Insurance Journal West 2017-03-20 by Insurance Journal

WEST REGION Hawaii-Made Beer Lawsuit in California Trumpâ&#x20AC;&#x2122;s Infrastructure Plan & Smart Roads Disruption Impacting the Future of Talent?

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Contents March 20, 2017 • Vol. 95 No. 6 • West

West W1 Suit Filed in California Says Kona Co. Dupes Those Seeking Hawaii-Made Beer

W2 TRUMP’S INFRASTRUCTURE

PLAN COULD PAVE WAY FOR SELF-DRIVING CARS, SMART ROADS

National 10 Credible Workers’ Comp System Needed Now More Than Ever: WCRI 17 2017 Corporate Profiles

W2 Trump’s Infrastructure Plan Could Pave Way for Self Driving Cars, Smart Roads

40 Special Report: Hot Markets to Watch in 2017 44 Spotlight: How Insurers Can Take the Lead on New Food Safety Risks

Idea Exchange 46 Tech Talk: Why Real-Time Binding Delivers Immediate Value 48 Minding Your Business: Catherine Oak & Bill Schoeffler 52 How is Disruption Impacting the Future of Talent? 54 Closing Quote: Making the Case for Innovation

10 EXPERTS ARGUE THE NEED FOR A CREDIBLE

WORKERS’ COMPENSATION SYSTEM IS MORE IMPORTANT NOW THAN EVER

Departments W4 People 14 Declarations 14 Figures

52 HOW IS DISRUPTION IMPACTING

4 | INSURANCE JOURNAL | WEST MARCH 20, 2017

THE FUTURE OF TALENT?

15 Business Moves 16 MyNewMarkets INSURANCEJOURNAL.COM

What is Craftsmanship ? SM

To be crafted is to meet exacting standards. It’s the human touch that combines art and science to create something unique.

©2017 Chubb. Coverages underwritten by one or more subsidiary companies. Not all coverages available in all jurisdictions. Chubb®, its logo, Not just coverage. Craftsmanship.SM and Chubb. Insured.SM are protected trademarks of Chubb.

We tend to think about craftsmanship in terms of physical things: fine wine, classic cars, custom furniture and iconic structures. But what about the underwriting of insurance to craft protection for your unique and valuable things? And the service behind that coverage when you need it most — like claims and loss prevention? For your business. Your employees. Your home. The people you love. Things that need a particular kind of protection and service. The kind Chubb provides. Not just coverage. Craftsmanship.SM Not just insured.

Chubb. Insured.

chubb.com

3 STEPS FOR BETTER CYBER SECURITY THAT WON’T BREAK THE BANK.

The internet has been a huge boon for business in recent years, helping companies reach unprecedented levels of productivity, profitability and visibility. Yet, along with the internet’s many benefits comes the growing threat of cyber attacks. They can put a business’s revenue, reputation and customers in peril. Small and midsize businesses (SMBs) are particularly vulnerable, victim to 60 percent of all cyber attacks in 2014, according to Symantec’s 2015 Internet Security Threat Report.1 That trend is expected to continue. This may surprise SMBs who believe hackers wouldn’t waste their time on a business their size. But cyber criminals can now launch automated attacks on thousands of businesses at once and profit from economies of scale. SMBs make easy targets because they often lack the robust security that can keep hackers at bay. Putting their assets at risk and providing an electronic gateway into the networks of larger business associates. The risk can be significant. And SMBs may lack the resources to invest in technologies and internal programs that large businesses can more easily afford. But even with a limited budget, there are three steps SMBs can take as a start.

1. Build a security-aware organization. Cyber security isn’t just about preventive technology. It requires the awareness and participation of everyone. That calls for a top-down approach, beginning with policies and procedures sanctioned by senior management. Ideally, employees will follow their lead in a collective effort to protect the company’s assets. Security-aware organizations have the following key components in place: • A written information security plan that: • Identifies security policies, goals and priorities. • Sets forth policies for network security; use of company email, social media, instant messaging and the internet in general. • Specifies the handling of proprietary company information; and activities that are prohibited on company-owned devices, networks and other resources. • Establishes internal policies for employees, but also demonstrates that security is a priority to state regulators and customers if a breach does occur. • An inventory of the business’s core assets and sensitive data, where it’s stored and which employees have authority to access it. Include personally

identifiable information (PII) for employees and customers (such as Social Security numbers), bank account

Businesses were victim to 60% of all cyber attacks in 2014.

data, company intellectual property and any other information that could damage the business if breached. • Access control. Limit access to computers, company networks and confidential data based on an employee’s need to know. • Employee training programs. Workplace security depends on a breach-savvy workforce. Training on basic security practices and policies is essential. Phishing awareness exercises can further help employees recognize and avoid email, websites and phone calls designed to infiltrate company systems or steal personal information.

Experienced cyber insurers can help SMBs tighten cyber security with recommended providers. To learn more visit THEHARTFORD.COM/CYBER.

2. Establish security safeguards. Help safeguard SMBs’ sensitive data from unauthorized access and use with these steps: • Encryption for laptops, desktops and mobile devices. Encryption encodes information so that only the person (or computer) with the key can decode it. While not a full security solution, it’s highly recommended for all devices, especially those with sensitive information. Most newer model mobile phones and tablets include autoencryption software. Many privacy and consumer protection agencies provide safe harbors in their statutes to incentivize businesses to adopt encryption controls. • Cloud service providers. Outsourcing security management to cloud-based providers is an increasingly viable alternative to an in-house security program. Cloud providers offer affordable expertise in identity and vulnerability management that the SMB needs but often lacks. SMBs should negotiate with providers for the security and privacy services that best serve their company’s protection needs.

• Password protection and authentication controls. Passwords are the primary means for controlling access to sensitive data resources. Change default passwords and require complex passwords that must be changed every 90-120 days. Multifactor authentication may be required depending on the type of data being accessed or the source (such as remote users). • VPN (virtual private network) for remote access. For organizations with remote users, VPN provides a secure channel through the internet to the SMB’s private network. VPN controls include encryption of all data that’s transmitted over the channel, multifactor authentication, strong passwords and automatic timeouts. • Vendor security. SMBs’ vendors should make securing sensitive information a priority. Before entrusting data to a third party, SMBs should get their vendors’ specific controls in writing. And augment them with additional controls if necessary. Also require the vendor to return or destroy all sensitive information upon termination of the contract. 3. Prepare for the worst. A security breach is a near certainty for businesses today. For SMBs, preparedness is key to surviving the fallout. An incident response plan (IRP) prescribes the way a business will respond to and manage the effects of a security attack. Its goal is to limit the damage and reduce recovery time and costs. All SMBs should prepare an IRP that includes: • Identification of an incident response team that includes system-savvy security

Visit THEHARTFORD.COM/CYBER today for additional cyber insights and resources.

staff and a manager authorized to make decisions on behalf of the business. • Clear delineation of possible incidents (such as malicious code) and how to identify and contain them based on the business impact (confidential customer data vs. intellectual property). • Procedures for eradicating the root cause of the attack and all traces of malicious code, restoring data and software, and monitoring systems for any remaining signs of weakness. SMBs should always work with their insurance carrier to integrate procedural requirements for coverage into their final plan.

The Hartford offers a unique and comprehensive risk management solution that rewards SMBs for boosting their defense against cyber attacks. Find out how at THEHARTFORD.COM/CYBER.

Find an insurance carrier that provides more than just coverage. Having comprehensive cyber insurance coverage is as important as best practice policies. Partnering with the right insurance carrier can help SMBs improve their cyber security and reduce financial losses. Experienced carriers like The Hartford provide full breach risk management solutions. So you can help SMBs prevail in the face of an inevitable security event.

Prepare. Protect. Prevail.®

Business Insurance CyberChoice First Response is offered on a SURPLUS LINES basis.* For Producers Only – Not for Distribution to the General Public. 1) 2015 Internet Security Threat Report, Volume 20, http://www.symantec.com/security_response/publications/threatreport.jsp *Eligibility for surplus insurance coverage is subject to state regulation and requires the use of a licensed surplus lines broker. Surplus lines insurance policies are generally not guaranteed by state guaranty funds. Policies should be examined carefully for suitability and to identify all exclusions, limitations, and other terms and conditions. Surplus lines coverage is underwritten by Pacific Ins. Co. Ltd (except in CT and HI) and Hartford Ins. Co. of Illinois in CT and HI. The Hartford has arranged for data risk management services for our policyholders at a discount from some third-party service providers. Such service providers are independent contractors and not agents of The Hartford. The Hartford does not warrant the performance of third-party service providers even if paid for as part of the policy coverage, and disclaims all liability with respect to use of or reliance on such third-party service providers. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries. Its headquarters is in Hartford, CT. 16-0110 © 2017 The Hartford Financial Services Group, Inc. All rights reserved.

Employee Benefits Auto Home

OPENING NOTE

Write the Editor: awells@insurancejournal.com

Prescription Drugs in the Workplace

M Publisher Mark Wells mwells@wellsmedia.com

EDITORIAL

SALES

Editor-in-Chief Andrea Wells awells@insurancejournal.com

West Sales Dena Kaplan (800) 897-9965 X115 dkaplan@insurancejournal.com

East Editor Elizabeth Blosfield eblosfield@insurancejournal.com

Romeo Valdez (800) 897-9965 X172 rvaldez@insurancejournal.com

Chief Content Officer Andrew Simpson asimpson@insurancejournal.com

Southeast Editor/MyNewMarkets Amy O’Connor aoconnor@insurancejournal.com South Central Editor/ Midwest Editor Stephanie K. Jones sjones@insurancejournal.com West Editor Don Jergler djergler@insurancejournal.com International Editor L.S. Howard lhoward@insurancejournal.com Columnists Catherine Oak, Bill Schoeffler, Tom Wetzel

Chief Marketing Officer Julie Tinney (800) 897-9965 X148 jtinney@insurancejournal.com

South Central Sales Mindy Trammell (800) 897-9965 X149 mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA and CT) Howard Simkin (800) 897-9965 X162 hsimkin@insurancejournal.com Midwest Sales Lisa Whalen (800) 897-9965 X180 lwhalen@insurancejournal.com East Sales (NY, PA and CT only) Dave Molchan (800) 897-9965 X145 dmolchan@insurancejournal.com Advertising Coordinator Erin Burns (619) 584-1100 X120 eburns@insurancejournal.com

Insurance Markets Manager Kristine Honey (619) 584-1100 X132 Kitty Ambers, David Coons, Sam khoney@insurancejournal.com Rizzitelli, Bruce Schreiner, Todd Sorrel Social Media Manager Ly Short (619) 890-7735 IJ ACADEMY OF INSURANCE Lshort@insurancejournal.com Director Patrick Wraight Classifieds, Jobs, pwraight@ijacademy.com Agencies Wanted/For Sale Sr. Sales & Marketing Coordinator Associate Director Kelly De La Mora (800) 897-9965 X125 Barbara Whiffen kdelamora@insurancejournal.com bwhiffen@ijacademy.com Contributing Writers

ADMINISTRATION

Chief Financial Officer Mark Wooster mwooster@wellsmedia.com

MARKETING

Marketing Director Derence Walk dwalk@insurancejournal.com Marketing Administrator Gayle Wells gwells@insurancejournal.com

NEW MEDIA

New Media Producer Bobbie Dodge bdodge@insurancejournal.com Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com

DESIGN/WEB

Chief Technology Officer/ Chief Innovation Officer Joshua Carlson jcarlson@insurancejournal.com V.P. of Design Guy Boccia gboccia@insurancejournal.com Senior Web Developer Chris Thompson cthompson@insurancejournal.com Web Developer Jeff Cardrant jcardrant@insurancejournal.com Web Developer Terrance Woest twoest@wellsmedia.com

CIRCULATION

Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com

ore than 70 percent of United States employers are feeling the direct impact of prescription drug misuse in their workplaces, according to a survey from the National Safety Council. The survey, How the Prescription Drug Crisis Is Impacting American Employers, also found that although 71 percent of employers agree that prescription drug misuse is a disease that requires treatment, 65 percent feel it is a justifiable reason to fire an employee. Only 19 percent of employers feel “extremely prepared” to deal with prescription drug misuse in the workplace. About 57 percent are drug testing all employees. Of those employers who conduct drug testing, 41 percent are not testing for synthetic opioids. “Employers must understand that the most dangerously misused drug today may be sitting in employees’ medicine cabinets,” said Deborah A.P. Hersman, president and CEO of the National Safety Council. “Even when they are taken as prescribed, prescription drugs and opioids can impair workers and create hazards on the job. We hope these findings prompt employers to take the lead on this emerging issue so that workplaces can be as safe as possible.” According to the research, drug poisonings, largely from opioid painkillers, now eclipse car crashes as the leading cause of preventable death among adults. Nearly half of Americans are personally impacted by prescription drug addiction, with 44 percent knowing someone who is addicted to a prescription pain reliever. Seventyfive percent of those struggling with a substance use disorder are in the workforce, revealing a hidden epidemic that many employers are struggling to address. Other key findings from the survey include: • Although just 13 percent are “very confident” that employees can spot the signs of misuse, 76 percent do not offer training to help close that knowledge gap. • 81 percent of respondents’ policies are lacking at least one critical element of an effective drug-free workplace program. • 88 percent are interested in their insurer covering alternatives to pain relief FOR QUESTIONS treatment so that employees can avoid REGARDING SUBSCRIPTIONS: Call: 855-814-9547 taking opioids, and nearly 60 percent Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: believe the insurance company will be insurancejournal.com/subscribe responsive. However, 30 percent of those Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media employers will not act on that interest. Group, 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 • Encouragingly, 70 percent would like to per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pub help employees who are struggling with lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended prescription drug misuse return to their to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2016 Wells positions after completing treatment. Media Group, Inc. All Rights Reserved. Content may not be photo-

‘Employers must understand that the most dangerously misused drug today may be sitting in employees’ medicine cabinets.’

copied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc.

Andrea Wells Editor-in-Chief

8 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 708, Northbrook, IL 60065-9967 ARTICLE REPRINTS: For reprints of articles in this issue, contact: Kelly De La Mora at 1-800-897-9965 ext. 125 or kdelamora@wellsmedia.com Visit insurancejournal.com/reprints/ for more information.

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National

Experts Argue the Need for a Credible Workers’ Compensation System Is More Important Now Than Ever: WCRI Conference By Andrew Simpson

fter decades of managing costs for employers, it’s time for workers’ compensation professionals and public policymakers to turn their attention to the needs of injured workers and think of themselves as players in a broader safety net, workers’ comp experts were told at the Workers’ Compensation Research Institute (WCRI) conference in Boston. Panelists and audience members at the conference stressed the need for a credible system for injured workers, especially as other social safety nets including job security, employer-funded pensions and health insurance are being weakened. They also challenged the professionals and public policymakers to more clearly define what responsibilities they have to those that fall

outside the workers’ comp system. This population includes older workers with chronic illnesses and long-term disabilities; workers including undocumented immigrant laborers who are injured on the job but afraid to file claims; and sharing or gig economy workers now classified as independent contractors not eligible for workers’ compensation. WCRI participants acknowledged that the industry is still smarting from past years’ Department of Labor, Occupational Safety and Health Administration (OSHA) and ProPublica reports. These reports alleged that the workers’ comp system is not living up to the “grand bargain” promised: that workers would be taken care of in the event of a workplace injury in exchange for giving up their right to sue their employer over the injury.

10 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

The reports accused the industry of failing too many injured workers. A 2015 Labor Department-OSHA report concluded that the costs of workplace injuries are borne primarily by injured workers, their families and taxpayers’ support of the social safety net.

How Workers’ Comp Got Here

Bruce Wood, long-time general counsel for the American Insurance Association (AIA) who recently retired, said stakeholders spent the past few decades trying to recover from a financial crisis in the 1980s and 1990s when costs were exploding and the system was in danger. “You had rates that were not politically supportable, so you had what became suppressed rates. You had an absolute crisis. You had a flight from voluntary markets to residual marINSURANCEJOURNAL.COM

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NATIONAL | News & Markets kets, and many states had to come to grips with that,” Wood said. They approved the use of measures of impairment as proxies for disability, mandating the use of fee schedules, and imposing caps on disability benefits. States also raised the bar on compensability, requiring work to be a major or predominant contributing cause of an injury. This was “because mostly through case law, what was considered a workers’ compensation claim was constantly being expanded, it was thought to be inequitable and it was more costly. So the policy objective here was to call for a stronger nexus between the injury and the workplace. We can debate how effective that’s been. But, you know, it wasn’t a crazy notion. There was a policy justification for doing that,” Wood said. Employers gained greater authority to direct medical treatment. This led to panels and networks, and eventually utilization review protocols, treatment protocols, evidence-based medicine, and more. “All of these issues continue to animate the debate today,” Wood said. Today’s intense scrutiny of workers’ comp may be related to the uncertainty over the traditional safety net tied to job security, health insurance and retirement benefits, he said. The workers’ comp system could also see even more scrutiny if changes to the Affordable Care Act leave more people uninsured, WCRI speakers said. Wood is troubled that some employers and states are championing an “opt-out” movement, which he said is not in keeping with the grand bargain. “They think we can just abandon the system, we’re gonna’ set up our own system.”

Worker Perspective

The problem with the focus of the past few decades has been the absence of the worker perspective, says Dr. David Michaels, a George Washington University professor of occupational health and formerly assistant secretary for labor with OSHA. “A lot of how you see the world depends on where you’re coming from,” Michaels

said. “Many workers who are either in the system or should be in the system are not doing well at all. That is the reason we’re having this discussion.”

‘Many workers who are either in the system or should be in the system are not doing well at all. That is the reason we’re having this discussion.’ There are “aging people who are invisible to everybody who works in workers’ comp,” Michaels said, adding that the number of people who get chronic, work-related illnesses from occupational exposure but never make workers’ comp claims is significant. “Almost none of those people actually ever seek medical compensation for some good reasons and some bad reasons. But they’re not covered at all, and none of those costs go into the system.” He also identified “vulnerable workers” including non-documented immigrants, temporary workers, workers in trades, and others that have contingent work relations as outsiders to the system. “Even if they know they have the right to get workers’ compensation, they never apply for comp.” Some gig workers are misclassified employees who should be covered by compensation while others are getting coverage through temporary agencies. But there is a subset who are legitimately classified as independent contractors and do not qualify for coverage. Studies show that $12 billion in costs in Social Security disability insurance (SSDI) are from workers who worked but are no longer getting workers’ comp benefits and are in disability at least to some extent because of their work-related conditions, according to Michaels. “We think the workers’ comp system covers all the costs, but it only covers the costs that we see and not this really huge world of costs that are really not compensated,” he said. Michaels said that in addition to lost

12 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

wages, injured workers face costs that are not covered such as those related to household maintenance. “A worker who’s injured can’t do all sorts of things, and someone else has to do those things. His or her wife or husband has to do those things.” “What claims or what costs should be encompassed by a comp system and aren’t because of some impediment in the comp system?” Wood asked.

Who Pays for That?

Dr. Emily Spieler, professor at Northeastern University School of Law and former West Virginia workers’ comp commissioner, says approaching the issue only from the perspective of costs to employers fails to consider the bigger picture — the “social insurance umbrella” of which workers’ comp is supposed to be a part. “Every economist I know, irrespective of their political proclivities, thinks that workers ultimately pay the costs of the compensation system, and not employers,” she said, noting workers never actually catch up on lost wages and they’re not getting benefits while they are out of work. According to Spieler, the intent of workers’ comp was for the employer to “take the worker as he found him.” But now states say a worker must show that the workplace is the predominant cause of the disability. An older worker working in a hard job who may have some history of back pain may be excluded from workers’ comp if he or she is off work as a result of an event. “How do we pay for that and who pays for that?” she asks. It’s not enough to think about the employer; it’s important to also think about where the costs are being distributed, said Dr. David Deitz, a former medical director with Liberty Mutual who consults on medical systems design and strategies. “We spend a lot of heat and light around some of these causation or proportionate kinds of decisions when the reality is, people need care and we ought to figure out what’s the most efficient way of delivering that causation to them.” Share this arti-

cle with a colleague. IJMAG.COM/320OK INSURANCEJOURNAL.COM

Figures

67,000 The number of prescriptions for painkillers two Alabama doctors were accused of writing in 2014. The pair, who ran a pain management clinic, were convicted on 19 of 20 counts, including drug distribution, conspiracy, health care and money laundering.

Declarations Free Speech

“The promise of free speech is that even when one holds an unpopular point of view, the state cannot stifle it. The price Americans pay for this freedom is that the rule remains unchanged regardless of who is in the majority.” — The opinion of one of the justices on the 11th U.S. Circuit

Court of Appeals, which ruled that Florida doctors can talk to their patients about gun safety. The ruling overturns a state law that said doing so was an infringement on citizens Second Amendment Rights to own guns.

High Job Growth

“Let our people grow these jobs.”

— Oregon Gov. Kate Brown warned the federal gov-

$1.85 MILLION

ernment to leave the state’s legal marijuana industry alone, and said that if the Trump administration makes a move against legalized recreational marijuana, it would be going against its own goals such as improving the economy, creating jobs and giving states more say in policies.

O&G Vulnerability

“There are actors that are scanning for these vulnerable systems and taking advantage of those weaknesses when they find them.”

3,000

The number of books the Wichita Falls (Texas) Public Library thought was damaged by water after a fire sprinkler wrongly went off and flooded a firstfloor area before the library opened for business. No damage estimate was immediately available.

The estimated number of tornadoes that struck in Missouri, Kansas, Iowa and Illinois on March 6 - 7, according to the National Weather Service’s Storm Prediction Center in Norman, Okla. The storm system brought hails and powerful winds as far south as the Ozark Mountains.

— Marty Edwards, director of U.S. Homeland Security’s Cyber

Emergency Response Team for industrial systems, says oil and gas companies are facing increasingly sophisticated hackers seeking to steal trade secrets and disrupt operations. Experts say the thousands of interconnected sensors and controls that run oil and gas facilities are rife with weak spots.

A Process and Journey

“Information security is a process and a journey, not a destination. All industries need to face the challenge of constantly evolving to ensure vigilance in awareness and risk mitigation.” The amount attorneys for a Hispanic man who worked on an Alaska fishing boat say he has won in a settlement against his former employer, Seattle-based Alaska Longline, after he was subjected to relentless racial harassment.

$153 MILLION

The amount Consolidated Edison has agreed to pay to settle charges over a 2014 gas explosion in East Harlem, N.Y., that killed eight people and injured about 50. A gas leak had been reported before the blast and the state’s Public Service Commission found that Con Ed violated state safety regulations. Gov. Andrew Cuomo said it’s the highest payment for a gas safety incident in New York State history.

14 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

— Ben Zviti, senior vice president in Marsh’s Financial

and Professional Products (FINPRO) Specialty Practice, discussing the impact of New York state’s recently implemented cybersecurity regulation, which went into effect on March 1. The regulation aims to protect New York’s financial services industry from the increasing risk of a cyberattack.

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Poll

Which one of these is your biggest challenge?

13.7% Finding new markets. (40 votes) 28.08% Finding new employees. (82 votes) 39.73% Finding new customers. (116 votes) 7.53% Finding new motivation. (22 votes) 10.96% Finding new efficiencies. (32 votes)

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West

Suit Filed in California Says Kona Co. Dupes Those Seeking Hawaii-Made Beer

class-action lawsuit says Kona Brewing Co. leads customers to believe they are buying made-inHawaii beer. The lawsuit filed in California is against Craft Brew Alliance, which advertises, markets, distributes and sells the Kona brand. Craft Brew Alliance spokeswomINSURANCEJOURNAL.COM

an Jenny McLean won’t comment on pending litigation. She explains that all packaged Kona Brewing beer is produced in Oregon, Washington state, New Hampshire and Tennessee. A KailuaKona, Hawaii brewery produces draft beer that’s sold in Kona Brewing pubs and elsewhere in the islands. The lawsuit says consumers purchased

Kona Brewing beer because they believed it came from Hawaii. The lawsuit says Craft Brew’s advertising and labeling is deceptive. According to its website, Kona Brewing ensures freshness and minimizes its carbon footprint by brewing beer close to distribution markets. Copyright 2017 Associated Press. MARCH 20, 2017 INSURANCE JOURNAL | WEST | W1

WEST | News & Markets

Trump’s Infrastructure Plan Could Pave Way for Self-Driving Cars, Smart Roads By Don Jergler

hat does the Trump Administration have in store for the development of autonomous vehicles and smart roads? With the administration’s ambitious infrastructure plan still far from finalized, Hilary Rowen, a partner in the San Francisco office of Sedgwick LLP, whose practice is dedicated to insurance regulatory issues, offered some insight into what developers of self-driving cars and the insurance community can expect. Rowen, who has testified at numerous regulatory and public hearings on autonomous vehicles, spoke with Insurance Journal on the topic. This has been edited for clarity and brevity.

Insurance Journal: What, if any, impact will the new administration have on the development and roll out of autonomous vehicles? Rowen: Perhaps the most intriguing and potentially far-reaching implication of the new administration is the infrastructure funding, if it is actually approved by Congress, which could lead to the construction at least of prototype SmartRoads.

IJ: Can you explain SmartRoads? Rowen: SmartRoads are roads with

embedded technology that allows the vehicle to actually, actively interact with the roadway. In other words, unlike the current generation of autonomous prototype vehicles, which effec-

tively used LIDAR (Light Detection and Ranging) and radar, and visual light cameras to sense their environment — much as analogous to the way that a human being uses their eyes, and to a certain extent, their ears to sense their environment — SmartRoad technology allows the vehicle to actually ping and interact with a roadway, usually, at least initially, contemplated to be a freeway. Hilary Rowen The implication of this is that it could allow autonomous vehicles, both cars and trucks, to platoon in very close formation. This would allow basically a de facto increase in road capacity in that platooning vehicles can travel in much closer formation, thereby effectively increasing road capacity without building or expanding existing freeways.

IJ: Now most of the players in the

development of autonomous vehicles seem to be happy with the Obama administration, to my knowledge. What do you think they may feel about the Trump administration? Rowen: I think that, at least, the initial indications is, that they will also be happy with, at least, the new Secretary of Transportation (Elaine Chao), who, in her confirmation hearing, also expressed support for facilitating autonomous vehicles. However, the proof of the pudding is in the eating.

‘Perhaps the most intriguing and potentially far-reaching implication of the new administration is the infrastructure funding, if it is actually approved by Congress, which could lead to the construction at least of prototype SmartRoads.’ W2 | INSURANCE JOURNAL | WEST MARCH 20, 2017

As yet, the new Department of Transportation staff and secretary have not taken any public steps with respect to SmartRoads, with respect to infrastructure, or with respect to any revisions to the guidance promulgated by the Obama administration last fall, (which) basically gave effectively a flexible and accommodating approach to the development of technology, much less rigid than the traditional rule-making approach.

IJ: What about state legislation and reg-

ulations? Do you think most states will be ahead or behind where the federal government will be on all this? Rowen: I think there is potential for tension between the federal government and the states. Specifically, there is at least some reasonable likelihood that states, in the guise of regulating the safe use of autonomous vehicles on their roads, may impinge or, at least be perceived by the federal government as impinging upon, the federal government jurisdiction over auto safety. Historically, the federal government regulates the safety features of vehicles as they are manufactured. The states regulate the safe use of their roads. That has been for the last 60 plus years, a pretty harmonious relationship. Basically, when I went to look, the last time the U.S. Supreme Court addressed this issue was back in the 1950s, the Navajo Freight Line Decision. This long-standing (decision) has the potential to be disrupted if the states essentially seek to impose more onerous restrictions on self-driving cars than the federal government wants to impose. INSURANCEJOURNAL.COM

IJ: Tell us about the Navajo Decision. Rowen: Certainly, it is actually, as

many of your readers, or listeners may know, one of those classic first-year law school decisions. It involves, I believe it was Illinois statutes that required that trucks passing through Illinois to have curved mud flaps. Whereas, the national standard, and even the requirement in several states that had legislated, was for flat mud flaps. The Supreme Court said basically that there was no federal mud flap standard. Nevertheless, the Supreme Court found that Illinois was unduly

burdening interstate commerce by basically imposing a non-industry standard out of step with anyone else, inconsistent with other state mud flap requirements that basically would require trucks to stop at the border and change their mud flaps. Illinois had attempted to justify its imposition, its statute regarding the curved mud flaps, on the grounds that curved mud flaps were safer than flat mud flaps. It was a state imposition of a safety standard the interfered with interstate commerce. Clearly, having to

‘I think there is potential for tension between the federal government and the states.’

INSURANCEJOURNAL.COM

stop and change your mud flaps is an interference with interstate commerce. The most recent, at least Supreme Court promulgation, that I’ve run across, could be roughly analogous to what would happen if a state imposed restrictions on smart cars, self-driving cars, that would cause a car to hit a state border, and then have to stop, or automatically have its software stop it, because it could not legally venture across the state line.

Podcast Hear full podcast of this conversation on www.InsuranceJournal.tv MARCH 20, 2017 INSURANCE JOURNAL | WEST | W3

WEST | PEOPLE

Steve Pietz

Carlos Ruiz

Loren Pierce

Reno, Nev.-based LP Insurance Services Inc. has added Steve Peitz, Carlos Ruiz and Loren Pierce as risk management consultants. Peitz was previously a safety specialist at Panasonic Energy North America and an assistant safety director at Q&D Construction Inc. before that. Ruiz was formerly safety manager for the San Jose/Santa Clara Regional Waste Water Treatment Plant capital improvement project and safety manager at Gilbane Federal for the U.S. Army Corps of Engineers Sharp Army Warehouse Depot. Pierce was previously a safety plant/engineer at Suburban Propane, a safety manager at Penta Building Group and safety coordinator for Steel Engineers Inc. LP Insurance is a risk services and commercial insurance brokerage firm. United Insurance Services has added K.J. Stephens and Adam Terpstra to its Granite Bay, Calif., location. Stephens is an employee benefits agent and Terpstra is a commercial agent. Terpstra specializes in member-owned group captives and alternative risk programs, while Stephens will focus on the employee benefits needs of employers in the area. Terpstra previously was a commercial insurance broker with Owen-Dunn Insurance Services. He was a risk engineering consultant with The Hartford Financial Services Group before that. Stephens is new to the insurance industry, joining the agency after serving as a youth pastor for over 15 years. Leavitt United Insurance Services is part of Leavitt Group. Walnut Creek, Calif.-based Heffernan Insurance Brokers has named Edward Huang assistant vice president of employee benefits. Huang an enterprise sales background ranging from financial services to software as a service. Heffernan has California offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Irvine, and offices in Portland, Ore., and St. Louis, Mo.

Hub California has named John Martin Ryan

employee benefits market leader for Northern California. Ryan is responsible for managing and overseeing Northern California employee benefit producers, recruiting employee benefits producers and leading client servicing teams. He will be based in HUB’s W4 | INSURANCE JOURNAL | WEST MARCH 20, 2017

San Francisco office. Ryan most recently was senior director of employee benefits consulting for NFP. He owned his own benefits consulting firm, Bay Benefits, prior to NFP. Chicago, Ill.-based Hub International Ltd. provides property/casualty, life and health, employee benefits, investment and risk management products and services. Miguel Nava has been hired at Stone Creek Insurance Agency in its Lafayette, Calif., headquarters as a personal lines producer. Nava will also serve as chair of the language department, advancing Stone Creek’s market share in this area. His emphasis will initially be concentrated in the Spanish speaking sector. Nava has been in the insurance industry for more than eight years. He has worked with various captive agencies in the sales, claims, underwriting and customer service capacity. Stone Creek is a brokerage that specializes in property coverage in the Western U.S. Allianz Global Corporate & Specialty SE announced a change in its global cyber leadership team. Emy R. Donavan is being promoted to global head of cyber, reporting to Bernard Poncin, global head of financial lines at AGCS. Donavan, who is regional head of cyber for AGCS North America, will succeed Nigel Pearson, who the insurer said has left AGCS to pursue other opportunities. Donavan will oversee cyber insurance for both commercial companies and financial institutions as well as IT Tech Professional Indemnity insurance. Donavan will be based in San Francisco. With Donavan becoming global head of cyber, her regional role will not be replaced. Jenny Soubra and Terri Mason, who have country responsibility for cyber and IT Tech PI products for the U.S. and Canada respectively will maintain their current focus. Donavan’s experience includes more than a decade of cyber, technology and specialty errors and omissions underwriting. Before joining AGCS as North American cyber practice leader in December 2015, she was vice president of underwriting at AXIS Pro focusing on cyber and technology placements. Donavan has also held prior roles in the specified professions and technology division at Zurich North America. She began her insurance career as an underwriter for ACE Group. INSURANCEJOURNAL.COM

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Business Moves | NATIONAL All Risks Ltd., American Management Advisors Inc.

All Risks Ltd. has announced the acquisition of American Management Advisors Inc. (AMA). Terms of the transaction were not disclosed. Following the acquisition, Janet Smith-Hogeland, President of American Management Advisors Inc., and the entire AMA staff will join Alive Risk, a division of All Risks Ltd. This division specializes in property and casualty, as well as accident and health insurance products for festivals, film productions, media, music, touring, sports, recreation and events of all sizes. All Risks is an independent wholesaler based in Hunt Valley, Md. Founded in 1972, AMA is a Fairless Hills, Pa.-based managing general agent and managing general underwriter for group accident insurance products.

The Hilb Group LLC, Sapers & Wallack Inc.

The Hilb Group LLC (THG) acquired the group benefits division of Sapers & Wallack Inc. (S&W) on Feb. 1, 2017. The group benefits division at S&W, together with all of its current employees, will join THG’s New England employee benefits operations led by Rob Calise. Tom Connors, president of the S&W group benefits division, will be the managing director of the Boston office of THG of New England, which will remain at the current S&W location. S&W President Aviva Sapers and Treasurer Ed Wallack will continue to operate their INSURANCEJOURNAL.COM

company’s executive benefits, insurance, retirement and wealth management divisions while collaborating with THG of New England. Located in the Boston area, S&W is comprised of specialists in group benefits, executive benefits, insurance, retirement plan consulting and wealth management. The Hilb Group is an insurance agency headquartered in Richmond, Va.

Starkweather & Shepley Insurance Brokerage Inc., McGrath Insurance Group

Starkweather & Shepley Insurance Brokerage Inc. (S&S) has acquired McGrath Insurance Group. The firm will operate as the McGrath Insurance Agency, a division of Starkweather & Shepley. McGrath merging with S&S further expands the agency’s commitment to Massachusetts and Sturbridge, where S&S already has a local office. The McGrath team believes that by aligning with S&S, it will be able further develop its areas of specialization, according to the release. S&S is an East Providence, R.I.-headquartered independent insurance agency. McGrath Insurance Group is an independent insurance agency operating in Sturbridge and Spencer, Mass.

Marsh & McLennan Agency, Blakestad Inc.

Marsh & McLennan Agency LLC (MMA) has acquired Blakestad Inc., a private client and commercial lines independent insurance agency. Terms of the transaction were not disclosed.

Headquartered in Minneapolis, Blakestad provides property/casualty insurance to privately held businesses and individuals, with expertise in working with high-net worth individuals and families worldwide. All of Blakestad’s employees and leadership, including its president Jerod Blakestad, are joining MMA and will continue operating out of the firm’s current Minneapolis office. Marsh & McLennan Agency LLC, a subsidiary of Marsh, was established in 2008 to serve as a platform for the middle market.

Plexus Groupe, Fairway Financial Insurance

The Plexus Groupe LLC, a privately held national insurance brokerage and risk management consultancy based in Deer Park, Ill., has acquired Arlington Heights, Ill.-based Fairway Financial Insurance Group, an independent personal lines insurance agency. Fairway will be rebranded as Plexus and operate out of the firm’s Deer Park headquarters.

Deborah Dohn, agency principal of Fairway, joined Plexus to lead the firm’s new Plexus Private Client Solutions personal lines insurance practice. Plexus Private Client Solutions operates nationally and offers comprehensive, white-glove auto, home and related personal lines coverages for individuals and families. Dohn will serve as vice president for Plexus Private Client Solutions, which is part of the firm’s property/ casualty practice.

Hub International, Tri-Star Insurance Professionals, Cassco Insurance, LISSC

Hub International Ltd. announced three recent acquisitions. Hub acquired the assets of Tri-Star Insurance Professionals Inc. (Tri-Star) in Plano, Texas. Hub also acquired the assets of Wolf Point, Mont.-based Cassco Insurance Inc. And Hub acquired LISSC in Santa Ana, Calif. Terms of all three deals were not disclosed.

MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 15

NATIONAL | MyNewMarkets

Amusement Centers/ Devices Market Detail: Anderson &

Murison Inc.’s (www. andersonmurison.com) program includes: escape rooms, batting cages, moon bouncers and ball pits on a per device basis. Moon Bouncers are limited to basic cube-shaped jump houses. No combos, obstacles courses, or slides. Available limits: Minimum $300,000, maximum $1 million Carrier: Multiple carriers, nonadmitted States: All states except Alaska, and Fla. Contact: Commercial underwriting at 800-234-6977, ext. 220 or email: commercial@ amqts.com

Broker Bond Mortgage Broker bond Market Detail: CalRisk

Insurance Center (www.calriskcenter.com) offers an insurance broker bond starting with competitive rates, instant in-house issue, and programs up to two years available. Surplus lines broker bond available with preferred rates limits up to $50,000. Mortgage Broker bond available at 20,000 limits. Quick application along with

business and personal financials. Available limits: Minimum $10,000, maximum $50,000 Carrier: Unable to disclose, admitted States: Calif. only Contact: Customer service at 877-239-8103

Mobile Food Trucks and Vendors Insurance Program

Market Detail: Mobile Food

Vendors Insurance (www. mobilefoodvendorsinsurance.com) considers this niche mobile food market a preferred industry class for inland marine, general liability, auto, workers’ compensation and umbrella coverages. This program is open to all duly-permitted mobile hot trucks, cold lunch trucks, gourmet coffee vendors and catering trucks. Available limits: Minimum $500,000, maximum $5 million Carrier: Various, admitted States: All states except Ala., Alaska, Fla., Hawaii, Idaho, Iowa, Miss., Mont., N.D., Neb., N.M., S.D., W.Va., and Wyo. Contact: Chris Whorton at 888-678-6384 or email: info@ mfvinsurance.com

16 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

Equipment Breakdown Coverage Market Detail: Hartford Steam

Boiler’s (www.munichre.com/ HSB/home/index.html) equipment breakdown insurance, sometimes referred to as boiler and machinery insurance, covers the costly physical and financial damage that can result from an equipment breakdown. This is critical coverage for any business or institution because standard commercial property insurance forms typically exclude the losses that equipment breakdown insurance is designed to cover, such as: mechanical breakdown; electrical arcing; artificially generated electrical currents; centrifugal force; and bulging, cracking or collapse of pressure vessels. Available limits: As needed Carrier: Unable to disclose States: All states Contact: Email Kevin Vincek at kevin_vincek@hsb.com

Agribusiness Services Market Detail: Sierra

Specialty’s (www. SierraSpecialty.com) offers exclusive agriculture service programs including: general

liability & professional liability; occurrence or claims made; pollution cleanup for site and transit; fast quote turn-around & flexible rating; and coverage extensions & higher limits available. Ag business service programs are also exclusive to Sierra Specialty, which has the authority to underwrite, bind and issue competitive & comprehensive programs specifically designed for many of the services by and for the farm & agriculture industry including: arborist tree trimming & pruning services; ag crop spraying; ag advisors (including chemical applicator advisor); farm managers; farm labor contractors; farm machinery operators and harvesters; hay baling services; landscape & gardeners; pest and weed sprayers and advisors; and tree trimming and pruning services. Sierra Specialty also has programs for farm and ranch for hard-toplace farms; an admitted and non-admitted equine program; admitted livestock mortality program; and an admitted preferred farm program. Available limits: As needed Carrier: Unable to disclose States: All states Contact: Mark Schroeder at 559-256-6900 or email: mark@ sierraspecialty.com

continued on page 45 This section brought to you by Insurance Journal’s sister website: www.mynewmarkets.com

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Dear Reader:

very business has a story to tell. For many corporations, small and large, that story ties closely to the personal lives of their founders. Throughout Insurance Journal’s history, we have come to know and appreciate many of the unique stories in our industry. And year after year, we have watched as our advertisers’ and readers’ companies have grown and changed.

INSURANCEJOURNAL.COM

As a leading industry news and information source, we are not able to profile all of the corporations that cross our path. Our position as journalists sometimes makes it difficult as well. Consequently, we have created this special supplement to allow our clients, and some of the corporations you may work with on a daily basis, to tell their story ... in their own words. We hope you find this supplement interesting and informative. Best wishes from all of us at Insurance Journal.

MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 17

Built on the pioneering spirit of its founder in 1952, K&K Insurance has grown from its original focus on motorsports to become one of the largest and most respected providers of insurance services to the sports, leisure and entertainment industries. Every year, K&K offers coverage for exciting events and organizations from fairs and festivals to sports teams and tournaments. Join over Amateur Sports Arenas & Stadiums Bowling & Billiard Facilities Camps & Campgrounds Civic Centers Collegiate Sports Community Centers

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Austin-based company takes hassle out of payment collection The insurance industry is fast becoming an epicenter for technology change. From underwriting software to management systems, insurtech is transforming the way we do business. Paying premiums by ACH or credit card is now second nature. Unfortunately, too many agents and brokers don’t have a way to collect electronic payments. Austin-based ePayPolicy simplifies payment collection by offering insurance professionals the ability to accept ACH and credit cards through a custom, company-branded web portal. “The platform is simple,” said co-founder Milan Malkani. “We built a web-based solution usable by anyone, anywhere, on any device.”

With a background in premium finance, cofounder Todd Sorrel emphasized the need for full transparency. “We don’t force our customers into long-term contracts or surprise them with hidden fees,” Sorrel said. The company is endorsed by a number of IIAB’s state associations to ensure agents and brokers stay competitive, fulfilling its promise to serve independents. Recently, ePayPolicy became fully-integrated with Vertafore’s FinancePro and AIM solutions, with more integrations in the works. They are bringing the reality of end-to-end management solutions to the entire insurance industry.

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Monarch E&S Continues to Expand

Michelle Mitchell

Janet Tharp

Dayna Herron

onarch E&S Insurance Services, one of California’s leading managing general agents and wholesalers, has brought on a team of five insurance professionals to kick-start operations at its new San Marcos office. The wholesaler has added: Michelle Mitchell, Senior Commercial Underwriter/Broker; Janet Tharp, Senior Commercial Lines Underwriter/Broker; Dayna Herron, Underwriter/Broker; Kristen Don, Senior Underwriting Assistant; and Chrissy Hellman, Senior Underwriting Assistant. The insurance pros were drawn to Monarch by the firm’s excellent reputation with their partner carriers and good standing with its employees. “These ladies came to us because we enjoy a very good track record of longevity with our people,” said Monarch Owner Derek Borisoff. Employees stay with Monarch because the firm provides a positive working environment and makes it a priority to retain talent, which just makes good business sense. “That translates to our retail agent customers. When they call us, they are going to have a very positive, knowledgeable person on the other line who’s happy to help solve their insurance problems,” he said. “This team has a very strong following from their retail agent customers. These ladies are well respected within the industry.” The new employees also fit the Monarch team culture. “They are excellent underwriters, have a strong following, a relentless work ethic and they work as a team,” Borisoff said. “We have enjoyed working with the new agents they have brought on board.” Their histories speak for themselves. Mitchell was born and raised in Jamaica, West Indies, where she began her insurance career in 1983. She’s been in the E&S business since 1993.

Kristen Don

Chrissy Hellman

Tharp is a 3rd generation San Diego native, who started her insurance career in 1997 with an E&S wholesaler. She began in the mail room and worked her way up to an underwriting position in 2006. Herron was born and raised in San Diego, and in 2003 followed in the footsteps of her mother, father and older sister by going in to insurance. She began as an office assistant and worked her way up to Senior Underwriting Assistant. Don was born in Portland, Ore. and moved to San Diego at age 7. She got into the insurance industry in 2001 when she joined an E&S wholesaler as a mail clerk. She spent nearly 15 years there, eventually becoming a Senior Underwriting Assistant. Hellman is a Southern California native who has been in the insurance industry since 2003. The opening of the San Marcos office is a strategic move that gives the wholesaler another office in the crucial San Diego area beside the existing Mission Valley office, and the new office is close to where the new employees live. Monarch’s commercial lines product list features professional liability, general liability, umbrella and property/inland marine. In the personal lines arena, Monarch delivers homeowners, personal liability and personal property floaters (i.e. jewelry and fine arts schedules). Monarch has the pen for 12 of the over 100 admitted and non-admitted markets that it represents. The 31-year-old independently-owned, California-based MGA has six California locations: La Crescenta (headquarters) San Diego, San Marcos; Rancho Mirage, Simi Valley and Fresno. Monarch also has offices in Arizona and Hawaii.

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NATIONAL | Special Report | Hot Markets

Cyber, Sharing Economy, Active Shooter, Construction, Mergers and More By Amy O’Connor & Andrea Wells

nsurance Journal examined industries experiencing changes, challenges, expansions and growth in the past year. For 2017, experts predict the U.S. economy will continue to expand. “Job growth means higher payroll, sales, more autos insured by businesses, construction, property expansion, etc., which will increase gross premiums underwritten,” according to the 2017 Wells Fargo Insurance Market Outlook. “The majority of insureds will continue to see rate reductions, just not as high as in prior years.” Here are the top five market sectors that could offer opportunities for agents and brokers in the property/casualty insurance industry in 2017.

All Eyes on Infrastructure

Quality infrastructure is a critical component to U.S. economic success, but lack of 40 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

funding in recent years has left many of the nation’s roadways, railways, airports, dams, bridges, water and energy plants in disrepair. Renewed federal efforts to rebuild America’s infrastructure by President Donald Trump could further boost the construction insurance sector. In February, Trump promised in a speech to Congress that a $1 trillion infrastructure rebuilding plan would create “millions of new jobs.” While

Other Markets to Watch in 2017 Private Flood Earthquake High Net Worth Terrorism Drones Transportation Auto Product Recall Environmental Equipment Breakdown Surety

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few of those jobs are expected to materialize this year, the promise offers new hope for construction specialists. Trump’s team has compiled a list of about 50 infrastructure projects nationwide, totaling at least $137.5 billion, as the new White House tries to determine its investment priorities, according to documents obtained by McClatchy’s Kansas City Star and The News Tribune. Senate Democrats also proposed a $1 trillion infrastructure bill to fund the nation’s infrastructure projects over a 10-year period and state their proposal would create more than 15 million jobs. There’s no question about the need for public infrastructure in the United States, said Scott Rasor, head of construction for Zurich North America. “The question is how to finance that need,” he said. “We still have a major need to build infrastructure in the country, not only from airports, but roadways, etc.,” said Jim Untiedt, president of PentaRisk Insurance Services LLC. “We’ll see an increase in public works, which I think is good.” Brian McDonnell, managing principal, Construction Practice at EPIC Insurance Brokers & Consultants, also expects to see greater growth in infrastructure spending now that President Trump is in the White House. But “whether those dollars actually get spent in 2017 is another question altogether,” he said. It terms of overall spending in the construction market, McDonnell said the industry is back to where it was in 20052008 in terms of real dollars spen,t although in his view INSURANCEJOURNAL.COM

some markets are close to tapping out in the San Francisco Bay area. “Many things are now in play politically so it’s hard to say what’s going to happen (during the rest of 2017) but some sectors are close to being tapped out from a demand perspective (office and multi-family residential being two examples in some cities),” he said. “If the economy remains healthy, and the consumer continues to lead expansion, the (construction) market could grow at 5 percent a year for the next two years,” Rasor said in late November. But the economy is just as likely to go the other way, he added. If that happens, construction will certainly contract. However, Rasor said, overall, he expects 5 percent growth in terms of put-in-place construction over the next year. “That’s probably reasonable.”

Belle of the Market Ball

For the umpteenth year in a row, cyber insurance is the belle of the market ball. Carriers are pumping out new cyber insurance products and enhanced policies with breach prevention and response services at a rapid pace, with new products or enhancements coming out almost daily. But the question remains for this market: is anyone buying them? The answer seems to be yes; the take-up rate for cyber

policies has grown every year, but there are indicators that the pace might be slowing. A 2016 survey from Zurich and Advisen of 345 U.S.-based risk managers, insurance buyers and other risk professionals covering both large and small companies, shows that over the last six years the proportion of companies buying cyber insurance increased by 85 percent. However, the proportion of companies buying coverage in 2016 was up only 7 percent from 2015, compared to an 18 percent increase in 2015 over 2014. Still, there is increasing awareness for the need for cyber coverage – 87 percent of the survey respondents believe technology interruption would have a moderate-to-significant impact on their business – which the insurance industry

hopes will turn into increased demand. An article from Marsh & McLennan Cos. Global Risk Center said total annual cyber premiums have reached an estimated $2 billion and may reach $20 billion by 2025. The biggest growth area may be in the realm of the Internet of Things (IoT), which could open the door for a personal lines cyber market. From smart phones, to smart watches, to smart TVs, and even internet-connected thermostats, people are constantly connected and so is their personal data. According to a survey from the Hartford Steam Boiler and Inspection Co. (HSB), eight out of 10 U.S. consumers have a home data network and more than a third of them connect entertainment systems, gaming consoles and other smart devices to the internet. With all of this connectedness comes increased risk of home cyberattacks. The HSB survey said that while cyberattacks on non-computing home systems and smart appliances have been relatively uncommon so far, the increase connectedness is luring hackers and cyber thieves that are looking for new targets. “Home devices like smart TVs and appliances are often designed for easy use and not security,” said Timothy Zeilman, vice president and counsel for HSB. “Compounding the problem,

continued on page 42 MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 41

NATIONAL | Special Report | Hot Markets continued from page 41 many consumers don’t take even basic measures such as changing default passwords and updating security software.” HSB said that damage to home devices in a cyberattack could result in a substantial financial loss – typically between $1,000 and $5,000. A report by Aon company Stroz Friedberg called “2017 Cybersecurity Predictions” listed the IoT as one of the top cybersecurity threats for 2017. The report said that insurers are beginning to respond with cyber insurance coverages for individuals that reimburse for expenses related to cyberattacks on home computers, home systems, and appliances and other connected devices, cyber extortion, data breach and online fraud. The business community’s risk is even greater, as employees increasingly turn to less secure devices outside of their office to conduct business. There will be a “necessity to accept that cybersecurity risk management is a critical part of doing business,” according to the Stroz Friedberg report.

Growing Risk of Active Shooters

Sadly, nearly every kind of business or educational institution faces the potential of an active shooter incident and the frequency of these incidents is increasing. An FBI study of 160 active shooter incidents, defined as one or more individuals actively engaged in killing or attempting to kill people in a populated area, found that between 2000 and 2013 there was an average of 11.4 annually, or one every three weeks.

In 2014 and 2015, there were 20 mass shootings per year, according to an analysis of 2014 and 2015 active shooter incidents released by the FBI last year. That has led to a growing insurance market with policies that provide coverage for both pre- and post-active shooter incident services, including security and risk management, post-event counseling, and coverage for lost income due to reputational damage to the business or institution. The agencies spearheading the emergence of this market say the education process on why a typical property or general liability policy doesn’t cover an active shooter event has been arduous, but they believe that down the road this market could become the next cyber or employment practices liability insurance. And, unfortunately, says Hugh Nelson, senior vice president of Southern Insurance Underwriters (SIU) in Atlanta, demand and sales tend to increase after active shooter events. “When people see that it is a real risk that could affect them… they start looking,” Nelson said. SIU launched its coverage with Lloyd’s last year for educational institutions and has since expanded it to encompass virtually any entity because of the response it received. SIU’s policy also now has an expanded definition of a weapon to include knives, explosive devices, chemicals, etc., because these events do not always center around shootings, Nelson said. “What [the coverage] provides is a primary layer of

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liability coverage that duplicates the GL coverage. If one of these events happens, that liability limit is likely not enough to cover any degree of negligence,” Nelson said. “It is pretty easy to allege negligence – someone can always argue more should have been done to prevent an incident.” Nelson says while premium growth has been slow, the product is just at the beginning of its cycle. The company also sees steady inquiries and hopes that as entities realize the need they will incorporate the insurance into their budgets. “The services that are built into this policy really do make it a viable product for them,” he said. Paul Marshall is program manager for McGowan Program Administrators’ dedicated Active Shooter Division, which launched last year. He says the company has seen a “very big uptick in the submission count and agent broker inquiries.” The company is doing a massive education campaign, including releasing a video series, and so far its policy count and premium book has “exceeded its expectations.” The program is now backed by its own McGowan Lloyd’s Line Slip and offers lower limit quotes with minimum premiums starting at $500 and limits up to $25 million. Lloyd’s has led the pack on all active shooter programs, but just this month Ironshore Specialty Casualty’s Public

Entity division introduced a policy extension offering institutions of higher education an automatic endorsement for expenses related to natural or man-made incidents, including active shooter and weapon wielding incidents, impacting campus operations. Nelson said he hopes a new carrier will help spur growth in the market. “The more it looks like a mainstream product the more it will cause people to think about it and buy it,” he said.

Opportunities for Transactional Risks

The merger and acquisition insurance sector has seen increased demand for coverage while competition in the market has also grown. Transactional risk insurance includes a class of policies that cover risks related to M&A, including representations and warranties insurance or warranty and indemnity insurance, tax indemnity insurance, and contingent liability insurance. Demand for transactional risk insurance increased globally in 2015, according to Marsh, which saw a jump in policies written by 32 percent yearon-year. Marsh reported that uptake rates

increased in all regions, continuing the trend from recent years. “A rise in the number of policies placed in Asia over the past year was particularly noteworthy,” wrote Karen Beldy Torborg, global practice leader of Marsh’s Private Equity and M&A Services, in a Marsh report. She added that the number of policies purchased also increased in other regions: up 21 percent in the U.S. and Canada and 15 percent in Europe, the Middle East, and Africa, year-over-year. The US and Canada also experienced a record value of limits placed, rising 56 percent in 2015 compared to 2014. The growth in transactional risk products is an area that came as a surprise to Patrick Ryan, chairman & CEO of Ryan Specialty Group. “Transactional insurance is reps and warranties from M&A transactions, litigation, insuring litigation risks, tax. Those three product lines, risks, are INSURANCEJOURNAL.COM

just growing exponentially,” he told Insurance Journal in September 2016. The number of markets offering M&A insurance has grown, too. More than 25 insurers now offer products under the banner of “transactional risk solutions.” The increase has been driven by demand as well as by insurers seeking new sources of written premium, according to Marsh’s Annual Transactional Risk Report published in April 2016. It’s a good market for AIG and an area the property/casualty insurer says it will continue to invest in, Michael Turnbull, America’s M&A manager at AIG, told Insurance Journal. AIG submissions for M&A business rose 23 percent from 2015-2016. As a result, Turnbull said the AIG M&A team has grown in response to the increased demand. “We have put underwriters onto the west coast in San Francisco and also in Chicago, Boston and Toronto,” he said.

Turnbull said while competition in the sector has increased, AIG continues to see significant opportunities in the M&A space in areas where buyers had not traditionally purchased coverage. “This product plays well in the mid-market … from $25 million deals to a couple of billion,” he said. Turnbull said for AIG, most of the growth has been in deals ranging from $50 million to $1 billion and primarily in the U.S. but he also noted growth in various cross border deals. “We see good quality transactions happening where insurance hasn’t been contemplated yet so our view is that there is definitely a good deal of room to play still left in this market,” Turnbull added. Other M&A activity reported in 2016: • ANV Global Services Ltd, the international managing general underwriter (MGU) of global specialty insurance group ANV, increased its Lloyd’s underwriting capacity for mergers and acquisitions insurance to a limit of €40 million, $40 million and £30 million per risk, marking an increase of 10 million in each currency compared with previous limits. Five supporting carriers provide “A” rated Lloyd’s capacity to ANV Global Services M&A Insurance, with ANV Syndicate 1861 continuing to provide the majority share of capacity. ANV’s Barcelona and London-based M&A team focuses primarily on bespoke warranties and indemnities insurance for commercial and financial clients across the European and UK markets. The company’s Lloyd’s syndicate, ANV 1861, continues to provide the majority share of the capacity under the MGU’s Lloyd’s

binding authority. • Preparing to capitalize on merger and acquisition (M&A) activity in 2017, XL Catlin further built out its global M&A insurance team with the appointments of Joseph W. Laws and Michael J. McGowan as directors of M&A Insurance in North America. McGowan joins XL Catlin from Chubb where he helped build out Chubb’s Transactional Risk practice. Laws spent five years at Kirkland & Ellis, where he advised private equity funds, as well as public and private companies related to mergers, acquisitions, leveraged finance, equity investment, joint venture and other commercial transactions. • Ironshore International expanded its global Mergers & Acquisitions unit by opening an office for transactions in the North and Latin American regions. The Americas team is led by Navine K. Aggarwal, senior vice president, head of Mergers & Acquisitions of the Americas, who will be based in New York. Aggarwal previously served as vice president of Mergers & Acquisitions with Allied World Assurance Co. Ironshore also added several regional underwriting specialists to its team. All new appointments came from Allied World, where each served in various positions within the mergers and acquisitions sector of the insurance industry. Patrick Ryan, vice president, and Aartie Manansingh, assistant vice president were named to Ironshore's New York office while Elizabeth Cunnane, vice president, and Andrew Stewart, vice president, operate the Atlanta and Toronto offices.

continued on page 50

MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 43

NATIONAL | Spotlight | Transportation

How Insurers Can Take the Lead on New Food Safety Risks

By Sam Rizzitelli

he recently finalized Food Safety Modernization Act (FSMA)-related FDA Regulations on Sanitary Transportation of Human and Animal Food has the potential to significantly affect risk management strategies employed by food suppliers and transportation companies for years to come. The more insurance companies and their agents

can educate their customers on the scope of this ruling, offer services that help manage this new risk, and provide insurance products that adequately cover new exposures, the better they can serve their clients. The goal of the rule is to create a modern, risk-based framework for the safe transportation of food. The rule aims to prohibit transportation practices that create food safety risks, such failing to properly refrigerate food, inadequately clean vehicles between loads, and failing to properly protect food that may become adulterated during transit. The new regulation is complex and has many components. In general, it affects shippers, loaders, rail and motor carriers, and receivers involved in transporting food for humans and animals. It establishes requirements for

44 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

vehicles and transportation equipment, transportation operations, training and records.

Who is Subject to the New Ruling?

The ruling potentially impacts all businesses involved in the transportation of food and beverages. It specifically applies to shippers (which includes freight brokers and freight forwarders), receivers, regardless of whether the receiver is the final point of destination, loaders and carriers who transport food in the U.S. by motor or rail vehicle, who have average annual revenues of $500,000 or more, regardless of whether the food product is offered for, or enters, interstate commerce.

Who is Excluded?

Importantly, the rule does

not apply to: • Exporters who ship food through the U.S. (such as from Canada to Mexico) by motor or rail vehicle if the food does not enter U.S. distribution • Shippers, carriers and receivers who are inspected under the National Conference on Interstate Milk Shipments (NCIMS) Grade “A” Milk Safety program • Food establishments holding valid permits issued by an appropriate regulatory authority when engaged as receivers, shippers and carriers in which food is relinquished to customers after being transported from the establishment, such as restaurants and supermarkets • Products that are imported for future export and are INSURANCEJOURNAL.COM

• •

neither consumed nor distributed in the U.S. Food located in food facilities that are regulated exclusively by the U.S. Department of Agriculture Products that are completely enclosed in a container, except when such products require temperature control

The ruling contains many complex details. All affected parties should study these closely to understand all of the various exemptions and waivers.

New Exposures

It’s not difficult to imagine circumstances giving rise to new exposures in the supply chain. What happens when a trailer gets to point B but doesn’t look quite right? What if there’s an unknown odor, foreign substance on the floor, ants on the wall, or dirt where it shouldn’t be? The receiver that notices this condition may believe some part of the load may have become contaminated or adulterated. Therefore, the cargo has to be removed from the supply chain unless it’s reconditioned according to the shipper’s practices or a qualified individual concludes otherwise. What if temperature-sensitive food products appear compromised but there’s no official record of temperatures? Or what if there is a record of temperature deviation but the carrier or receiver does not know what the permissible variations may be? The possibilities of what can go wrong with food in transit are practically infinite, and all have significant implications for risk managers. INSURANCEJOURNAL.COM

Expect Changing Practices

The overall emphasis of FSMA’s food safety goal is to focus on transportation practices that create safety risks with an overt intention to allow for flexibility and shipper direction, given shippers are usually in the best position to know what practices are the best. As a result, the rule will drive new practices throughout the supply chain, affecting all parties engaged in the transportation of human or animal food and beverage. The onus is on everyone in the supply chain to identify violations of the regulation and remove cargo that doesn’t meet the requirements. Therefore, it’s all parties to the supply chain that have the biggest task of implementation and who will ultimately be responsible for enforcement. It will likely take the supply chain years — perhaps a decade or more — to get fully up to speed with all of the consequences of this new rule. All affected businesses are expected to comply with the new requirements within the next two years, depending on their size.

Insurance Companies Can Lead the Way

With a myriad of new exposures created by the new rule, it’s incumbent upon marine insurance companies to lead the way in the unchartered new world of food safety. With food and beverages representing the most frequently shipped commodity in the U.S., the potential impact is significant. Leadership starts with gaining the necessary knowledge and focused training and edu-

cation. Insurance companies must learn the FSMA inside and out before they can educate clients about how it might affect them. Next, insurers can assist their clients with risk management by helping to determine where they have exposure and what measures may be necessary to reduce risk. They can recommend areas where lawyers should be called upon to assist with new contracts covering risk transfers and other specific issues, especially as fundamental and long-established shipping laws evolve. Finally, and most importantly, marine insurers should

fully embrace the new exposures by providing coverage forms that expressly and specifically cover food safety-related exposures, which their clients need. While it may take a while for the transportation industry to forge new practices that effectively minimize food safety risks, the supply chain needs marine insurance partnerships now more than ever. Share this

continued from page 16

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MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 45

Idea Exchange

Tech Talk

Why Real-Time Binding Delivers Immediate Value

By Tom Wetzel

or independent agents, optimum use of technology delivers a multitude of benefits, including streamlined back-office operations and more effective marketing outreach. Yet one benefit, arguably the most powerful, is often overlooked — that of producing tangible and immediate value to the customer. An agency-branded mobile app that facilitates easier premium payments and claims filing is one example already in use. While not yet a reality, real-time binding is another innovation that produces value any buyer can appreciate. The National Association of Professional Insurance Agents (PIA) has been a champion of real-time binding with its “Buy Button.” “Our biggest challenge as agents is not the decision whether or not to go digital,” said Mike Becker, PIA executive vice pres-

ident. “Our biggest problem is insurance sales, both online and off-line. The fact is, we need to be in a position to sell insurance in real-time.” Becker says the Buy Button gives agents the ability to bind a policy in a “once and done fashion” using their agency systems for both clients and prospects who walk in the office, call on the phone or visit online. Agents could also bind outside the office using mobile technology. “Real-time binding in the agent’s office can enhance the customer experience, improve conversion rates, and help with retention and cross-selling,” said Bill Pieroni, ACORD chairman and CEO. Experts agree the technology is already available. However, deployment is complicated by how current systems are set up. “Independent agents operate in a multi-carrier environment in contrast to direct writers,” said Keith A. Savino, partner and chief operating officer for Warwick Resource Group and a PIA board member. “Directs operate with one system while each of our companies have their own systems. In the manual world, the best we can hope for is being in position to provide estimated annual premium to prospects. We need to be able to offer real-time, exact and findable quotes.” Carriers will tell agents they can provide binding on their proprietary systems but

46 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

what agents need is to be able to offer binding through their own agency management systems, Savino said. “Instantaneous binding puts more pressure on an agent to ask all the right questions in taking an application, however the payoff is huge. It can be a game-changer for independent agents.” PIA’s Becker said there will always be agents who are “latecomers to the party.” But making the change to real-time binding in an agent’s office is critical to the future of our agency system. “We have the better products and pricing but this one piece is a huge impediment.” As important as real-time binding is, Pieroni cautions that seeing technology as the only answer to addressing the current competitive climate misses the mark. “Agents face three key challenges as it relates to digitization — leveraging technology to address emerging consumer demands, successfully incorporating digital technology into their office operations, and rethinking strategy and overall value proposition moving forward,” Pieroni said. Digitization of the value chain can, if done correctly, reduce costs and increase effectiveness for the agent, while strengthening the value proposition. “It requires a rethinking of the whole capability model — processes, organization, as well as technology. Solely focusing on technology will impair full realization.” Digital challenges facing agents falls into three buckets — streamlining back office functions, mastering the use of customer-facing tools such as a website and social media and delivering as many services as possible to the policyholder in real-time without sacrificing quality. This last challenge is perhaps the toughest but is becoming an absolute necessity. Wetzel heads his own insurance marketing firm that specializes in website design and social media programs for agents through its Social Media Content Roadmap©. Website: www.wetzelandassociates.com. Email: twetzel@wetzelandassociates.com. INSURANCEJOURNAL.COM

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Idea Exchange

Minding Your Business

Yield Signs and Outdated Beliefs go through years and years of life with a belief that was not consistent with the way things actually are.

Why Are Beliefs Often Wrong?

By Catherine Oak &

Bill Schoeffler

uick, what color is a yield sign? Many adults, especially those more than 50 years old will say unequivocally that a yield sign is yellow and black. The image is so clear in their mind. Well, the yield sign is not yellow and black. It is red and white and has been so since 1971. The yellow and black yield signs along a person’s usual route were emblazoned in their mind. However, after pointing out the current colors, somehow, when the person drove past them again they magically were changed to red and white. How could they be so wrong? The problem was that the person grew up with yellow and black yield signs and that was fixed in their mind. They did not update the image with the current actual colors of red and white. They managed to

Beliefs are generalizations or presuppositions that people create about how the world is and the relationship between experiences. They serve as filters that allow a person to get through life without having to re-think things every time. This can be helpful as well as unhelpful, depending upon the belief and the circumstances. Issues arise because beliefs lie below the surface of consciousness. They are so ingrained in one’s system that a person doesn’t even realize they exist. Beliefs are the driving force that determines whether a person is successful or unsuccessful. For example, a couple of beliefs around money are: “It takes money to make money,” and “I am a great investor.” A person with the first belief will most likely not even get out of the starting gate when it comes to financial success. They won’t even try to invest their money. Whereas, a person with the second belief will use their money to generate more, regardless of how much they had when they started.

Get Rid of Outdated Beliefs

Now is the time to consider a “spring cleaning” of outdated beliefs that no longer serve as helpful. The first step is to identify these beliefs. The best way to do this is for one to find recurring results that they do not want. In business, this could be a lack of new sales or employee turnover. Personally, this might be failed relationships that end the same way over and over again. Next, question every decision that led to the poor end result.

‘Now is the time to consider a ‘spring cleaning’ of outdated beliefs that no longer serve as helpful.’ For most of human existence, things changed very slowly. People and society had ample time to react and modify their beliefs and the way they did things. Now, change is occurring more rapidly than ever. This is creating interesting issues for individuals and society. What was “true” last year is no longer “true” now. But, many people hold onto beliefs based on the old “truth.” This causes dysfunction, and people are often not sure why problems keep occurring.

48 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

INSURANCEJOURNAL.COM

This is when having another person becomes very helpful. A person with a different perspective might not readily dismiss basic assumptions. For example, a company might have a lack of new sales. The owner might blame it on the sales team not doing cold calls. The importance of cold calls should be questioned. Also, what are other businesses in the same industry doing? Is the industry growing or shrinking? Does the consumer see value in the product or service? Make observations about one’s experience and what is happening in the rest of the world. It is important to be open to new information. If some people are succeeding when one is failing, then there is a limiting or old belief holding the person back. Be cynical. Find out what works for others and compare that to what is not working for oneself.

Common Old Beliefs in Agencies

Insurance agencies have their fair share of outdated beliefs. For example, a firm might have high turnover with new (inexperienced) producers. Often, the agency owner is using the same approach that they experienced when they started. That is to say, they use the sink-orswim approach. The producer is paid on commission only, they are not given any support to generate leads and there is no training program.

employee. They will stop giving 110 percent when they see this occur.

Summary

Beliefs are the algorithms that run our lives. Problems arise when one’s beliefs are based on information that is outdated. To get desired results, find the outdated beliefs that are holding them or their business from being successful. A person should act as an outside observer to their thoughts and decisions. Question what seems to be reality. Are yield signs yellow and black or red and white?

Share this article with a colleague. IJMAG.COM/320FD all employees are paid the same bonus. Owners are often mystified when employees are not satisfied when they all get the same raise or same bonus. The belief that if you treat everyone the same should result in harmony is based on a misunderstanding of what motivates people. The top performers are discouraged when they get the same raise or bonus as an underperforming USA12043.qxd 1/4/08 2:26 PM Page

Oak is the founder of the consulting firm, Oak & Associates, based in Northern California. Schoeffler is an associate of the firm. Oak & Associates specializes in financial and management consulting for independent insurance agencies, including valuations, mergers and acquisitions, sales and marketing planning as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com. Website: www.oakandas1sociates.com

Insurance agencies have their fair share of outdated beliefs. With some modest changes to the sinkor-swim approach, the success rate for new producers can drastically change. Another outdated belief in some agencies is that INSURANCEJOURNAL.COM

MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 49

NATIONAL | Special Report | Hot Markets continued from page 43

• Breckenridge Insurance Group jumped into the space in 2016 with the formation of Vista Insurance Advisors, a new company focused on the Transactional and Mergers and Acquisitions market. Vista Insurance Advisors is led by Chief Executive Officer Thomas Dowd based in New York who previously worked for AIG, Lloyd’s, Crum & Forster, Employers Insurance of Wausau and Seneca Insurance.

Sharing Economy Market Continues Grow, Evolve

The idea of sharing resources as a small business opportunity continues to gather interest from a growing number of Americans. People continue to play in the gig economy by sharing their homes, vacation properties, collector cars, recreational boats, ridesharing digital platforms like Uber or Lyft, and even household tools. In the context of gig employment, nearly one-in-10 Americans (8 percent) have earned money in the last year using digital platforms to take on a job or task, according to the Pew Research Center survey conducted in August 2016. “Nearly one-in-five Americans (18 percent) have

earned money in the last year by selling something online, while 1 percent have rented out their properties on a home-sharing site. Adding up everyone who has performed at least one of these three activities, some 24 percent of American adults have earned money in the “platform economy” over the last year.” As the sharing economy continues to evolve and grow so does the insurance market. But emerging risks associated with the sharing economy and new technology that enables this budding industry poses challenges for insurers. Because insurers don’t have a good handle on future exposures of shared economy risks, education is key, said Scott Kellers, head of Syndicate and Reinsurance Claims for London-based Liberty Specialty Markets. Pete Fennell, managing director of Aon Benfield and immediate past president of the International Association of Claim Professionals, said that future exposure will be hard to assess. He offered the example of Uber, which doesn’t consider itself to be a transportation company but rather a software company. “Are they? How does

50 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

that get insured? Who’s paying the claim if there is a claim? Airbnb just got sued recently for discrimination. Is it Airbnb’s liability? Is it the homeowner’s liability? This is a really gray area right now,” Fennel said. The lines between underwriting personal and commercial property risks are blurring as the sharing economy evolves, Christopher Pesce, president of Maritime Program Group, told Insurance Journal last fall. “Look at some of these rental operations, at Airbnb, and how the market responded to the fact that there is now a mixed commercial use of what’s otherwise considered personal property.” Pesce believes the insurance industry has and will continue to find ways to insure sharing economy risks. “I think we have an advantage from the standpoint of really knowing and understanding the risk.” There are some insurance markets developing solutionroductss today. One just released this month is pay-peruse insurance option by Slice Labs Inc. Slice is a tech startup featuring an on-demand insurance platform for people who share or rent their homes. The payper-use insurance coverage is available on a limited basis in six states: Colorado, Iowa, Maryland, Massachusetts, Texas and Washington. The Slice product is a customized commercial policy. It is for users of homeshare sites like Airbnb, HomeAway, OneFineStay and FlipKey. Users can purchase the coverage through an app or online and turn it off-and-on as needed by the week, day or hour. The coverage can be for

a room in a house or condo, or an entire residence. The customized commercial insurance policy includes commercial liability coverage limits of $2 million, full replacement cost value of the home, and low or no deductible coverages. The offer is not open to the overall public yet but homeshare hosts in those states can get access to the Slice offerings on an individual basis. Slice, headquartered in New York City, is backed by Horizons Ventures, XL Innovate and Munich Re. It is currently licensed to sell insurance in 49 states. The company says it has plans to eventually offer a ridesharing insurance product as well. Homeshare platforms like Airbnb tend to offer limited property damage and liability protection for hosts who rent their space using their sites. Other platforms such as GetMyBoat.com advise purchasing additional coverage if a boat owner’s personal boat owner’s policy doesn’t cover charters/rentals. Traditional insurers are also moving into the sharing economy space. Last spring, Allstate began offering homesharing protection in six states — Arizona, Colorado, Illinois, Michigan, Tennessee and Utah — and said it plans to expand it to others this year. In November, ISO, the policy and rate development organization used by many P/C insurers, introduced homesharing insurance options for insurers to adopt for their home insurance customers who might rent or share their properties.

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Idea Exchange

Human Resources

How is Disruption Impacting the Future of Talent?

By David E. Coons

rom smart TVs and live streaming turning the entertainment industry on its head, to mobile health monitoring systems that are revolutionizing the way patients interact with their doctors, disruption is changing the way the world does business. Within insurance, rapid technological advancements, evolving consumer demands and new regulations are opening the industry up to disruption. While some insurance

organizations have embraced the potential of disruption, others are reluctant to accept the changes. Disruption is here to stay and only those organizations that adapt to this new business reality will find success. Today’s “innovate or die” business reality requires a company culture that promotes and embraces evolution and innovation. But organizational ranks with highly innovative, creative and adaptable professionals can be challenging. Finding individuals with the in-demand skills to thrive in a disruptive environment requires organizations to rethink their current recruitment and engagement strategies. How can insurance organizations adjust their strategies to best attract innovative talent? How can organizations take advantage

of growing industry disruption within their current engagement strategies?

Hiring for Today’s Disruptive Reality

Despite disrupters’ ability to drive growth and advancement, some insurance organizations are reluctant to keep up with marketplace advancements. Some 69 percent of executives are worried about the changes being brought by disrupters. However, avoiding disruption is no longer an option. Organizations that fail to keep pace with today’s rapid technological changes face the risk of falling behind. A key step in successfully embracing disruptive innovation is to broaden your organization’s horizons when hiring. Focusing on a unique mix of professionals who can think and work in highly different ways helps to foster a culture of innovation and collaboration. Already, 81 percent of insurance CEOs are looking to hire individuals with a broader range of skills ito ensure their success in a disruptive industry. To better understand current disrupters and incorporate them into

market, as widespread retirements and an aging workforce are creating an increased staffing demand that cannot be met. By 2020, the insurance industry is predicted to see a shortfall of 400,000 professionals. As a result, insurance organizations are scrambling to ramp up their recruitment and engagement strategies to close the gap. Unfortunately, insurance is competing against a number of industries that have more enticing public images.

their business, organizations may want to consider employing subject matters experts. Many of these professionals have embraced the recent industry changes and have become specialists in disrupters. Their unique knowledge and skills can be drawn upon to address your organization’s specialized labor demands and fill a niche talent need. Organizations should also think outside the box and look at young professionals with a passion for data analytics and emerging data innovation. Science, technology, engineering and math (STEM) are often influencing — and even driving — many of the emerging industry disrupters. Much like organizations who hire young hackers to hack their data to find vulnerabilities, recruiting emerging professionals from the innovative STEM fields may provide your organization with an inside perspective into disruption.

Disruption as a Best Practice

The key to finding success in today’s evolving business reality is to change the way the industry thinks of disruption. One potential opportunity is to view disruption through the lens of potential talent. The advancements and technologies being introduced are exciting and, in many cases, groundbreaking. These innovations present a unique opportunity to help the insurance industry combat the growing skills gap. The industry faces an increasingly challenging labor INSURANCEJOURNAL.COM

Finding individuals with the in-demand skills to thrive in a disruptive environment requires organizations to rethink their current recruitment and engagement strategies. This is where disruption comes in. Many of today’s professionals are looking for job opportunities that are high-tech and allow them to be at the forefront of innovation. Disruption is exciting, new and trending. Promoting organizational involvement with these ground-breaking changes may be the key to attracting talent to an industry that many consider boring. Insurers need to make sure to build career interest around the technological advancements they are involved with. Providing insurance to driverless cars? Publicize that on your website. Using drones to assess damage for claims? Share your work on social media. Provide details on the projects your company is working on and, if possible, include employee testimonials to broaden your exposure. The key is to be present where the candidates are. Disruption may be the push the industry needs in its current “war for talent.” It provides a great opportunity for organizations to infuse energy into the industry and revive their outreach to young professionals. Disruptive innovation is rapidly redefining the insurance industry. In addition to impacting the way insurers do business, disruption is changing the way organi-

zations think about talent. Only those companies that are ready and willing to embrace these growing changes will have the competitive capabilities to sustain growth and weather the growing talent storm. Share this article with a col-

league. IJMAG.COM/32JU Coons is senior vice president of The Jacobson Group, a provider of talent to the insurance industry. Phone: 800-466-1578. Email: dcoons@ jacobsononline.com.

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Amerisafe www.amerisafe.com SC8, S3 Amwins Group, Inc. www.amwins.com 34, 35 Apartment Insurance Consultants, LLC www.aicinsure.com 1 Applied Underwriters www.auw.com 2, 3, 56 Burns & Wilcox Ltd. www.burnsandwilcox.com 11 Chubb www.chubb.com 5 Contractor Connection www.contractorconnection.com 13 ePay Policy www.epaypolicy.com 28, 29 EZLynx www.ezlynx.com 22, 23 Great American Insurance Group www.gaig.com 24, 25 Insurance Technologies Corp. www.getitc.com 47 K&K Insurance Group www.kandkinsurance.com 18, 19 Leavitt Group Enterprises, Inc www.leavitt.com 20, 21 Midlands Management Corporation www.midlandsmgmt.com SC7 Monarch E&S Insurance Services www.monarchexcess.com 32, 33 PersonalUmbrella.Com www.personalumbrella.com 55 Philadelphia Insurance Companies www.phly.com 9 Ryan Specialty Group www.ryansg.com 38, 39 SIS Wholesale www.sisinsure.com 36,37 South & Western www.southandwestern.com 30, 31 Summit www.summitholdings.com SC4, S4, M5 Texas Mutual www.texasmutual.com SC3 The Hartford Insurance Group www.thehartford.com 6, 7 United Fire Group www.ufgsolutions.com W5 Universal Service Agency, Inc. www.universalbonds.com 49 Worldwide Facilities www.wwfi.com 26, 27

MARCH 20, 2017 INSURANCE JOURNAL | NATIONAL | 53

Closing Quote Making the Case for Innovation

By Kitty Ambers

ave you noticed how technology is rapidly eliminating tasks? We can bank remotely or have goods delivered to our doorstep with the click of a mouse. Whether it’s banking, retailing or insurance, nearly every industry is under pressure to improve efficiencies, streamline workflows and put the end-user in the driver’s seat. Innovation, increased competition, regulation, consumer expectations and disruption have all been factors. These changes haven’t occurred overnight. Think about our industry. Are you automating as much as you could be, or taking advantage of digital technologies such as e-signature, download or real time? The ESIGN Act made digital signatures binding in 2000. Real-time products like TransactNOW were introduced in the early 2000s. Commercial Lines Download has been around for more than a decade. Yet, adoption of these tools has been slow.

As the CEO of the largest technology user group in our industry and an advocate for innovation, nothing would make me happier than to see broad adoption of these technologies. But as someone who also has roots in the independent agency system, I can appreciate why some agents haven’t fully embraced them. Independent agents develop systems based on what works for them and their clients. Depending on the markets they serve, they may believe there is a good return on their investment. If we want to achieve greater adoption rates for new technology — and provide a better consumer experience — we’ll need to face up to some tough questions. Among them:

Have we made the business case for adoption? So often,

we fail to answer the fundamental “why?” of investing in new technology. We need to do a better job of making the business case for adoption; how it enhances value and profitability; and the ways it can speed the flow and access of data, and improve productivity and the customer experience.

Are we working together to foster a culture of innovation? I’m a firm believer in collaboration and have worked closely with the Agents Council for Technology (ACT) to advance a number of user issues. Groups like AUGIE, ACORD and ID Federation have also brought

54 | INSURANCE JOURNAL | NATIONAL MARCH 20, 2017

The pervasiveness of mobile devices has changed consumer expectations. together different players in our industry. We must also be willing to share solutions. Agreeing to a set of common standards or opening up a system that otherwise would remain proprietary isn’t easy, but it may be necessary to move forward.

Are we breaking down silos to achieve end-to-end consistency? Are carriers providing

the tools agents need to write more and better business? Do vendors understand our distribution channels and our business problems? Do agents realize that until we adopt new technologies, the systems and data to drive further innovation (like big data or mobile apps) won’t be possible?

Are we building systems with the consumer in mind?

Whether our customers are businesses or individuals, we need to tailor solutions to the end-user. Developers, vendors and carriers need to align their platforms so that users

don’t have to learn a dozen different systems. Let’s create a customer experience that’s simple, consistent and frictionless.

Are we preparing for the millennial generation? We’re

losing the tribal knowledge in our industry as older agents and employees retire. What are we doing to transfer that knowledge and attract millennials? Is it realistic to expect this tech-savvy generation to embrace our “old” ways of doing business? Maximize the technology you have by participating in a user group. User groups foster the exchange of information, provide valuable feedback to vendors and generate ideas for future improvements. Together, we can implement innovative solutions more quickly, allowing us to focus on building lasting relationships with our customers. Kitty is CEO of the Network of Vertafore Users (NetVU). kitty@netvu.org. INSURANCEJOURNAL.COM

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