up. The healthcare debate? No P/C pulse. All the attention went to health insurers and death panels — despite the fact individual mandates have been around in auto insurance since Henry Ford. At the start of the BP Gulf Coast oil disaster there was some gushing about federal liability limits but that dried up quickly. Financial crisis? Other than that short-lived AIG connection, the P/C industry gets absolutely none of the systemic credit. Too big to P/C industry keeps fail? We wish! missing PR opportunities. The industry has also whiffed on opportunities presented by the recession. While the media can’t get enough on Detroit automakers, home foreclosures, or school teacher layoffs, it has barely noticed the P/C industry, which just hums along paying claims, creating jobs, obeying laws. Borrrrreeeeeng!!! Wikileaks never leaked any insurance documents, and Rupert Murdoch’s News Corp. never tapped any insurance phone lines. But the final straw was that during the summer’s dramatic debt ceiling showdown, there was not one hint of P/C insurance. No promise of a tax on property insurance. No credible threat to pull the plug on the flood program. Neither Rush Limbaugh nor John Stewart interviewed a single P/C executive or CSR. This industry has to beg and bribe for publicity while big banks, Wall Street brokers, oil companies and Donald Trump get all the free publicity they want. Sure, we get the occasional floods or wildfires but those are local events and firefighters and FEMA quickly grab the spotlight. Part of the problem is state regulation. State regulators happen to be darn effective at resolving problems before they grow into national crises. Too effective. Look what bad news (injuries, poor reviews, firings, financial woes) did for the musical Spiderman — it’s making money on Broadway now. This industry deserves its own, headline-hogging scandal. When is it our turn to be center stage?
Juan Toothree
VP of Discontent All’s Well Publishing Inc.
Disclaimer: This is Insurance Journal’s Satire Issue. The content is fake. Honestly. This isn’t real news. Fortunately. Even the names are made up. Totally. We hope you have fun. Seriously. If you have complaints, please send them to editor@pc180.com. Confidentially. N6 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
Publisher Mark Orson Wells Chief Executive Officer Mitch Dunford
EDITORIAL Editor-in-Chief/Interim West Editor Andrea Ortega-Wells | awells@insurancejournal V.P. Content/Southeast Editor/Interim East Editor Andrew Simpson | asimpson@insurancejournal.com South Central Editor/Midwest Editor Stephanie K. Jones | sjones@insurancejournal.com Southeast Reporter Michael Adams | madams@insurancejournal.com Interim West Reporter Timothy Kirn | tkirn@insurancejournal.com International Editor Charles E. Boyle | cboyle@insurancejournal.com MyNewMarkets Associate Editor Amy O’Connor | aoconnor@insurancejournal.com Director of Education Chris Boggs | cboggs@insurancejournal.com Columnists Chris Burand, Catherine Oak, Curtis Pearsall, Bill Schoeffler, Alan Shulman, Juan Toothree Contributing Writers Chris Amrhein, Peter van Aartrijk, Ordway Broomhandle, Denise Johnson, B. Leary, Joseph Petrelli, Ima Underwriter, Britton Wells, Cranky Yankee, Charles Yoble
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 Julie Tinney (800) 897-9965 x148 jtinney@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 Old Markets Sales Manager Kristine Honey | khoney@insurancejournal.com Classified Advertising Administrator Heather Frantz | classifieds@insurancejournal.com (800) 897-9965 x125
MARKETING Marketing Administrator Gayle Wells | gwells@insurancejournal.com Advertising Coordinator Barbara Dooley | bdooley@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 Art Director Jamie Bethell | jbethell@insurancejournal.com
Guest Illustrator
Aaron Dunford | adunford@insurancejournal.com Web Developer Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Chris Thompson | cthompson@insurancejournal.com
ADMINISTRATION Accounting Manager Megan Sinclair | msinclair@insurancejournal.com
FOR QUESTIONS REGARDING SUBSCRIPTIONS: Call: 856-380-4176 or You may subscribe or change your address online at
insurancejournal.com/subscribe Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semimonthly by Wells Publishing, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2011 Wells Publishing, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Publishing, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 9049, Maple Shade, NJ 08052 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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Learn how he did it here:
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NATIONAL COVERAGE
News&Markets
HARD MARKET RETURNS!!
Shows Up In Dallas But Doesn’t Stay Long; Mum on Future Plans: Exclusive Interview
Hard Market Returns: P/C Hard Market made a surprise appearance in Dallas recently. He has mostly been in hiding since 2004. He answered questions from Insurance Journal.
R
Hard Market Leaves: After a very brief stay, Hard Market left as he came, quickly and quietly, with few recognizing him. He teased that he might return after the U.S. hurricane season but made no firm promise. He would not say where he was going.
eclusive insurance celebrity P/C Hard Market slipped into the U.S. for a brief visit last week but left without promising if and when he might return for an extended period. “I am having a good time just dropping by, here and there,” the mystery man told an Insurance Journal reporter who caught up with him at Dallas-Fort Worth Airport. “I have no urge to hang around just yet.” The P/C icon, who has been in hiding off-and-on since about 2004, would not give any details about his whereabouts or future plans. He said it was nice being able to walk the corridors of carriers for a few days unnoticed. “Most of the people now working don’t know who I am,” he said. As for what he has been doing, Hard Market would only say that he is keeping busy, and while he sometimes misses the roller coaster ride, he has mixed feelings about hopping back on. “I miss having the doctors and contractors get all upset at me. But I don’t miss the brokers and CEOs who took me for granted when I was around,” he said. He has been accused of taking advantage of people’s misery after 9-11 and Hurricane Katrina and some think that is why he disap-
N8 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
peared. But Hard Market shrugged off the criticism. “I’ve got a thick skin. In this business, to some, you’re a hero; to others, a villain,” he said, putting on his sunglasses and turning to leave. Hard Market did give his fans one ray of hope. “I want to see how the hurricane season goes. Maybe I’ll return for a longer while after that,” he said, looking back over his shoulder as he walked away. Insurance professionals told Insurance Journal they are glad to hear he is alive and well, even if they are frustrated with how he shows up one day and is gone the next. “This is the new paranormal,” said Hugh Gudderbeekiddunme, CEO, Iamsure Specialty. “Get used to it.” Sally Surple, a Chicago wholesaler broker who happened to be at the airport, said she could not believe her good luck in catching a glimpse of the celebrity. “I have been in the business for seven years and have never seen what he looks like,” Surple said. “Boy, the folks back at the office are going to be so jealous. I snapped a photo.” Told that Hard Market said he is waiting to see how the U.S. hurricane season plays out, Manny Mainstreet, an agent from Miami, told Insurance Journal he knows what to do now. “Pray for storms,” Mainstreet said. www.insurancejournal.com
Lloyd’s Moving to Des Moines
AIG Offers Bail Out to U.S. Government A
merican International Group (AIG) showed the world it wants to once again be taken as a systemic risk to the financial system by offering to help bail out the U.S. government. Buoyed by its sale of its surplus lines (see story page N31), airplane leasing and Chinese life insurance units, its recent multibillion settlement with Bank of America over mortgage fraud, and seven straight profitable quarters, the insurance giant was scheduled to meet with Obama Administration officials this week to present its plan to lend the government as much as $500 billion.
The AIG offer comes after China, the largest U.S. creditor, continued ratcheting up the pressure for the U.S. to get its financial house in order or risk having China cut off funds. “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” said China’s official fair and balanced Xinhua news agency. “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States www.insurancejournal.com
address its structural debt problems and ensure the safety of China’s dollar assets.” The U.S. is $14 trillion in debt, of which about $2 trillion is owed to China. AIG, which was itself bailed out of its financial crisis by the federal government for $180 billion only three years ago, paid back U.S. taxpayers in full and ended government control of the company one year ago. The company says it is now sitting on several trillion in reserves and in a strong position to loan the U.S. money. A source inside AIG said the company wants to thank taxpayers for the aid they gave AIG when it needed it. “Ben [AIG CEO Robert Benmosche] is looking forward to turning the Rose Garden into a vineyard,” said the source. AIG has offered the government a $500 billion loan, on terms similar to those that the government gave AIG in its bailout, including a interest rate of 850 basis points over the three-month London Interbank Offered Rate (i.e., LIBOR plus 8.5 percent). In exchange for the $500 billion credit facility, AIG would receive an 85 percent equity stake in the U.S. government. AIG would also control Cabinet appointments and Congressional posts. If the U.S. does not come up with a financing plan by yearend, it runs the risk of defaulting on more of its obligations and losing its “A” credit rating. Analysts expect AIG will want to name its own treasurer
LONDON — Iowa’s tax breaks lure historic underwriter to relocate. Here, Lloyd’s executives pack up in front of the London building to make the trip to the new world headquarters in the East Village, close to the D-Line shuttle. Lord Serene of Lloyd’s said it was more than the tax breaks that convinced the insurer to move. “It’s also the dynamic business climate, productive workforce, wonderful quality of life — Des Moines is the place.”
to replace Timothy Geithner. Richard Fuld, the former chief of Lehman Brothers, is reportedly on the short list. Terms of the deal include: • AIG CEO Robert Benmosche will move into the White House and gain use of Air Force One for weekly trips to Croatia. • President Barack Obama will lose his staff and teleprompter. • The President and his family will relocate to the vice presidential residence. Vice President Joe Biden will be housed in a trailer on the grounds at Camp David. • There can be no raises or bonuses for the President or Cabinet members and there will be clawbacks to 1911 of any raises
given to federal workers. President Obama called House Speaker John Boehner, Senate Majority Leader Harry Reid and documentary filmmaker Michael Moore to the White House to discuss the AIG offer. Republicans criticized the deal for not going far enough to privatize the government. Some analysts were critical of AIG for the move so soon after its own near-death experience. ”You would think they would have learned their lesson about risky investments,” said Tilly Understow, Substandard & Poor. AIG’s stock price, already at a new high, further shot up on news of the proposal.
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N9
NATIONAL COVERAGE
News&Markets Baseball Standings: Insurance Ballparks Trail Banks, Liquids Agency to Sell Insurance
When Terry Aki first took over the insurance agency he now owns five years ago, he struggled with how to differentiate his firm. But now he has come up with a solution. “The solution is to stop offering solutions,” said Aki. His firm, Bostonbased Boston P/C Insurance Problem Solutions, was about to launch a new solution for contractors when Aki sensed a problem. “A bell went off,” recalls Aki. That was the customer doorbell. Another walk-in customer was looking for personal hand lotion and eye rinse. “But your signs says you sell solutions,” the woman complained. Aki said that since he has switched to talking about insurance, customers actually take his calls. “I think they finally understand what I do,” he said. Agency consultant Pepper van Eyetrick said Aki is courting trouble by letting customers know what he really does.“Eventually, he will need to present a valueadded proposition that includes enterprise risk management, ancillary limits analysis and elevated hyperlocal services,” said van Eyetrick. “Or he might need an errors and omissions solution himself.”
M
ajor League Baseball parks named for insurance companies trail those named for banks and liquid refreshments in winning percentages thus far this season. Insurers have naming rights to only four parks compared with five each for banks and liquids. But the playing field may soon be leveled. There are reports that GEICO has made an offer for the naming rights to Yankee Stadium. The insurer would rename the historic stadium Gecko Park. Also, like many others, the Mets are reportedly suing Citi so that relationship might not last through the playoffs.
Insurance vs. Banks vs. Liquids Standings as of Aug. 8, 2011 Win/Loss Win Percent Bank Ballparks Pittsburgh PNC New York Citi Detroit Comerica Phoenix Chase Philadelphia Citizens Total/Average
54-59 56-57 61-53 62-52 74-40 307-261
.478 .496 .535 .544 .649 .675
Liquid Ballparks Colorado Coors Houston Minute Maid Tampa Bay Tropicana St. Louis Busch Milwaukee Miller Total/Average
53-62 37-77 59-54 62-53 65-50 276-296
.461 .325 .522 .539 .565 .482
Insurance Ballparks Cincinnati Great American Seattle Safeco Cleveland Progressive Florida Sun Life Total/Average
55-59 49-64 56-56 55-59 215-238
.482 .434 .500 .482 .475
Hackers Hack Cyber Insurance Site
H
yperCyber.com, a leading supplier of cyber liability insurance for corporations, reported that its site has been hacked. The California-based insurer said the customer names, customer revenues, policy numbers, coverage limits, expiration dates, names of key personnel and passwords to bank accounts of more than 10,000 commercial clients were stolen sometime in May. No claims data was stolen because there was none, the insurer said. “Oops,” said HyperCyber CEO Tyron Shue, on a conference call with reporters where he explained that the data was apparently breached after an employee left his iPad in a bathroom at Dodgers Stadium. “We think that might have been when it happened but we really aren’t sure.” The company said it delayed notifying officials and policyholders about the privacy breach because it didn’t think it was that big a deal, although Shue said he thinks a few
N10 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
employees may have mentioned the theft to some customers at an after hours party one night. “This is just another example of how important it is to not only have insurance coverage but also have a cyber security plan in place,” said Shue. “Check out our white paper for more.” HyperCyber said it has a commercial general liability policy for its own operations and is pretty sure that covers data breaches. “We did not see the need to get additional coverage because our IT people told us they had everything under control and would be insulted if we bought liability coverage for our network,” said Shue. China denied it was behind the hacker attack. www.insurancejournal.com
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BROKERAGE
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People CEO Warren Buffett is leaving Berkshire Hathaway for a job with Gorat’s Steakhouse in Omaha, Neb., where he will greet customers and serve the root beer floats. Buffett said that since he has given away all of his money to Bill and Melinda Gates and global charities, he needs a job that pays better than Berkshire Hathaway.
Orson A. Round
Lynn C. Doyle
BIG Insurance Co., a small specialty insurer in Dallas, has traded its rookie chief executive officer, Orson A. Round, to Seattle Marine Underwriters for $5 million and an underwriter to be named later. The highly-touted Round, drafted in the first round by BIG during the 2010 RIMS Conference in Vancouver, spent most of the past year on the disabled list. Jed I. Knight is the new CEO at The Force, a claims mediator based in Lightside, Mich.. Knight brings more than 30 years of experience to The Force. He specializes in large galactic claims and peaceful negotiations among factions. He will be based in the Coruscant office. Gulph Coast Insurance Group in South Carolina has announced the hiring of Rick O’Shea as senior vice president. O’Shea, a recent college dropout, previously worked as a lifeguard at a Hilton Head nude beach. “We are very pleased to have Rick join us in the agency owned by his father,” said his uncle and agency treasurer, Nick O’Shea.
Lois Nominator
Feelgood Mutual Insurance in Miami has promoted B. Lowe Paar to the position of vice president of golf. In his new position, Paar will be responsible for scheduling tee times and reserving carts. Paar is a 20-year veteran of the insurance golf scene, having served as a marketing representative for several agency mutual insurers in the Northeast.
Rick O’Shea
The Phoenix chapter of the National Association of Insurance People with Pets International announced its 2011 award winners at a recent bar hopping. Lynn C. Doyle, of Patriot Insurance Services, was awarded Young Professional
N12 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
of the Year. Bill Meelater of Meelater Associates was awarded Old Professional of the Year, posthumously. Folly Insurance Group has hired Bruno Beer as a producer in its Cherry Hill, N.J., office. Beer, who is the agency’s third hire for this position within the last 60 days, will strong-arm potential property/casualty clients into buying excess coverage. Prior to joining FIG, Beer was a professional wrestler. Louisiana Workers’ Compensation Corp. President and CEO Kristin W. Wall and Texas Mutual Insurance Co. President Ron Wright have agreed to exchange jobs. Wall will take Wright’s post at Texas Mutual for a year and Wright will lead LWCC. Wall said the jobswitch idea started out as a joke but after a couple of gin and tonics they said, “What the heck, let’s do it.” There is a 75 percent probability that Lois D. Nominator, a vice president with Ohio-based actuarial services firm Decoteck, will be elected president of the Group of American Actuaries in Practice (GAAP) when the group meets next week in Las Vegas. Nominator is favored over Tad Moore. Toni Liebig is the new vice president of government affairs for the Government Insurance Group (GIG), based in Alexandria, Va. Liebig will be in charge of contingent commission payments and escorts for members of Congress and their staffs. GIG members support the federal crop, flood and terrorism insurance programs. Philomena Crouch is the new chief of mobile claims for New England at Hemlloyd’s. In this new position, Crouch will hack and re-route all claims that are submitted online from customers operating from mobile locations. She will work from a Starbuck’s coffee shop off Route 93 in Londonderry, N.H.
www.insurancejournal.com
NATIONAL COVERAGE
Declarations Underpricing
Catch Us
“If there is any underpricing by my underwriters, I want to know about it.” — Fromius Blorch, CEO, Pricemark Insurance Co.
“Some of our competitors are giving away the business but you will never catch us doing that.” — Octavius Groat, CEO, Bestpick Insurance Co.
Proud
Parting Words
Value Pricing
“We are proud of our underwriting discipline.” — Gorkun Grimsby, CEO, Big Picture Insurance Co.
“Yeah, we bend on price all the time. It’s the only way to make the quarterly numbers.” — Graviotus Strunk, former CEO, Goodone Insurance Co.
“While others may value market share at any price, we practice value pricing at all times in the market.” — Titus Pluckstone, CEO, Stoneface Insurance Co.
Figures
7
The number of continents, oceans, musical notes, and years since the last hard market
45
The number of individuals per year who achieve millionaire status as a result of insurance fraud
1.2
Million
The number of downloads of IJ Academy’s Chris Boggs’ new “Why I Love Insurance Certificates” music video performed with Jennifer Lopez
35
%
The percent of drunk drivers who offer their arresting officer a drink
99.9%
The percentage of homeowners who read their insurance policy front to back
11.24
$
999 The number of PIP claims filed per minute in Florida.
The claims dollars actually paid by insurers in 2010 under cyber liability policies
N14 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
www.insurancejournal.com
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REGIONAL COVERAGE
News&Markets Florida Windfields to Steer Hurricanes
No Rain, No Wind
F
“If we can’t get rain, we won’t allow wind either.” — Texas Attorney General Craig Abbett announced that windstorms would no longer be allowed in the state as long as Mother Nature refuses to let it rain. Tropical Storm Don, which moved quickly through the Gulf of Mexico in late July, would have been able to squeak in, Abbett said, because it promised to bring much needed rain to a wide swath of sun-parched Texas. The rain failed to materialize. Downgraded, a depressed Don made haste for Mexico where it dodged a rainstorm of bullets while crossing the border.
Stop Sign “Because it’s the law, people won’t do it.” — North Dakota Highway Patrol Lt. Haug Tide believes drivers in North Dakota will stop texting while driving now that it’s illegal in that state to do so. “People who have had a habit of texting behind the wheel will stop now that there’s a law against it,” Tide said. When reminded that plenty of drivers speed even though it’s against the law, Tide replied, “That’s different.”
Cat Models Compete for Top Crown
Weather permitting cat models from around the world will be meeting in Atlantic City later this month for the annual World Cat Model pageant. Models from AIR, RMS and Eqecat are favored. The models, some of them riding high on successful predictions of losses from the world’s latest earthquakes, will compete for the top cat title, which comes with a cash prize and a two week vacation in Key West in October. The models will also participate in a charity blackjack game while in Atlantic City. The event is being hosted by Donald Trump whose hair is in the Disaster Hall of Fame.
California Allows Homeowners Insurance for Cars
C
alifornia Insurance Commissioner Davey Jones announced that traffic has gotten so bad in Los Angeles that his department will allow independent agents to write homeowners insurance for cars. “People are putting coffee makers in their cars, and texting like mad while ignoring the person in the passenger seat, and bickering with those in other cars,” said Jones, who is not to be confused with the Monkee, but who has been made to be a monkey’s uncle a few times. “It’s just like home. It is time we cut the poor Angelinos some slack.” How bad is traffic? In just the past few days, city officials announced plans to have a public meeting to discuss resurrecting the street car system, with armed security this time, and LA Bariatrics had to cancel its planned “Walk for Health” because there was no way anyone could get there in their cars. “I am just so grateful,” said Marisol S teinberg, who lives near Griffith Park. “I’ve always liked that Davey Jones, with his boyish good looks. I’m a believer! I think my husband is grateful, too. Course, I never see him. He leaves work, and eventually he gets close to home. But, by then, it is time for him to turn around and go back. I tell him he should walk the two blocks but he won’t listen.”
N16 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
lorida is looking to get a leg up on green technology by setting up windfields to capture the energy generated by hurricane winds or send then spinning in a different direction. Acme Turbines, whose motto is “If it blows, we spin,” is setting up turbines all along the coast to capture the kilowatts that could be generated by the 100-mile plus winds produced by hurricanes. Acme owner Pete Whistler said a good Saffir-Simpson Category 2 Storm with sustained winds between 96 and 110 miles-perhour would be enough to keep the traffic lights in Miami on for several weeks. Another benefit of the windfields is that by reversing the motion of the turbines, potentially ruinous hurricanes could be diverted toward other states. “It’s not that we wish bad things on other states,” said Whistler. “We just want to keep the golf courses open in Florida.”
California Insurers Call for Carmageddon II
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iting a dramatic drop in claims after the first one, California auto insurers are urging state highway officials to again close a stretch of major highway for several days as they did in July. According to the Sacramento office of the Insurance Institute of Driving, keeping cars off the road for just one weekend in July saved insurers $500 million — 2 percent of which insurers said they may pass onto policyholders in lower premiums if forced to by the state. California Insurance Commissioner Davey Jones welcomed a Carmegeddon sequel but said he plans to hold a set of grandstanding hearings across the county to pry the real savings numbers out of the industry. Jones said he’d also like to see highways closed in other places across the state, not just in Los Angeles. www.insurancejournal.com
Indiana Republicans Vote to Privatize State Farm
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Oregon Medical Marijuana Costs Too High, Say Workers’ Comp Insurers
O
regon’s workers’ compensation insurers are begging the state’s medical marijuana outlets to cut them some slack on price, and warning that they may need federal assistance. “I never thought I would say it, but I long for the days when all we had to pay for was OxyContin and other narcotics,” said an executive. “At least you needed a bona fide diagnosis in those days.” Researchers at the Workers Compensation and Reefer Institute (WCRI) say prices for medical marijuana have been skyrocketing as lines at dispensaries snake down
the block, and more and more workers are being stricken with anxiety, a lack of appetite, a vague malaise, and the potential for a headache. “Why you workin’, man? I can get you something. It’s all good,” said one, in-network, occupational physician contacted for this story. “I’m in a bind here,” said one beneficiary. “My job made me nervous so I had to take time off and I got a ‘script. But now I can’t get hired anywhere because they say I am under the influence, so I can’t get off the workers’ comp.”
N.C. Trial Lawyers Seek Malpractice Cap
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orth Carolina trial attorneys are upset with rising legal malpractice insurance rates and want lawmakers to act. The North Carolina Academy of Trial Lawyers wants lawmakers to place a cap on the awards that plaintiffs can receive in legal malpractice cases. Insurance rates for law firms have “crossed the legal threshold,” according to Sue Alotte, president of the trial lawyers group, which has also asked Insurance Commissioner Wayne Wingood to investigate the profits of Lawyers Malpractice
Insurance Co., the chief underwriter of law firms in the state. Alotte said the number of lawsuits against lawyers and the average award in legal malpractice cases have skyrocketed but that is no excuse for insurers to hike premiums. “Lawyers are only a little, not a lot, more incompetent than they used to be,” said Alotte. “Yet rates are going through the roof. Why?” Alotte said the trial lawyers are ready to donate millions to lawmakers if that’s what it takes to stop the rate hikes.
ndiana House Speaker Brian C. Bosma, R-Indianapolis, along with other House Republican legislators, hailed the passage of a bill to privatize giant State Farm Insurance. “This is yet another victory in our campaign to create jobs,” Bosma said. The measure passed the House, 60 to 40 along party lines. It previously passed the state Senate 30 to 20. House Democratic leader Patrick Bauer, D-South Bend, said his party opposed the bill because State Farm, already a private company, is located in Illinois. Gov. Mitch Daniels has vowed to sign the bill into law.
Report: Okla. Roofer Gives Storm Victim Honest Deal
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he Oklahoma Okeedokee is reporting that a roofing contractor who gave a tornado victim a fair price for repairs proceeded to complete the work on schedule and for the agreed upon amount. The contractor reportedly did quality work and used high quality materials. Then, after finishing, the contractor cleaned up the site and thanked the homeowner. Oklahoma Insurance Commissioner John Doak said his department is looking into it. “Stranger things have happened,” said Doak. “On second thought, no they ain’t.”
Florida’s Citizens Has Sweet Plan to Cover Hurricane Losses
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lorida’s largest property insurer, the state-backed Citizens Property Insurance Corp., which is always looking for ways to shore up its reserves, thinks it has a new winning plan. Citiizens has more than $5 billion in surplus, however, if a major storm were to hit, losses could be four times that amount and Citizens policyholders and taxpayers would have to be assessed to pay losses. Citizens officials told Gov. Rick Scott and members of the Florida Cabinet last week that they are planning a series of bake sales featuring home baked muffins, pies, cookies and cakes. The tasty treats will be made by www.insurancejournal.com
Citizens staff and volunteers from the fraud bureau. Citizens executives said they believe they can raise about $100 million selling baked goods, even though by law Citizens has to charge less than other bake sales. This is not the first time Citizens has tried to raise money. In 2009, the insurer sold raffle tickets for free house demolitions for hurricane victims. CFO Jeff Atwater criticized the latest plan as a “half-baked idea” but Hammond Daigs, executive chef at Citizens, defended the plan. “If it’s good enough for the girls’ lacrosse team, it’s good enough for us,” said Daigs.
Daigs may wish he had never put it that way because as soon as they heard about it, youth sports teams up and down the coast said they are filing suit against the insurer for anticompetitive practices. Gov. Scott urged Citizens to consider bagels instead of muffins.
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N17
Industry Keeps Pace As America Gets Older, Wider By B. Leary
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ritics have for years complained that the U.S. property/casualty insurance industry’s employment picture does not reflect the diversity of America. A new report from the Employment Equality Office (EEO) confirms this. Only 2.6 percent of employees are African American and only 4.3 percent are Hispanic or Latino. The industry does a bit better with women; 38 percent of its employees are female. Those numbers are overall a poor reflection of the diversity of America. But the report also has some good news for insurance industry diversity watchers. While the P/C insurance industry lags in the hiring and advancement of ethnic minorities and women, the industry has a very strong track record with two other groups that often face discrimination: older Americans and heavyset Americans. While P/C employees and senior executives are overwhelmingly male and white, they are also increasingly old and heavyset. In fact, the P/C insurance industry ranks as one the oldest and heaviest. Also, while during the recession other industries have cut back on their diversity efforts, the P/C industry has continued to get older and wider along with the country. “We have always argued that corporate American should look like America looks,” says Mindy Wickles, chair of the Diversity in Business Initiative in Washington, D.C. “The property/casualty industry has found its own way of accomplishing this worthy goal.” As baby boomers grow older, so does the U.S. workforce. The EEO report confirms that the insurance industry is getting older along with the nation, with an average age of agency principals, 58, and an average age of carrier managers, 64. Of the 1.2 million workers in the P/C insurance industry, more than 15 percent are 65 years and older — which beats the country’s population percentage of seniors of 12.9 percent. The P/C industry ranks high among corporate entities in the average age of employees, behind only the U.S. Senate, the funeral industry and public parks department workers. The average age in the U.S. Senate is 72 while in the funeral industry, it’s 66. “The insurance industry doesn’t get enough credit for all it does for older Americans,” said Mary Sprint, 62, an insurance recruiter in Maine. “Hiring all of these elderly and keeping them busy contributes enormously to our econoN18 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
www.insurancejournal.com
my. It also keeps the libraries and bingo halls from being overcrowded.” Eighty-eight year old Harrison Buford has been CEO of Middle American Insurance Co. in St. Louis since 1949. He said that whenever his senior managers meet, there is nobody in the room under age 68, not counting the nurses. He believes there are clear advantages to having older, wiser leaders at the helm. “Take that predictive modeling craze of a few years ago,” Buford said. “I know a passing fad when I see one.” Gerry Attrick, an agency owner from New York, started a networking group of young people, aged 65 and under, who want someday to work in the P/C industry. “The group is growing because they know it’s either this or bagging groceries at Safeway or Piggly Wiggly,” she said. “Insurers pay them a little bit more because there is no tipping.” The P/C insurance industry is not just older than other industries, it’s also bigger around the waist. In the EEO ranking of industries by median weight, the P/C insurance industry came in fourth, behind trial lawyers, donut shop owners and bankers, but above professional footcontinued on page N20
INDUSTRY EMPLOYMENT BY MEDIAN AGE U.S. Senate Funeral Industry Public Parks Dept. Insurance Journalism Source: EEO
72 66 63 58 55
INDUSTRY EMPLOYMENT BY MEDIAN WEIGHT Trial Lawyers Donut Shop Owners Banking Insurance NFL Players Source: EEO
260 248 245 238 230
INSURANCE SECTOR EMPLOYMENT vs. U.S. POPULATION U.S. Population Women Blacks 51% 12.6%
Hispanic 16.3%
Asian 4.8%
Heavyset 33.8%
Age 65+ 12.9%
Insurance Industry Employment Women Blacks Hispanic Asian 38% 2.6% 4.3% 6.8% Source: EEO
Heavyset 28%
Age 65+ 15%
Would You Like Risotto with That Auto Policy? By B. Leary
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he yellow fin tuna is bathed in a citrus vinaigrette and served with mushroom risotto. The filet mignon is grilled and served with green olive hollandaise. The salad is avocado and grapefruit with just a touch of tarragon. The soup is lobster and vegetable minestrone. Finally, the dessert is key lime cheesecake. Must be dinner at a trendy, high-priced, metro restaurant, right? Nope, it’s just a typical lunch for employees at Harvey Milk Insurance Co. in suburban San Francisco, the nation’s only openly gay insurer. Last week, the luncheon entrees included marinated Alaskan black cod, shrimp dumplings, grilled Porterhouse steak, and duck leg with jam. Oh, and selections from a list of some of California’s finest wines. The insurer specializes in insuring high end but tasteful homes, luxury cars, fine arts and hairdos. It is rated “F”abulous by I.M. Best. The firm’s gourmet café, called Current Cravings, is drawing raves from employees, and from food critics. The San Francisco Chronicle gave it four stars. The New York Times agreed, saying, “The beef tenderloin was mouthwatering and so was our waiter.” Waiter? That’s right, in addition to gourmet cuisine, employees are continued on page N20
www.insurancejournal.com
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N19
Industry Keeps Pace continued from page N19
Risotto Policy continued from page N19
ball players. The P/C industry weighs in at 238 pounds. A healthy 28 percent of employees are heavyset, which is just a tad shy of the figure for the entire U.S. population, which is ballooning. “These P/C jobs are among the most sedentary jobs in America,” said Marty Zuck, researcher and author of the EEO report. “So if they aren’t heavy when they are first hired, there is a good chance they will be within a few years.” Some other industries force out heavyset employees, according to Zuck, but not insurance. Tommy Matson used to work in the adult entertainment industry. He was let go when he reached 200 pounds. “It was the best thing that ever happened to me,” said Matson, who now works for a surplus lines broker in Rhode Island and loves it. “I work all day in air conditioning with my clothes on. It’s great.” Overweight Americans are an easy target for discrimination, not just in employment. However in the P/C industry they know that a few extra pounds won’t get in the way of career advancement. At the recent Independent Brokers of the U.S. meeting, a panel of executives assigned to discuss diversity was perfectly cast for the occasion. The five, 65-year old white, balding, heavyset male CEOs all agreed: the industry must increase its diversity to survive. “If we as an industry don’t strive to look and think like our customers, they are likely to go elsewhere,” said 67 year-old Mack Jackson, CEO, Jackson Brokerage.
tended to by waiters in muscle-hugging black t-shirts, handed heated moist hand towels, and serenaded by a jazz quartet. The café is wildly popular and it’s the main reason the 200-employee company has a 100-person waiting list of people who want to work there, according to the company. “I can’t believe I used to throw a sandwich in a paper bag, scoff it down at my desk, and call that lunch,” says Mary Lamb, who works in the IT department. “I’ve put on a few pounds since I started here but it’s worth it.” Elton Jane, human resource person, says five years ago all of the employees at the company were gay but the company has been trying to diversify, hoping to also appeal to bisexual and even straight buyers by diversifying its own workforce. The café has become an important recruiting tool in that effort. “We are finding many straight people crave fine dining on the job. It is one of the first things they ask about during their introductory brunch,” Jane said over oven roasted farm chicken and poached vegetables, sipping what she said was an under-rated Stepping Stone Napa Valley Riesling with an aroma of white flowers and honeysuckle. “Whereas 10 years ago they wouldn’t be caught dead working here, now they are dying to get in.” That’s no exaggeration. Last week an applicant who was told he did not get the claims job he wanted drove his car off the cliff outside the company’s health spa. The man was not a policyholder, according to Jane.
Fired Up!
10 Steps to Diversify Insurance Workforce
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B
n a major corporate housecleaning, Fireman’s Fun Insurance Co. in California has replaced all of its top 10 executives with women. The move follows the appointment of Isadora Belle as CEO in place of Lee Vittalone.
As dramatic as the change at the top is, the company isn’t stopping there to reduce the influence of males. Belle said the company would in the future do business only with female independent agents. Also, it is replacing its trademark red fire hat with a pink hat and renaming the company Fireperson’s Fun Insurance Co. “The insurance industry needs men like a bicycle needs a fish,” said Belle.
eyond advancing older and heavyset employees, the property/casualty insurance industry should reflect the changing face of America in other ways. The industry must do a better job of attracting and promoting more women, minorities, tech-savvy young people, gays, disabled workers, unemployed Americans and illegal immigrants, says Heidi Seik, who heads the Diversity in Business Council. “The industry has a very good track record of recruiting straight white men. It just needs to apply some of those same techniques to emerging populations,” she says. Here are some quick tips from Seik for diversifying an insurance business: 1. Announce on Facebook that you are a progressive-thinking employer. 2. Translate your agency slogan into a foreign language. (But be careful. Coors put its slogan, “Turn It Loose,” into Spanish, where it was read as “Suffer From Diarrhea.”) 3. Attend funerals in a minority community. 4. Condense an entire policy and all of its exclusions into a Tweet. 5. Sign your business e-mail messages with a smiley face! Also, overuse explanation points whenever possible!! 6. Hold a Personal Umbrella for Same-Sex Couples, or Singles, or Hispanic/Latino Couples, or Illegal Immigrants, wine tasting. Don’t embarrass yourself. Go light on the legalese and the Pinot Grigio. 7. March in a local ethnic parade or attend a festival wearing an appropriate costume. 8. Open an agency office in the local unemployment office. 9. Fly the flags of various nationalities and/or a rainbow flag outside your office. 10. Actually interview some minority candidates for a change.
N20 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
www.insurancejournal.com
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News&Markets Democrats, Republicans Compromise on Federal Flood Insurance
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n a rare compromise, Democrats agreed to let the federal flood insurance program expire in exchange for Republican tax breaks for the wealthy. The Senate voted 74-26 for the bill, which lets the National Flood Insurance Program expire while eliminating taxes for Republicans who own coastal homes. It passed the House earlier, 269-161. In a concession to Democrats who wanted a revenue provision, the bill assesses all Democrats who own property in a floodplain $1,000 a year until the NFIP’s $18 billion debt is repaid. Senate Democratic Majority Leader Harry Reid of Nevada said his colleagues are pleased that the NFIP is being allowed to die with dignity. “There will be an appropri-
ate ceremony in a floodplain and a farewell letter robo-signed by the President will be sent to all policyholders,” said Reid. Senate Republican leader Mitch
McConnell of Kentucky welcomed the compromise even though it did not also shut down the terrorism reinsurance, Medicare and Medicaid programs as he had hoped.
Poll: Democrats Tops in Disasters Poll: Disaster Masters
W
hen Americans are facing a flood, tornado, hurricane, oil spill or other natural disaster, they prefer a Democrat to be in charge of paying claims and doling out the aid far more than a Republican. In fact, a new poll finds that Americans would rather have any number of other powers in charge of paying claims — from State Farm to BP Oil — before they would want Republicans in charge. “The public has great confidence that when it comes to disasters, Democrats know their stuff,” says pollster Less Moore.
N22 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
If you and your family were victims of a natural catastrophe such as a hurricane, tornado, flood, oil spill or mining death, what official(s) would you want settling claims and deciding on assistance?
Officials in Charge Democrats State Farm Red Cross Kenneth Feinberg BP Bill Gates Massey Energy Mississippi AG Jim Hood Republicans
% Preferring 55 15 9 6 5 5 2 2 1
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IDEA EXCHANGE
Stranger Than Truth 3 Blind Execs
Three insurance executives, in relentless pursuit of business opportunities, were traveling through a dangerous area when they were captured by rebels and sentenced to death by firing squad for the crime of being capitalists. 1) The first executive, the actuary, was blindfolded. He stood in front of the firing squad, thinking: “I’m an actuary! I’m smart! Surely I can think of something to distract the firing squad.” So he yelled out: “Earthquake!” The firing squad became frightened, dropped their weapons, and scattered. The actuary escaped. 2) The second executive, the underwriter, next had a blindfold placed on him. He stood in front of the firing squad, thinking: “Everyone knows underwriters are just as smart as actuaries! Surely I can think of something to distract the firing squad.” So he yelled out: “Windstorm!” The firing squad became frightened, dropped their weapons, and scattered. The underwriter escaped. 3) The third executive, the CEO, had a blindfold placed on him. He stood in front of the firing squad, thinking: “I’m the CEO! No one is as smart as the CEO! Surely I can think of something to distract the firing squad.” So he yelled out: “Fire!” From www.Aartrijk.com
Man with Tongue Stuck to Peacock Falls Off Burning Bike with No Shorts On, Is Then Saved by Umbrella I S The following stories were submitted by readers of Insurance Journal. ome insurers offer contractors a policy with an option for a “Sunset Clause” that restricts the number of years to file a claim. We presented it to our agent as an option to lower the price. The response: “Please bind the “sunset clause” option; my insured (contractor) doesn’t work after sundown!”
A
djuster received a claim for a barn that burned down. Mrs. Insured said since husband was out of town, she was handling claim. She said the barn was worth more than the $100,000 it was scheduled for; no need to inspect, just send the money. Adjuster said he could not just send $100,000, had to inspect and take photos. It was a replacement cost policy and he said he had to make sure she got back what she had before. Mrs. Insured said that was silly, nothing to see, only ashes remained, just send the money and save all that travel. She didn’t want what she had before; they would use the money to build a modern barn. Adjuster said that is not how insurance works. He had to inspect and make sure she gets paid for what she had before. Mrs. Insured then said, “Well, if insurance always gives you back what you had before, cancel the life insurance on my husband!”
I
remember an old cartoon where a man is sitting at his desk talking on the phone and he says: “So you want us to pay your claim, refund your premium, and shoot your adjuster?”
N24 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
was surprised to hear my client ask, “Are peacocks covered under my policy?” Peacocks? Really? Trying very hard not to laugh, I asked what happened. “The peacock attacked my friend’s car.” So being a good agent I took his information and promptly called the adjuster, who laughed at me. The adjuster went to the insured’s house and adjusted the claim. The next day the adjuster told me the rest of the story. The friend parked in the driveway and the peacock saw his reflection in the car. The peacock thought his reflection was another peacock. It seems that peacocks can be territorial. The car looked like it had been through a hailstorm. The car was covered in blood and broken glass. The peacock lived.
How does a producer spell Loss Runs? Los Run How does in underwriter spell? LOSS RUNNNNNSSSSSSS How does an insured? loss run An actuary? Lo++ Run+ An Underwriter? *@## %&@*
I
was sitting with new prospect discussing what policies he currently has. I asked if he had homeowners insurance, auto insurance, flood insurance, umbrella? He said, “What good would an umbrella be in a flood?”
I
was at a managing general agency when an agent called with a claim from her insured, a large nightclub. A go-go dancer had fallen off the bar while dancing and fell on a customer. Her stiletto heels lodged in his thigh and was stuck in the bar stool. The customer, stool and heel were transported to the hospital by ambulance. The app said nothing about dancers.
F
rom an agency automation salesman: I met an agent at a convention and asked her (as is my job responsibility) what it would take for her to be paperless. Without missing a beat, she looked me in the eye and said, “A fire.”
A A
friend and I were riding our mountain bikes along a trail and he started talking to me about how he needs to get bike insurance. I’m behind him wondering where is he getting this idea of bike insurance. There’s no such beast. So I shouted back, “Dude, there’s no such thing as bike insurance!” He stopped his bike and looked at me with a puzzled look on his face. He said, “I’m talking about biking shorts.”
client put in a workers’ compensation claim regarding an employee who was found on the floor of a walkin freezer with his tongue stuck to a metal rack that fell on top of him. The fire department was called in to help “detach” the bar from his tongue and remove the rack. An investigation revealed hat the employee was putting a chocolate cake on the shelf and some chocolate dripped out. The employee licked the chocolate only to have his tongue stick to the pole. To loosen his tongue he shook the rack, which then fell upon him. www.insurancejournal.com
NATIONAL COVERAGE
News&Markets Top 10 Innovative P/C Insurance Products By Ima Underwriter
S
ince the beginning of the year, dozens of property/casualty insurers have announced innovative protections for risks involving new technologies, current economic concerns, personal and family relationships, home-based small businesses, and more. “This is a new era in property/ casualty insurance. Innovation is breaking out all over,” said Roger Hurtvig, president of the Insurance Innovation Institute (III) in Warwick, Rhode Island. The P/C industry has a reputation of being slow to embrace new ideas but the III’s own measure of innovation — the P/C New Products Index — has been rising steadily for the past year and hit a record high of 75 out of a possible 100 points last month. “It seems that with every day comes a new idea,” Hurtvig said. ““The new products are anchored in traditional insurance principles but they speak to a new generation of risks. It’s very exciting.” So what are some of these new ideas that have put the industry’s unhip reputation at risk? Insurance Journal searched the database at www. MyNewMarkets.com to find the Top 10 Most Innovative P/C Insurance Products: 1. Pay-As-You-Park: Private passenger auto policy from Progresso. Rates are based on how long the vehicle is not driven. Policyholders are sent a small white box that attaches to the front driver’s side wheel. The box
N26 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
contains a meter that is loaded with an initial estimated premium. The box calculates premium discounts for every 15 minutes the vehicle is parked but adds surcharges for every 15 minutes the vehicle is in motion. Pay-As-You-Dock boat policy also available. 2. GreenMaker: R.W. Barkley is selling a product liability policy for home or garage-based businesses that manufacture cosmetics, clothing, jewelry, toys, computers or other products using primarily recycled, upcycled, natural or organic materials. 3. Commercial Specific Liability (CSL): A low-cost option to the Commercial General Liability (CGL), the CSL lets business owners specify the exposures they want covered. The final ISO form is not expected until December but some examples of actions expected to be covered include: nailing into a water pipe, electrical wiring or cable; causing a fall due to the failure to warn of water, change in elevation (a step), or intoxication; and releasing a pollutant that the insured did not bring to the job site. 4. Vanishing Coverage: A multi-year package policy from Hubb Insurance available only to owners of high-end coastal properties and antique autos. The premium is lowered by the same amount the deductible is raised each year until the deductible reaches the policy limit or the premium hits zero, whichever happens first. 5. Home Business Interruption Protection (HBIP): Revelers Insurance has a business interruption policy for any service business conducted from the home, from hackers and day traders to massage therapists and insurance agents. Covers loss of Internet connection, telephone service,
daycare, HVAC as well as refrigerator breaks. 6. No-Show Coverage: There is coverage for shoddy work, but what about when the plumber, electrician, roofer or other contractor doesn’t even show? Handover Insurance now covers damage caused by old pipes, leaky roof or other conditions that did not get fixed on schedule as promised. 7. Global Scoring: Chartus has developed a policy that guarantees to convert its auto and home policyholders’ credit scores to whichever foreign currency presents their financial history in the most favorable terms. 8. Relationship Breakdown: Hartford Stream coverage is triggered after two lovers break up and remain separated for more than three months. Pays 50 percent of the cost of unreturned gifts including rings and other jewelry; moving expenses; temporary housing; damaged or lost goods; up to $50,000 for reputational damage. 9. Homeworkers’ Compensation: The Harmfort’s injured worker coverage is specific to hazards of the homebased workplace. Includes injuries related to solitary worker syndrome, excessive weight gain, unnatural pet attachment, and deterioration of driving skills. 10. Hoosier Daddy Policy: An Indiana insurance company has launched a policy that protects a family’s income while the breadwinner is imprisoned for financial crimes. Not currently available to Wall Street executives or public officials in New Jersey, Illinois or Louisiana. A version of this report originally appeared on www.InsuranceJournal.com on April 1, 2011. www.insurancejournal.com
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The Power of Independence The Strength of Unity UÊ ,iÌ> ÊÞ ÕÀÊiÝ ÃÌ }Ê `i Ì ÌÞÊ> `ÊV À« À>ÌiÊ >}iÀÞ UÊ 9 ÕÊ Ü Ê£ää¯Ê vÊÞ ÕÀÊ >}i VÞ]ÊÞ ÕÀÊL Ê vÊ LÕà iÃÃÊ> `Ê ii«Ê£ää¯Ê vÊÞ ÕÀÊV Ãà à UÊ ÀiVÌÊ>VViÃÃÊÌ Ê «ÀiviÀÀi`Ê ÃÕÀ> ViÊ V>ÀÀ iÀÃÊ> `ÊiÝV Õà ÛiÊ «À }À> à UÊ >À iÌÊV ÕÌÊvÀ ÛiÀÊ£Ê Ê >ÀÃÊ Ê ÜÀ ÌÌi Ê«Ài Õ ÃÊ> `Ê Þ ÕÊ«>ÀÌ V «>ÌiÊ Ê«À v ÌÊ Ã >À }ÊÜ Ì Ê ÊÛ Õ i ÀiµÕ Ài i Ì
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MyNewMarkets Service Animals’ Workers Comp Market Detail: Every year, 1,600 service dogs are hurt on the job working with police and fire investigators and the elderly and blind. DoggieWC can take the pain out of those high vet bills that strain municipal and family budgets. This is a managed care network of pet medical services for service dogs. In exchange for giving up their right to sue their handlers over any work-related injury, the dogs obtain discounted medical care and are enrolled in a back-to-bark program. Available limits: $1 million on weekdays; $2 million on Fri. and Sat. Carrier: DoggieWC States: All states Contact: 1-203-K999
After the Fact Earthquake Market Detail: When the Big One Hits Brokers (www.wetoldyouitwouldhappen. com) offers protection for homeowners and businesses that are uninsured when an earthquake happens. No more having to hear “I told you so” after the “big one” hits. Clients can now get coverage after it happens! Available limits: Maximum $300 Carrier: Unable to disclose, admitted States: California and other states on fault lines Contact: Customer service at 555-Earthquakes
Free Car with Auto Policy
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etLite Auto & Home is now offering insurance buyers a free vehicle from Hyundai if they buy a one-year auto policy. NetLite said that drivers who buy a policy before Dec. 26 will receive a new 2006, 2010, 2011 or 2012 Hyundai car, truck, scooter or lawnmower. The NetLite policy covers liability and physical damage, with limits below the states’ required minimum. It also covers anyone who drives the car without the owner’s permission. Policies have separate $5,000 deductibles for collision and noncollision coverage. Rates under the program are not based on garaging location or driving history but instead on the vehicle’s color, amount of leather upholstery, and the age of the owner’s pet.
N28 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
Drunk Pilot Program Market Detail: Stupid People Insurance Co. (www.drunkpilotinsurance.com) offers coverage in the event that a pilot shows up drunk to fly. Coverage includes a crisis response team that will physically remove the pilot from the captain’s seat and transport him to the local drunk tank. The coverage also provides a replacement pilot. Minimum premiums start at $50,000. Available limits: As needed Carrier: Unable to disclose States: All States Contact: Jeff Fillinger at 555-Fly-Plane or e-mail: flyplane@drunkpilot.com
Rich Executive Protection Market Detail: Protect the Rich Insurance Services (www.itsnotmyfaultyouarepoor. com) has developed a program tailored specifically to wealthy executives or politicians who need to “get out of dodge” in the event of a financial crisis, large oil spill, Ponzi scheme, tax evasion or sex scandal. Coverage features include a private jet to transport the executive; accommodations on an undisclosed private island; and an unlimited supply of all of the executive’s desires to get him/her through the trying time. Premiums are covered by taxpayers. Available limits: $500 million minimum, no maximum Carrier: Unable to disclose (for obvious reasons) States: N.Y., Calif., Contact: Customer service at 555-ProtectRich
Divorce Coverage Market Detail: Love Bites Professional Services (www.marriedthewrongperson. com) offers coverage in the event of dissolution of a marriage. Coverage will pay for a top divorce lawyer, all expenses of divorce proceedings, as well as reimbursement for whatever cosmetic procedures the client needs to put them “back on the market.” Enhancements to this coverage include a social networking specialist who will tell all the details on the soon to be ex-significant other on all social media sites, including but not limited to sites such as Facebook, Twitter and dating Web sites as well. www.insurancejournal.com
Don’t Miss IJ’s Upcoming Market Directories Coverage also ensures that insured pays no spousal support, no matter what. Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All States Contact: Laura Lovington at 555-LOVEBITES or at llovington@lovebites.com
Sandwich Reputation Market Detail: A New York-style deli names a giant sandwich made of roast beef, corned beef, bacon and horseradish after your actress client who objects because she is a vegetarian. Or a local burger joint names its grilled tofu burger with sprouts after a football player you insure but he thinks it makes him seem girly. As a result, their reputations, endorsement opportunities and careers are diminished. Help is here from FoodRepCo. This policy covers legal action against the offending sandwich vendor to
have the item removed from the menu and monetary damages for reputational harm and lost endorsements. Special pizza and alcoholic drink endorsements endorsements available. Available limits: $1 million on weekdays; $2 million on Fri. and Sat. Carrier: FoodRepCo. States: All states Contact: Reservations required. Like us at www.sandwichliability.facebook
Human Insurance for Pets Market Detail: Insure Your Humans Insurance Agency (www.insureyourhumans. com) offers insurance for pets against human laziness and ignorance. This insurance guarantees that no pet will be ignored or left unattended, ever. Coverage features a dog walker and required daily visits to the dog park. It also offers an enhancement that protects against angry owners in the event of
World’s Largest Directory of Insurance for Unsafe Products Programs for manufacturers and sellers of guns, jetskis, ATVs, lead toys, chainsaws, motorcycles, fireworks and more. Directory of Insurance for the Rich and Famous Includes Robb Report subscription cancellation insurance; underdeveloped tanning coverage; personal rickshaw liability; illegal alien domestic workers’ compensation; paparazzi liability and more. “accidents” or destruction of property, such as shoes, furniture, etc. Man’s best friend deserves the best! Available limits: As needed Carrier: PetFriends States: All states Contact: Customer Service at 555-PetFriends
Do you know where the next disaster will strike? Use RiskMeter Web services to prefill your quotes with natural hazard information. Identify hazards at the quoting stage, rather than paying claims later. Make straight-through-processing a reality! Better Underwriting Data…Better Underwriting Results For more information call www.insurancejournal.com
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August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N29
NATIONAL COVERAGE
Business Moves Church Insurance, State Farm The boards of directors of State Farm Mutual of Illinois and Church Mutual Insurance of Wisconsin have approved the merger of the two to form Church and State Insurance. The firm will specialize in insurance for religious institutions, public entities and farms, along with personal lines coverages, although Ted Bust, CEO, State Farm,
5 Insurers Become 1 Five well-known Midwest property/ casualty insurers have agreed to merge into one that the public is sure to forget. Lackawanna Casualty, Wawanesa Mutual, West Wawanosh Mutual, Lanark Mutual and Mutual of Enumclaw recently agreed to join forces. The new company will be known as Lackawawawawalananumcla Insurance.
vowed there would be a strict separation between the lines of coverage and crossselling would not be tolerated. Baldwin & Lyons, Brotherhood Mutual Baldwin & Lyons Inc., insurer for the motor carrier industry, announced its merger with Brotherhood Mutual Insurance Co., which specializes inchurches and ministries. The companies, both based in Indiana, will operate under the name Baldwin Brothers Insurance Co. Stephen Baldwin, former actor and sometimes evangelist, brought the merger to fruition. “The new ministry motor coach policy is just what the Kingdom needs in this time of world turmoil,” he said. Louisiana Underwriting Services, Texas Underwriters Inc. LATEX Underwriters Inc. has been formed from the merger of insurance wholesalers Louisiana Underwriting Services and Texas Underwriters. The combined companies specialize in tire manufacturers and makers of other rubber products. The structure of the newly formed company is extremely elastic and will allow the company to expand into other niches without being stretched thin, the firms said.
Other Merger Headlines: Golden Bear, Arch Insurance Merge to Form Golden Arch Insurance MGA Bliss Glennon Merges with Bloss Dillard to form Bliss Bloss Lexington Insurance, Concord Insurance Form Lexington & Concord Insurance Royal Insurance and Finger Lakes Fire Casualty Become Royal Finger Insurance Sue Shock Insurance Agency in Arizona Partners with Awe Insurance of Illinois to Form Shock & Awe Insurance Freemount Insurance, Auto Club Two Michigan-based property/casualty insurers, Freemount and Auto Club, have merged. The new entity is named Free Auto Insurance. The company’s new slogan is: Don’t Let Insurance Costs Mount — Join the Free Auto Club. To avoid confusion, Free Auto adds a disclaimer noting that the coverage it offers is neither free nor limited to automobiles. Holyoke Mutual, Accident Fund In what analysts are calling a miracle transaction, two insurers with little in common have agreed to join forces. Regional carrier Holyoke Mutual Insurance of Chicopee, Mass., said it would become a holy owned subsidiary of workers’ compensation specialist Accident Fund Insurance Co. of America, based in Michigan. The new entity will be branded Holy Accident Insurance Fund. “I have been praying for just the right merger and this came to me when I was walking in the woods,” said Holyoke CEO Noah Angell. Cincinnati Financial, Ohio Casualty, State Auto Cincinnati Financial Corp., a holding company, has acquired both Ohio Casualty and State Auto. The newly acquired businesses will form a subsidiary operating under the corporate name of Cincinnati Ohio State Insurance. John Johnston, CEO, commented on the acquisitions, “We think this is a perfect match for the coverage needs of the university campus. Our new products are sure to catch the eye of the university student.” Ranger Insurance, Main Street Ranger Insurance, Main Street America Group, LAMMICO, Direct General, and Donegal Insurance recently merged to form
N30 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
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China Buys U.S. Surplus Lines Industry By Ordway Broomhandle Rooters
RaMaLAMADingDong Insurance Group. The new company will operate in every state and every line of insurance through agents and is also developing an Internet sales system. “Our merged company can provide every line of insurance to any insured in the country,� said Ramalamadingdong CEO James Reynolds, former lead singer of The Edsels.
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Lyons Companies, Tiger Insurance, Black Bear Agency, Ohmi Railroad British car insurer Tiger Insurance has acquired two U.S. independent agencies: Lyons Companies, a Top 100 agency based in Delaware, and Black Bear Insurance Agency in Orlando, Florida. Tiger, which is owned by Japanese railroad conglomerate Ohmi Railway Co., said it intends to combine the agencies into a distribution force under the name of Lyons, Tigers & Bears, Ohmi. It will make its headquarters in Kansas. “This merger feels like a dream come true,� said Dorothy Toto, CEO, Tiger Insurance.
hina has closed on its previously announced acquisition of the top 25 surplus lines insurers in the U.S. for $21 billion. As a group the 25 insurers write $26 billion, which is about 80 percent of the entire U.S. surplus lines market, according I.M. Best. The new entity will be known as The People’s Excess and Surplus Lines Insurance Company of China Holdings Company (PESLICC). Overnight it becomes the world’s largest surplus lines carrier. The insurers acquired include American Supernatural, Hemlloyd’s, Zooitch, R.W. Barkley, Marky Mark, Moonitch and Alleyed, as well as the surplus lines units of wellknown brands including Revelers, Chump, Ironpoor and Burpshire Throwaway. The industry’s 62,000 employees will
be detained and transported to the city of Wenzhou on a slow boat and then fast train, said chief negotiator Mi Quak Do. The sale comes after the fourth consecutive year of declining premiums for the surplus lines industry — an unprecedented slide. Despite this, the sector, which has freedom to set its own rates and dictate its own terms on policies, is still highly profitable. With the deal, the Chinese gain ownership of the industry that insures most of the products made in their country. The deal was delayed for 24 hours because it had to be approved by all state regulators. The Chinese won over the states by promising to handle all tax collection on multi-state risks. Within minutes of the closing, Goldman Sachs announced it would buy a 10 percent stake in China’s newest insurer.
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August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N31
IDEA EXCHANGE
The Competitive Advantage
Easy Ways to Increase Revenue and Profits with Little and Preferably No Effort
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am frequently asked how agencies can increase their revenue per person. Since all agencies are basically the same, I have developed a three step program that is sure to help every agency increase this all important metric.
Step 1: Abandon Service Think about how much more money an agency can make if its customer service representatives (CSR) do not service clients. If the agency just renews all policies as is, the agency probably can eliminate 20 percent of its CSRs. So if an agency’s CSRs are servicing $250,000 in commission each today, eliminating renewal policy review can result in each remaining CSR servicing $300,000.
By Chris Burand
Step 2: Do Not Discuss Coverages Next, do not waste time discussing coverages. Just give the client what the client requests without regard for how insufficient
their requests may be. This step has an added benefit; the client never thinks you are selling them coverage they do not really need. The result is you will be held in greater esteem by the client. The benefits do not end there. You do not have to answer stupid questions about how coverages apply nearly as often and you do not have to get frustrated explaining why certain coverages are necessary. You do not even have to deal with explaining why — just because the law requires certain coverages and limits be purchased — you cannot legally sell policies or coverages with the limits the insured is requesting. After all, this is America, home of capitalism, and if someone wants to forego uninsured motorist insurance, they should be allowed to do so. Think about all the time the agency will save. Plus, office morale will greatly increase. With more time, more profits, and the agency’s revenue per person rising above best practices levels, the agency will have more to celebrate too. Then it can make the cover of
N32 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
an insurance publication and become famous for its profits, its efficiency, and its parties (P.E.P. for short because all great success stories need a good acronym). Step 3: Only Positive Energy I am sure there are some readers concerned about retention, sales, and errors and omissions (E&O) claims resulting from these first two simple but effective steps. Such negative energy only invites bad retention, poor sales, and E&O claims. Most agencies do not incur E&O claims every year even if they are real screwballs so agencies are just wasting time, money, and energy by taking the steps recommended by their E&O carriers, instructors, and consultants. It is so much easier and requires so much less effort to just think positively. Send out positive vibes in a 360 degree arc. Every good salesperson knows great sales are about positive energy. A producer does not really have to know coverages. So much less energy is required when a person just www.insurancejournal.com
thinks positively. Too much negative energy Since agencies do not have to invest nearly as is required developing and following proper much in software, the key here is thinking procedures. Think too about all the time positively and over simplistically. saved not studying coverages! I should not say “over” simplistically Positive energy will take because the insurcare of uncovered claims too, Many insurance carriers ance world is not making coverage knowledge have grown fast through more complex than an even more moot point. it was 20 years ago, the years by ignorWith enough positive enernot really. So it is ing good underwriting gy, companies will pay for impossible to over rules. … Learn from claims their policies do not simplify how to cover. manage an agency, your carriers! This saves a lot of time its employees, its and money too. I estimate agencies can save carrier relationships, and customer relationat least 20 percent when completely impleships. When everyone is happy, what is there mented. to manage? To speed the process, an agency might As an example, on Discovery Channel’s have to purchase certain mood enhancing “Deadliest Catch” the captains were disorganic chemicals that are easily obtained cussing how bad morale was — until they today and might even become a niche started catching crab. As long as they were market. This accelerated approach slightly catching a lot of crab, morale was great and diminishes the initial profitability, but it’s nothing went wrong even when the crew such a small price. One of the greatest energy consumers in One Submission. agencies is the constant battle between CSRs and producers. CSRs want the job done right and producers are constantly trying to take shortcuts. Just get the sale and don’t confuse them or the client with extra procedures, paperwork, coverage checklists, etc. Positive thinking, as previously explained, completely obviates the need for this conflict. When such conflict ceases, all parties have more time to write more business. This is a key to growing faster. You have seen many insurance carriers grow fast through the years by ignoring good underwriting rules. Some of these carriers even appeared on the covers of magazines as the featured growth stock! Learn from your carriers! Many now claim to have the greatest underwriting/pricing models ever developed negating the need to underwrite in the traditional sense. This allows them to write new business at 40 percent less than the expiring policy and still make money. I really do not www.AndersonMurison.com know why more agents do not understand that abandonment of all rules makes so much 800-234-6977 good sense. ÀÊ >Ý\ÊÎÓÎ Óxx ä xÇ Many companies did invest a lot of money nääÊ7°Ê À>` Ê Û`°Ê in their rating/underwriting software so this ÃÊ }i iÃ]Ê Ê ää{£ wasn’t the fastest way to greater profits. www.insurancejournal.com
was working 24-hour days. This is a great lesson. All an agency has to do is write business, think positively and not provide detailed, professional service. Then the agency’s revenues will be high and everyone will be happy. The competition will be blind-sided by your success. Heck, all their employees will be applying for jobs at your agency. Your agency will be a magnet for all the producers in a 50-mile radius that do not want to follow their current agencies’ silly rules. This is just another benefit. You will never have to be concerned again about finding good producers! See, thinking positively solves everything! Just follow these three simple steps and your revenues and revenue per person will be beyond compare! Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868. E-mail: chris@burand-associates.com.
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August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N33
IDEA EXCHANGE
Growing Your Property Casualty Agency How One Independent Agent Tried to Off the Gecko A Stirring Tale of Dismemberment, Kidnapping and Murder
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bsession is more than some Calvin The epic began when Mr. X declared to Klein perfume; it’s the root cause of his wife, while watching a Godzilla movie, one independent agent’s tragic that independent agents have to do someattempts to terminate the marthing to stop the Gecko. He said, “Sure, I keting influence of what he calls can improve my Web site, use social media, the “little green monster” (no send direct mail, and gain a professional relation to the famous wall in designation, but all this stuff requires time Fenway Park). The “monster” to and effort. There must be an easier way,” he this agent (referred to here as declared. Then it hit him, like King Kong By Alan Shulman Mr. X) is the fictional GEICO hit Godzilla, if he could come up with a Gecko, the brilliantly successful monster of his own, of like kind and quality, character of endless TV he could conquer the Gecko Independent agents and strike a victory for indecommercials and print ads. However, Mr. X have to do something pendent agents everywhere. views it as more than The next day, as Mr. to stop the Gecko. a reptilian mascot, he X played golf, he saw an sees it as something real. I was fortunate to alligator sunning itself near the second learn the details of his saga from Mrs. X who hole. “That’s it!” he screamed to his playshared it with me as we chatted amicably by ing partner. “I know how to beat that little a hospital vending machine. green monster. I’ll train this big guy to kill
N34 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
the Gecko. Come on, let’s put it in the cart.” He convinced his partner to help him by letting him grab the tail as he wrapped his arms around the sleeping reptile’s head. The motion startled him awake and he snapped off the agent’s left arm. So much for plan one. Plan two was a bit harder to initiate, what with only one arm and all, but it was still easier than studying for a CPCU exam. It involved outnumbering the Gecko with a small army of lookalikes that would take the monster prisoner. This strategy seemed safer to Mr. X than the alligator fiasco as his lookalikes would be his own children dressed up in little Gecko costumes. But, he
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knew from TV commercials, especially the one at the convention where the Gecko had a “Hello My Name Is” ID badge stuck to him, that the reptile was pretty small. So, he told his wife, as she was holding the other end of his submarine sandwich, “Honey, I need to shrink the kids.” Mrs. X wasn’t thrilled with the prospect of having artificially diminutive children. She told her husband that she was pretty sure that up to a point, they were supposed to grow bigger, not smaller. But in the interest of family harmony, she went along with the plan. Mr. X threw himself headlong into research by renting Rick Moranis’ “Honey, I Shrunk the Kids” film. To get a reducing ray of his own, he Googled “child shrinking machine” but was thwarted when he only found references back to the movie. Humbled by failure and to clear his head, Mr. X took his cat for a walk. Then the ultimate plan hit him. Cats are the natural predators of all things gecko. So, he would train his tabby to kill the GEICO mascot. Drills began every morning at 6 a.m., when the cat was taught to pounce on paper images of the Gecko cut out from GEICO newspaper inserts. After six weeks, the cat was ready for the real thing. Unable to locate the real thing, Mr. X decided to rub his big screen 3-D television with tuna juice upon the Gecko’s next TV appearance. He did so, and the well-trained cat viciously attacked, smashing the massive set to the floor, thus ended plan three. At this point, after suffering from a painful dearth of entertainment, Mr. X checked himself into General Hospital (before it was canceled) and having nothing else to do decided to read all of this author’s back columns in Insurance Journal magazine. He is now well on his way to properly growing his property/ casualty independent insurance agency. As for the Gecko, Mr. X no longer thinks of him as the “little green monster,” just an annoying competitor with a weird British accent. Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and market-ing newsletter. He is also the author of the many tools posted on the Agency Ideas Instant Download Store. Phone: 800-724-1435. E-mail: alan@ agencyideas.com. Web site: www.agencyideas.com. www.insurancejournal.com
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N35
IDEA EXCHANGE
Commercial Property New Rating and Policy Bureau Breaks Ground With Injudicious Exclusion
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nsurance regulators across the country are bracing for the introduction of new commercial property policy language promised this fall by the newly-formed property insurance rating and policy form bureau, the National Organization of Property Exchanges (NOPE). By Chris Boggs NOPE was formed to promulgate rates and forms on behalf of many of the newly founded property insurance exchanges and existing captive insurers, and promises to bring new life to a rather boring and staid insurance industry. NOPE’s strict focus on property insurance has allowed it to analyze property losses “from every angle,” according to NOPE CEO Kermit DePhrog. DePhrog says that NOPE’s primary goal in developing new commercial property policy language, “unlike any that has ever been used,” is to assure that members of exchanges and captives get the most for their premium dollar. A review of the new policy language promulgated by NOPE shows that many of the traditional property coverages offered
in other rating organization forms, such as those from Insurance Services Office (ISO) and the American Association of Insurance Services (AAIS), are found in NOPE’s property form. However, there is one new and potentially game-changing exclusion found in NOPE’s property form not found in any other previously promulgated form; this new exclusion is known as the “Injudicious Acts Exclusion.” “Our long research of and into commercial property claims proved what has long been expected within the insurance industry, namely that most commercial property losses are due to, well, human error,” said Waldorf N. Statler, NOPE’s chief coverage officer. NOPE’s goal, according to Statler, is to remove coverage for such causes. An example of a loss covered under old terminology but excluded under NOPE’s “Injudicious Acts Exclusion” is damage caused by fire resulting from an employee’s poor judgment or lack of experience. Essentially, this exclusion is designed to remove coverage for any action of any insured that fails to meet standards of reasonable care.
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Let us take the blues away * Homeowners * Commercial Auto * Personal Auto * * Mobile Home * Earthquake *
http://cnico.com 800.733.0880 N36 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
‘Stupidity is excluded.’ “Basically we want to exclude loss caused by stupidity,” said Statler. ISO and AAIS are both interested in this new exclusionary wording, according to representatives from both rating organizations. “We want to see how the ‘Injudicious Acts Exclusion’ holds up in court before we begin the long process of filing the form changes for our member carriers,” said one ISO executive under condition of anonymity. “Courts may consider property policies with such provisions illusory.” ISO and AAIS both state that this so-called “stupidity exclusion” will result in much lower property rates. In fact, AAIS calculates that property rates would likely be cut by more than half if injudicious acts could be excluded. Boggs, director of education for the Insurance Journal Academy of Insurance, is charged with the impossible task of trying to make insurance interesting. Rather than pursue normal hobbies, Boggs has earned 73 designations, including CPCU, ARM, MIC, KEY, MOUSE, BIG and DEAL. www.insurancejournal.com
IDEA EXCHANGE
Erors & Omisions E&O Insights: 15 Ways to Guarantee an Agency E&O Claim
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hile most agencies want to avoid errors and omissions (E&O) claims, there may be some agents that are just dying for the experience of what it feels like. For those folks, here are some ways to significantly increase your chances of being handed a summons and complaint.
Tip # 6 – Surplus lines — it works the same as the standard market. If you need to bind the account, just go ahead and do it. You’re pretty sure the agreement between your agency and the wholesaler gives you this authority anyway, right? For renewals, don’t bother checking to see if there have been any changes. It’s the wholesaler’s job to tell you that.
By Curtis M. Pearsall
Tip #1 – Keep your customers in the dark on how their policy works. Do your customers need to know a homeowners policy does not provide flood coverage or insuring their jewelry as contents on the homeowners policy is not as broad as insuring it on a floater? No. The only time it really matters is if they have a claim — and what are the chances of that? Tip # 2 – Don’t bother holding staff meetings; the less your staff knows, the better. Meetings take time and the staff probably isn’t paying attention anyway. If the carriers change their binding guidelines, the staff will find out eventually and, if there is a problem, just tell your carriers you forgot to tell the staff. They will back you up.
Tip # 7 – Procedures Manual — tell the employees it is up to them if they want to use it. Keeping the manuals up-to-date takes time, so if an employee wants to use it, that’s up to them. If some staff members like their shortcut better, that’s fine. Tip # 8 – Include a cover letter with your policies telling customers they don’t need to read their policy. After all, that’s your agency’s job: making sure customers are covered. If they happen to have a
Tip #11 – When customers stop into the agency to pay their premium, just say “thank you” and let them go. After all, if the policy was cancelled yesterday, they know that just dropping off the premium means they have coverage again. Companies are so hungry for business, they will reinstate and honor a claim if one occurs. Tip #12 – When customers reduce their coverage, their word is good enough for your agency. If something happens, customers will be very forthcoming and admit they knew they didn’t have the coverage. Tip #13 – Doing quality control isn’t worth the time. After all, the quality control results have been over 90 percent and that was equivalent to an “A” in school, so that is good enough. Besides, the staff thinks you are spying on them when you do QC. Tip #14 – On new business, just duplicate what they had before. Your agency is giving the customer what they had before and you saved them some money; isn’t that all they want? To discuss additional coverages would have only made them mad.
Tip # 3 – Tell your carriers what you need to tell them to get the account written. Your job is to write business and being honest with your carriers won’t get that done. The less your carriers know, the better. Just because the account had losses in the past does not mean they will have them in the future. Tip # 4 – Sign the customer’s name. Who will ever know? Chasing down your customers to get their signature takes time and agencies just don’t have the time anymore. The carriers won’t know.
loss that is not covered, well, that’s why you buy E&O coverage.
Tip # 5 – Price is all that matters. When you move an account to another carrier, the customer will be happy as long as the premium is less. The only time it will matter is if they have a claim … and this account has never had a claim.
Tip #9 – Your promotional material doesn’t have to be accurate — isn’t the goal of promotional material just to write business anyway? Your material should make you sound like you are an expert.
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Tip #10 – Documentation is so overstated. Documenting takes time and you and your staff have better things to do. If something happens, there is no doubt the courts will believe you as opposed to your customers. After all, you are an insurance agency.
Tip #15 – Put whatever you need to on a Certificate of Insurance. After all, nobody looks at them anyway. If you need to add an additional insured, just go ahead and do it. If a problem develops, just tell the carrier you forgot to tell them. Since you regularly play golf with the underwriting manager, there is just no way they won’t help you out. Pearsall, CPCU, ARM, is president of Pearsall Associates Inc., a risk management consulting firm specializing helping agents protect themselves. He is also a special consultant to the Utica National Agents E&O program. Phone: 315-768- 1534. E-mail: curtis@pearsallassociates.com.
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N37
IDEA EXCHANGE
Minding Your Business Managing Agency, Company Relationships the Easy Way
W
e all know the importance of maintaining good relationships with insurance companies in order for your agency to succeed. The slowdown in the economy has created changes to the internal structure of many insurance companies. In turn, agencies need to respond differently to By Catherine Oak ensure a successful working relationship. Robert Leach, an insurance consultant, has summarized three ways to improve how your agency works with its carriers. Don’t guess what they want. It changes too often. Just send them anything. There is and Bill Schoeffler a good chance that the underwriter might think the agency is going in a new direction and changed its appetite. The underwriter might just bind the account without questions. Schmoozing company reps does not
work. They get it all day long from your competitors. Instead, think of something that you know you can beat them in and challenge them to a competition. For example, one agency owner who was a black belt, challenged the company rep to a friendly fight. The agency owner was able to release his frustrations and intimidate the company rep at the same time. Put the squeeze on the head honchos. As we hear too often in the news today, people are embarrassing themselves on the Internet, such as Rep. Anthony Wiener. Conduct some opposition research on the Internet for top-level management in the insurance companies. Dig down a few layers and include their spouses and children. It should be real easy to find embarrassing, if not scandalous information on the CEOs children’s Facebook page. Keep in mind, the companies really don’t care about you as an individual. The successful agent is the one that knows how to get things done.
Port Smith Agency Owner Missing
M
alcolm Tidwell, an insurance agent from Port Smith is reported missing. The exact date of his disappearance is unknown. Police were first alerted to his disappearance by one of his clients who said that he missed their weekly golf game for two weeks in a row. Tidwell does not have any immediate family, so police want to question neighbors, his employees, and other next of kin. Police reported that interviews with Tidwell’s employees did not produce any substantial leads. Bertha Fife, Tidwell’s lead customer service representative indicated that she knew something was wrong, because her workload for the last two weeks dramatically dropped. “I was finding that I had plenty of time to actually service the customers and not be put on some wild goose chase.” She indicated that the customers were also commenting how professional and well run the agency has been. Jessica Henke, the agency’s bookkeeper said that she was thinking something was wrong with Tidwell because the crossword puzzle and Sudoku was not filled out before her lunchtime break. “I sure hope that he comes back soon. It is almost the end of the month and he needs to sign our paychecks.” Police request that if anyone has any leads or information regarding Tidwell’s disappearance, to please contact the Port Smith Police Department. N38 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
Tacaño Insurance Announces New Contingency Guidelines
T
acaño Insurance Co. from Chevy Chase, Md., announced new guidelines for contingency commissions for its agents this month. “We wanted to reward our agents who generate great business for us and help streamline the overall process for everyone,” said Philip Mackinaw, company president. In the past, contingents were based on low loss ratios and increasing volume. “We found that the old method simplified the real situation too much and did not address today’s needs,” Mackinaw said. “Management decided that we needed to create new incentives in order to go in the direction we have for the future.” Instead of basing contingent commissions on low loss ratios and increased volume, Tacaño Insurance Co. will be using a point system when an agent meets criteria such as: • Submission of complete typed applications on the proper ACORD forms at least 60 days before the expiration date. • Properly guessing of the company’s “appetite of the month.” • Sailing to the land of the Sirens to attend the annual company meeting. • Finding at least one of Mackinaw’s horcux and returning it to him safely. • Write a 1,000-word essay on how the lesson of Sisyphus can be expanded into the role of today’s insurance agent.
Reality Show Contestant Coverage Unveiled
C
reative Insurance Solutions of Las Vegas, Nev., has just released it latest product — Reality Show Risk. This new policy is for contestants on the plethora of reality shows on television. Coverage includes demeaning belittlement from the host, including Simon Cowell, Gordon Ramsey and Donald Trump. Policyholders are also entitled to any losses sustained due to their 15 minutes of fame, such as carpal tunnel syndrome due to signing autographs. Reality show celebrities, such as Kim Kardasian, are excluded from the policy. For more information contact Stephen Winn at CISLV. www.insurancejournal.com
NATIONAL COVERAGE
News&Markets Government Reaps Benefit of P/C Insurers’ Excess Profits
T
he property/casualty insurance industry reported unexpectedly robust profits in the latest quarter, surpassing all estimates of Wall Street analysts. Gross profits were up more than $50 billion, which meant tax revenues to the federal government exceeded $220 billion. By Joseph L. Petrelli Insurance company chief executive officers quickly took credit for the phenomenon so that underwriters and claims personnel could not. “This is the evidence that we needed to see to determine once and for all that the hard market has returned,� said an industry spokesperson who preferred to remain anonymous because he has made this same statement in the past. “Risks are being appropriately priced and competition is now based upon capacity, capability and commitment rather than cost. Although we should
not expect future results to remain in line with this remarkable turnaround, neither we should dismiss the operating results that have pushed the P/C industry into the black.� The Internal Revenue Service said it is very excited and ready to help facilitate tax payments. “If insurers do not wish to wire transfer their tax payments or overnight a check, we are willing to meet them more than half way. Specifically, we have made arrangements to have bonded couriers meet the chief financial officers at the location of their choice so we can pick up the tax payments in person. After all, we are from the government and we are here to help,� the IRS said. Not everyone was ecstatic at the news. True to his profession as an actuary, Joseph
L. Petrelli, president, Demotech, told Insurance Journal that “all of this would be appreciably more fun to discuss if the P/C insurance industry had booked any reserves whatsoever for Incurred But Not Reported losses. Although I am pleased that the industry believes that it has turned the corner and the worst is behind it, it would have been preferable to do so when booking reserves for reported claims only.� An unidentified agent who overheard Petrelli’s comments called Insurance Journal to request a delay in publishing the story. “I want to cash my contingent commission bonus check,� she said. Petrelli says he is president of the actuarial services firm Demotech Inc. in Columbus, Ohio.
Are You
Hiring? Post an online job ad by August 31st and NL[ H MYLL WYPU[ JSHZZPĂ„LK HK PU [OL :LW[LTILY 19[O ,TWSV`TLU[ /9 PZZ\L ( ]HS\L
Submit your job ad online at www.insurancejournal.com/jobs 8\LZ[PVUZ& *HSS www.insurancejournal.com
_ VY LTHPS JSHZZPĂ„LKZ'PUZ\YHUJLQV\YUHS JVT August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N39
IDEA EXCHANGE
Coverage Analysis 25 Fears That Can’t Be Insured Against By Charles Yoble
1) Children possessed by demons
17) Poisonous toads
2) Donald Trump
10) Black helicopters
3) Reality TV shows that have
11) Twitter, Facebook and LinkedIn
nothing to do with reality
18) Darwin award contestants (but not winners) 19) Vampires, zombies and werewolves
12) “Evildoers” and
4) “Prophets” who predict the
“Do-Gooders”
end of the world
20) Bin Laden’s followers
5) Teenagers
13) Flying saucers and other “aliens”
21) Freeway closures (in L.A.)
6) Radio-TV preachers
14) “Free” credit cards
7) National debt levels in devel-
22) People who are famous for being famous
15) Alligators, pythons and other
oped countries, especially the U.S.
8) Planned parenthood – an oxymoron, if there ever was one
large beasts in sewer systems
23) E coli 24) TV ads for embarrassing pharmaceutical products
16) High heels
9) Leaf blowers
25) Republicans and Democrats
Advertisers Index Abram Interstate www.abraminterstate.com American Agents Alliance www.agentsalliance.com Amwins Group, Inc. www.amwins.com Anderson & Murison, Inc. www.andersonmurison.com Applied Systems www.appliedsystems.com Applied Underwriters www.applieduw.com Astonish Results www.astonishresults.com Astonish Results www.astonishresults.com Atlas Financial Holdings www.atlas-fin.com
N35 N13 N11 N33 N7 N44 N21 N12 N22
CDS Business Mapping www.riskmeter.com Century National http://cnico.com First Nonprofit Insurance Company www.firstnonprofit.com/texas Fujitsu PFU www.fcpa.fujitsu.com Gateway Specialty Insurance www.gatewayspecialty.com ISU Group www.joinisu.com K&K Insurance Group www.kandkinsurance.com LexisNexis www.lexisnexis.com MarketScout www.einsurancesymposium.com
N40 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
N29 N36 N34 N23 N30 N28 N25
Midlands Management Corporation www.midlandsmgmt.com N35 Monarch E & S Insurance Services www.monarchexcess.com N27 Monarch E & S Insurance Services www.monarchexcess.com N2 National Alliance for Insurance Education & Research www.scic.com N31 PersonalUmbrella.Com www.personalumbrella.com N5 UCA General Insurance Services www.ucageneral.com N15 Zurich Insurance Company www.zurichna.com N43
N3 N39
www.insurancejournal.com
CLASSIFIEDS
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NOTICES
August 15, 2011
August 15, 2011
August 15, 2011
Allegheny Casualty Company One Newark Center, 20th Floor Newark NJ 07102
American Hallmark Insurance Company of Texas 777 Main Street, Suite 1000 Fort Worth, TX 76102
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty insurance in the Commonwealth of Massachusetts.
The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty insurance in the Commonwealth of Massachusetts.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
Berkshire Hathaway International Insurance Limited 33 St Mary Axe, London, EC3A 8LL, United Kingdom The above company has made application to the Division of Insurance to be an Eligible Alien Unauthorized Insurer to transact Property and Casualty insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
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We help keep you in touch. The most effective way to gain new leads, increase sales, nurture customer relationships, and generate repeat business is to stay constantly in touch. Send pre-designed eNewsletters, Holiday eCards, Email Letters, Press Releases and Promotional Campaigns. Plus, increase productivity by automating your responses to inquiries, proactively sending renewal notices, birthday cards, and much more. Call (866) 447-4631 or go to www.intouchagent.info/email. It’s email marketing and automation at its most powerful best.
August 15, 2011 INSURANCE JOURNAL-SATIRE ISSUE | N41
IDEA EXCHANGE
Closing Quote
Got Regional? T
he multitudes of fine regional insurance companies have been a source of salvation for independent agents. In the last 15 years, their share of the overall personal lines market grew from 18 percent to 23 percent. They are steady-eddies in commercial, writing a third of all premium. They own about the same share (28 percent to 29 percent) of total property/ casualty premium as national independent agency company By Peter van Aartrijk competitors. Okay, now that all the execs have seen enough statistics to quit reading, let’s cut to the real reasons agents love regional carriers (and puh-leez, it’s not the beefy commissions): Accent. Commercial general liability coverage is complicated, so why not speak the same lingo? If you’re an agent in Minnesota, your regional underwriter offers an enthusiastic “You betcha!” or “Oh, sure!” In New York, we want a reassuring “How youz guyz doin’?” To which we’ll respond, “Impair my & Chris Amrhein property, I breaka you face!” In the Deep South, hello, we don’t have to explain that the plural of “y’all” is “all y’all.” Trips. National carriers seem to have eliminated reward junkets for agents — unless you’re counting the all-youcare-to-eat fish fry at the Day’s Inn in Fargo in February. But regionals? They can throw a party. Trips and cruises to South America, the Caribbean and Europe are alive and well. And if N42 | INSURANCE JOURNAL-SATIRE ISSUE August 15, 2011
they do choose Fargo, they at least know the right places to eat fish. Leadership. Regional carrier execs are a friendly sort. They walk the walk on understanding agents. That’s because many, in fact, are former agents who sound like actuaries and thus could not communicate with customers. No problem! Run a carrier! It’s way less stress, as long as you can understand a combined ratio. Or not. And they hang around, unlike those national carrier CEOs who always are getting fired. (Whoops, according to the news releases, they’re “pursuing” — wait for it — “other personal opportunities.”) Underwriting. Got a tipsy plumber? General contractor with a little gambling issue? Pit bull that occasionally nibbles on a bratty kid’s leg? When it comes to regionals, we’ve got three words for you: Bind me, baby! Heck, we might even be able to BOP that sucker. Brand. Who needs one? Smaller or less distinctive is better. We can sell a carrier with the same Indian name as the mascot for the local high school football team. And who cares if our agency has accumulated more total premium than The REAL reasons the carrier — we’re in agents love regional Iowa, so give us warm and carriers. fuzzy messaging about barns and amber waves of grain. Besides, there’s something called reinsurance and we’re told London has it all covered. Another thing: Those regionals have corporate logos in the same shade of “safe blue.” We agents like safe — don’t you go rebranding on me! Giveaways. Dear national companies: Don’t mail us cheap paperweights that can’t control our stacks of submissions going to the regionals. Lose the plastic pens that explode in our shirt pockets. And your magnets slide off the lunchroom fridge. Our agency seeks high-quality cheap crap, and we’re sorry, but we apparently only can get that from the regionals. Service centers. We agents typically hate ‘em, and if you were a regional, you wouldn’t consider a service center in Orlando to handle our clients in Missouri. When we call your office, take us to our peeps: Joe in claims who’s married to Sally in underwriting who has a brother on the janitorial staff. Field reps. These regional cats actually still drive around and visit our agency. And forget manuals! They bring Dunkin’ Donuts for our CSRs and sand wedges for our principals. And when you’re facing a double-break, downhill 17-footer, it’s always a gimme putt by your regional buddy. We fear for you, regional companies. Your underwriting and investment practices may get too successful. You could grow into a — perish the thought — super-regional. That’s too close to a national company. Yikes! van Aartrijk (peter@Aartrijk.com) is an insurance retread, hanging around the industry for 30 years. Ditto for Amrhein (chris@insuranceisfun.com), who, like you readers, has done a lot of really important stuff in his career. But we both agree that insurance is fun. No, really it is. www.insurancejournal.com
“We make communication work seamlessly across six continents. Zurich does the same with our insurance.” Andrew M. Miller, President & CEO Polycom, Inc.
Zurich HelpPoint A single property insurance solution designed to help reduce coverage gaps and overlaps. Polycom, a global leader in telepresence solutions, needed a financially strong carrier that could make complex insurance coverage easier. Zurich provided a custom solution that’s as simple as it is seamless, integrating property with liability coverage all under one policy. It’s an example of how Zurich HelpPoint delivers the help businesses need when it matters most. Watch the video to learn more. www.zurichna.com/stories7
Insurance is underwritten by insurance company subsidiaries within the Zurich Financial Services Group including, in the US, Zurich American Insurance Company and its underwriting subsidiaries. Insurance product obligations are the sole responsibility of each issuing insurance company. For example, only the assets of Zurich American Insurance Company (and no other assets of the Zurich Financial Services Group) are available to meet its obligations for the performance of its products. For more complete financial information, audited annual statements of the Group and information on the ratings of the underwriting companies of Zurich in North America, access www.zurichna.com. Certain insurance coverages are not available in all states. Some coverages may be written on a non-admitted basis through licensed surplus lines brokers.
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OUR CUSTOMERS ACTUALLY LIKE WORKING WITH OUR CLAIMS DEPARTMENT. Our adjusters answer their phones. They also answer clients’ questions. And because we assign our adjusters half the caseload typically assigned by our competitors, we close claims 2.5 times faster than the industry average. It’s one of the many reasons our customer retention rate is one of the highest in the industry. Experience our way of doing things. Just one company, one bill and the hardest-working workers’ compensation insurance around.
Standard premium of $200,000+. Most classes. All states. Call (877) 234-4450 or visit www.auw.com for more information.
©2009 Applied Underwriters, Inc. A Berkshire Hathaway Company. EquityComp patent pending.