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Contents December 18, 2017 • Vol. 95 No. 24 • West
West
National
W1 Northern California Agency Owner Answers Christmas Wishes of Single Mothers in Need
8 The Road to Rebound After 2017 Storms, Fires: Fitch 10 How Commercial Insurance Customers Rate Large Carriers, Brokers: J.D. Power
W2 California Wildfire Claims Top $9.4B, Department of Insurance Says W2 Wells Fargo Facing Insurance License Discipline in California W2 Idaho Suit Accuses Home Depot of Discriminating Against Mom with Newborn
W1 NORTHERN CALIFORNIA AGENCY OWNER
8
ANSWERS CHRISTMAS WISHES OF SINGLE MOTHERS IN NEED THE ROAD TO A REBOUND AFTER 2017 STORMS, WILDFIRES: FITCH
Idea Exchange
14 Special Report: Agents of the Year 16 Special Report: Insurance Industry Week of Giving Set Records in Midst of Catastrophes 18 Special Report: After the Storms – The Insurance Industry to the Rescue 20 Special Report: The Charity Issue – Photos of Giving
28 The Wedge: New Year’s Letter to My Boss 30 Minding Your Business: 6 Trends for 2018 34 Closing Quote: What Story Will You Tell Over the Holidays?
Departments 9 Declarations 9 Figures
28 NEW YEAR’S LETTER TO MY BOSS 4 | INSURANCE JOURNAL | WEST DECEMBER 18, 2017
11 Business Moves 13 MyNewMarkets INSURANCEJOURNAL.COM
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OPENING NOTE
Write the Editor: awells@insurancejournal.com
Inspiration
From the front Cover:
I
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
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 Columnists Erin Burns (619) 584-1100 X120 Catherine Oak, Bill Schoeffler, Randy eburns@insurancejournal.com Schwantz Insurance Markets Manager Contributing Writers Kristine Honey (619) 584-1100 X132 Marguerite Tortorello khoney@insurancejournal.com IJ ACADEMY OF INSURANCE Director Patrick Wraight pwraight@ijacademy.com Associate Director Barbara Whiffen bwhiffen@ijacademy.com
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
Social Media Manager Ly Short (619) 890-7735 Lshort@insurancejournal.com Classifieds, Jobs, Agencies Wanted/For Sale Sr. Sales & Marketing Coordinator Kelly De La Mora (800) 897-9965 X125 kdelamora@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
New Media Producer Bobbie Dodge bdodge@insurancejournal.com
Web Developer Jeff Cardrant jcardrant@insurancejournal.com
Videographer/Editor Ashley Waldrop awaldrop@insurancejournal.com
Web Developer Terrance Woest twoest@wellsmedia.com
CIRCULATION
Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com
t’s not very often that Insurance Journal editors have the pleasure of publishing good news. We have enjoyed pulling together this special issue of Insurance Journal – The Charity Issue — that is filled with representative stories of charitable efforts by the insurance industry. Given the outpouring of caring and support in the wake of this year’s natural disasters, it was a challenge to narrow down the stories to a number we could fit in this report but it was a welcome challenge. This year will be remembered as a year filled with devastation for individuals and businesses due to historic Hurricanes Harvey, Irma and Maria, as well as the wildfires. These and other crises kept insurance professionals busy all year. But not too busy to also give back to their communities and those in need. “The industry has been incredibly responsive and generous during this very difficult disaster driven year,” says Alisa Breese of the Insurance Industry Charitable Foundation. For Harvey relief, the insurance industry alone committed more than $15 million directly to relief efforts. Of course, insurance professionals did more than donate dollars. They participated in hundreds of volunteer events in 2017. They spent thousands of hours volunteering for education, at-risk women, children and youth, the homeless and food insecure, adults and children with disabilities, military veterans, pet rescues, cancer research, health and human services, and other charitable causes. There are countless stories of good deeds done by insurance professionals and organizations, a number that goes well beyond those printed in pages of this special issue. Our web site InsuranceJournal.com will feature additional photos and stories of charitable deeds in the coming days and weeks. Check it out. We hope you will be inspired like we have been by the industry’s generosity and kindness. We encourage all of our readers to give so that others who might be without this time of year FOR QUESTIONS enjoy a happier holiday REGARDING SUBSCRIPTIONS: Call: 855-814-9547 season and are blessed with Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: renewed hope for a better insurancejournal.com/subscribe new year. To all of you who Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media have given and will give, 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 thank you. Best wishes per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pubfor a happy holiday and a lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended healthy and prosperous 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 new year … to all. Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc.
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.
6 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
1. James Grindler
2. James Russell
3. Joe Redshaw
4. Mark Hilliard
5. Stuart Young
6. Priya Huskins
7. Matt Hammer
8. Mike Richmond
9. Edward Mackoul
Andrea Wells Editor-in-Chief
10.Michael McCarron
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National
The Road to a Rebound After 2017 Storms, Wildfires: Fitch
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.S. property/casualty insurers will rebound in 2018 from the late-2017 onslaught of hurricanes and wildfires, but it will take a while to return to “significant underwriting profits,” Fitch Ratings predicted in a new report. “While performance is likely to rebound in 2018 from recent catastrophe events, market fundamentals point to several challenges hindering a return to significant underwriting profits and an adequate market return on capital,” the Fitch report said. Part of the hindrance will come from added caution after a rough fall. Fitch said the natural catastrophe surge in late 2017 will make primary underwriters more likely to spend additional funds in reinsurance protection. In doing so, they’ll put into play aggregate catastrophe reinsurance instead of per-occurrence treaties. Fitch also expects underwriters to use more per risk and facultative cover to manage net retentions, and their actions mean
the market will have some short-term strong reinsurance market capacity. Fitch said that the P/C industry’s outlook remains negative. However, the rating outlook is stable for U.S. property/casualty insurers in personal and commercial lines, and a majority of companies in this space that Fitch covers have stable outlooks, which indicates that “ratings are unlikely to change in the next 12-18 months.” Fitch pointed out that underwriting performance worsened rapidly in 2017 in the wake of Hurricanes Harvey, Irma and Maria, as well as Q4 California wildfires. As insurers confronted claims from these catastrophes, they dealt with significantly higher catastrophe losses, and Fitch said U.S. P/C insurers will deal with a 104.4 combined ratio for 2017 as a result (up from 100.7 in 2016). But as hard as it may be to return to profitability from those hits, Fitch said that insurers are buttressed by generally
8 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
strong capital strength. “The industry’s capital remains very strong under several observed measures, providing most individual insurers with resources to absorb near-term volatility and the effects of adverse events,” Fitch said. “Limited insurer capital raising activity following 2017 severe catastrophe losses provides an indication of this capital resiliency.” Fitch said it expects price stabilization as large property losses produce higher premium rates in “loss-affected market segments.” Fitch said that some segments that are underperforming could see flatter pricing versus recent declines. For 2018, Fitch said the U.S. P/C industry should see a return to combine ratios that come close-to break even, as catastrophe loss experience returns to “longer-term norms.” But this trend, combined with a limited change of investment earnings growth means the industry’s returns on capital should still be below normal. INSURANCEJOURNAL.COM
Figures
893,798
Declarations
85
Human Activity
“The study’s findings suggest that the recent Fort Worth Basin earthquakes, which involve swarms of activity on several faults in the region, have been induced by human activity.”
The number of wells near the Chemours Co. plant in North Carolina found to be contaminated by the potentially harmful and unregulated GenX compound. North Carolina officials said they recently discovered 34 more contaminated wells near the chemical company’s manufacturing facility. The state suspended Chemours’ permit to discharge wastewater into a neighboring river after it failed to report a spill of a GenX precursor in October.
$90 MILLION The number of Texans who registered by the Nov. 30 deadline for Hurricane Harvey federal disaster recovery assistance. The Federal Emergency Management Agency said more than $1.4 billion in funding has been approved so far, but more will be needed. Harvey made landfall as a Category 4 storm on Aug. 25 about 180 miles southwest of Houston. It damaged or destroyed around 200,000 homes and flooded much of Houston and smaller coastal communities.
$83,000
The amount in workers’ compensation benefits that David Sigl, the former owner of Lake Country Logging in Auburn, N.Y., collected after reporting an injury he said he sustained while working at a Syracuse construction firm in 2013. Prosecutors said Sigl lied about the injury. He was sentenced to one-tothree years in prison and ordered to pay restitution. INSURANCEJOURNAL.COM
— Michael Blanpied, associate coordinator of the earthquake hazard program of the U.S. Geological Survey and a co-author of a report by Southern Methodist University researchers published online in the journal Science Advances. Blanpied said wastewater injection associated with the oil and gas drilling process of hydraulic fracturing has triggered quakes in recent years along faults that had been dead for more than 300 million years.
Cybersecurity Talent
“The protection of Georgia’s citizens, businesses and institutions within the digital realm remains a paramount concern, and the demand for cybersecurity talent continues to exceed supply. This facility will encourage world-class collaboration between industry leaders, startup companies, academic institutions and government in the field of cybersecurity, and provide space for private sector entities to leverage the center’s strategic resources.” — Georgia Gov. Nathan Deal in a statement on the expansion of a cybersecurity training center in Augusta that is expected to be completed by the end of 2018.
InsuranceJournal.com That’s how much of a net negative impact RenaissanceRe Holdings Ltd. said losses from the October 2017 California Wildfires will have on its fourth quarter 2017 results of operations.
$340,000
The amount of a judgment awarded to former high school cafeteria worker Amy Stubbs, who alleged in a lawsuit she was discriminated against by the Independence (Missouri) School District. Stubbs filed suit after she was fired from her job at William Chrisman High School in May 2015. Stubbs alleged her daughter was sexually harassed while attending the school, and the district didn’t do enough to protect her. Stubbs contended she was disciplined and eventually fired for complaining to district officials.
Poll
To get more homeowners covered by flood insurance, which of the following steps would you support? 23.15% Make flood coverage mandatory in all standard homeowners policies (47 votes) 23.65% Encourage more private flood insurers to provide coverage (48 votes) 5.91% Have the U.S. government provide flood insurance premium subsidies (12 votes) 11.82% Reduce the coverage and/or raise deductibles to make it more affordable (24 votes) 15.27% Have the U.S. government provide a backstop for private insurer losses from flood (31 votes) 2.96% Pay for flood losses through a new tax on all homeowners (6 votes) 11.82% Mandate flood insurance purchase by all homeowners (24 votes) 5.42% Other: (11 votes) Total Votes: 203
DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 9
NATIONAL | News & Markets
How Commercial Insurance Customers Rate Large Carriers, Brokers
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verall customer satisfaction with large commercial insurers increased in 2017, driven primarily by insurers’ focus on more tailored and diversified products for their customers. That’s according to the J.D. Power 2017 Large Commercial Insurance Study that measures customer satisfaction with commercial insurers and insurance brokers based on the opinions of 2,500 risk professionals.
Also, demonstrating an understanding of customers’ business needs is one of the most significant performance metrics for large commercial insurers, according to the study. The study, now in its fourth year, measures satisfaction with commercial insurers using five factors: service interaction; program offerings; price; billing process; and claims. Satisfaction with commercial insurance brokers is based
10 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
on nine attributes: quality of advice and guidance provided; reasonableness of fees; ease of the renewal process; effectiveness of risk control services; variety of program offerings; effectiveness of program review; price, given services received; billing and payment process; and claims process. The study was conducted in conjunction with RIMS (the Risk and Insurance Management Society). According to the results, on a 1,000 point scale, XL Catlin ranks highest among large commercial insurers with a score of 806. Chubb ranks second at 783 and The Hartford ranks third at 772. Lockton ranks highest among large commercial brokers at 856. Arthur J. Gallagher & Co. ranks second at 855 and Aon follows at 822. “Amid a sustained period of stagnant rates, top-performing large commercial insurers have set themselves apart from the competition by offering a wider variety of coverage options and services to meet the specific risk needs of their customers,” said David Pieffer, P/C Insurance Practice Lead at J.D. Power. “While we expect rates to start rising in certain catastrophe-exposed lines for 2018 after the heavy catastrophic losses experienced during the 2017 hurricane season, the customer expectation for tailored product offerings has now become a critical part of the business insurance product mix.” Some findings of the study: • Variety of program offerings drives overall increase in customer satisfaction: Overall customer satisfaction with large commercial insurers is
761, up 7 points from 2016. The improvement is largely due to a 10-point increase in satisfaction with program offerings. • Cyber insurance presents challenges, opportunity: P&C insurers wrote $1.35 billion in premiums for cyber insurance in 2016, a 35 percent increase from 2015. Yet, data breach/ cybercrime programs are among the lowest-rated programs in 2017, averaging 7.56 on a 10-point scale. Among top concerns of commercial insurance customers are: gaps related to security; loss prevention and risk control; business interruption; and remediation. • Commercial insurance customers are less likely to become brand advocates: Net Promoter Scores, which measure the likelihood that a customer will recommend a product or service, are much lower among commercial insurance customers than for services like business utilities or personal auto insurance. • Understanding business needs makes big impression: Demonstrating an understanding of customers’ business needs is one of the most significant performance metrics for large commercial insurers, and is associated with a 141-point improvement in customer satisfaction among those who say their insurer completely understands their business vs. those who say their insurer does not understand or only partially understands their businesses (827 vs. 686). Organizations included in the study have at least $100 million in annual revenue or operating budget and purchased a commercial insurance policy from one of the profiled insurers or brokers. INSURANCEJOURNAL.COM
West
Hundreds of rolls of donated wrapping paper and volunteers ready for the Sparkle Foundation’s annual wrap-a-thon held on Dec. 9, 2017. More than 150 volunteers turned out to wrap gifts for 28 families in need in Northern California.
Northern California Agency Owner Answers Christmas Wishes of Single Mothers in Need By: Amy O’Connor
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ommercial Coverage Insurance Agency Owner Samantha Tradelius approaches running the nonprofit she started two years ago, The Sparkle Foundation, in the same manner she runs her insurance agency: it’s about taking care of people and living a life of purpose. Raised in Southern California, Tradelius has grown up in the insurance industry. INSURANCEJOURNAL.COM
Her parents own Tarzana-based LyteSpeed Learning, an online professional insurance education resource that offers pre-licensing, continuing education, exam prep, and corporate training classes and programs approved by the California Department of Insurance. She started teaching classes when she was a teenager, then started her own property and casualty insurance agency at the
age of 24. Now, she co-owns Commercial Coverage Insurance with her husband, Paul, and runs the company’s recently opened San Rafael, Calif., location. The agency focuses on property and liability coverage for investment properties such as apartments, and has another office in San Francisco.
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DECEMBER 18, 2017 INSURANCE JOURNAL | WEST | W1
WEST | News & Markets continued from page W1
But her work doesn’t stop there. Inspired by her grandmother who raised three kids as a single mom in the ‘50s, Tradelius started a 501(c)(3) two year ago called The Sparkle Foundation, to help struggling single mothers. The foundation is run by a board of seven women, with Tradelius serving as executive director, and raises money through events and donations to fund enrichment program scholarships for kids in need, and puts on an annual holiday gift drive for nominated families. One hundred percent of what is raised goes to Sparkle causes. Tradelius said her grandmother, who recently passed away, worked several jobs to take care of her children and never asked for help. “I wanted to help those moms,” she said. “Sparkle isn’t going to change the world, but it provides a little bit of hope — or sparkle — for someone who needs it.” Her idea started 12 years ago with a small holiday gift drive. “I just wanted to do something to give back, and I started talking to people about how and found out about a ‘Dear Santa’ program at the post office,” she said. Tradelius said kids in need would send their letters to the North Pole — or in this
case the Valencia, Calif., post office — and people could go read their letters and purchase the items requested. “I would sit in this room and I would just cry. These kids were asking for basic things — food, socks, bikes — not iPads or video games,” she said. “I started asking people to help me and donate, and they did.” She would wrap the gifts and deliver to the kids personally because she “wanted to see the process through.” Tradelius continued this effort over the years, eventually moving to Northern California, and more people joined in to help. She was encouraged to start a nonprofit to reach even more people. The idea was daunting to her at first, she said. Then one night while sitting at her kitchen table she noticed the sparkle on her kitchen tablecloth Agency owner and Sparkle Foundation Founder and realized, “That’s what we are Samantha Tradelius prepares for Sparkle’s annual doing, we are sparkling.” wrap-a-thon in Novato, Calif. “When you hand a bag of food to enough insurance,” she said. “Everyone in a woman who can’t feed her kids, you see our community knew someone who knew this sparkle in her eye,” She said. “I threw someone who lost something.” the name out there and it got approved, The foundation has also given out then we got our IRS approval, and here we $15,000 in goods and gift cards directly to are two years later.” single moms affected by the fires. The small holiday gift drive is now a “We have answered a ton of questions in huge community the agency, but then Sparkle was also able effort. Last year to support those needing help,” she said. Sparkle helped 17 Tradelius said the insurance indusfamilies and raised try has been incredibly supportive of $35,000 in cash her efforts, either through donations or and gifts. This year in-person volunteering at Sparkle’s annual was even bigger wrap-a-thon, held on the second Saturday with more than of December in her hometown of Novato. $70,000 raised in All of the donated gifts are wrapped and donations and gifts delivered to the chosen families by Sparkle for 28 families, volunteers. More than 150 people came out including four Northern California to help this year. Tradelius said Sparkle’s work is just getfires victims. ting started, and she knows they can do “[The fires] more. For many of those working in the really hit home insurance industry, it is a profitable and for me personally stable business, she said, and there is a real because we are in opportunity to make a difference. the property insurance world. I knew “The biggest message I have is to live a Sparkle could help life full of purpose, and where you have Jon Uyeyam, partner with Scottish American Insurance, delivers gifts those who didn’t the ability you have a responsibility to Dec. 9, 2017, to one of the recipient families of The Sparkle Foundation’s have insurance or help,” she said. 2017 holiday drive. W2 | INSURANCE JOURNAL | WEST DECEMBER 18, 2017
INSURANCEJOURNAL.COM
Readily Available Admitted California Residential Flood
WEST | News & Markets
California Wildfire Claims Top $9.4B, Department of Insurance Says
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alifornia Commissioner Dave Jones announced in early December that the total of insured losses from the wildfires in California in October had topped $9.4 billion in residential and commercial claims. That figure is near the upper end of estimates given so far on losses from the wildfires, which are now counted among the most deadly and costly in the state’s history. Modeler AIR Worldwide reported last month they expect losses from the Tubbs, Nuns, Atlas, Redwood and Sulphur fires alone will be between $8 billion and $10.5 billion. The latest report is the result of a formal data call in which more than 260 insurers reported total claims as of Dec. 1 and includes the destruction and damage for more than 21,000 homes, 2,800 businesses, and more than 6,100 private autos,
commercial vehicles, and 788 losses involving other lines of insurance such as agricultural equipment and watercraft, according to the California Department of Insurance. “The October wildfires that devastated whole communities and tragically cost 44 people their lives have now proven to be the most destructive and deadliest in our state’s history,” Jones said in a statement. On Dec. 9, the CDI held an Insurance Recovery Workshop for North Bay residents that included department experts and insurers providing wildfire victims with one-on-one assistance with their specific insurance claim questions.
Idaho Suit Accuses Home Depot of Discriminating Against Mom with Newborn
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former Home Depot assistant supervisor in Idaho has filed a lawsuit against the company alleging sex and pregnancy discrimination. The lawsuit alleges the company violated federal law by refusing to allow the woman breaks to pump breast milk and store it for her newborn child while working for the company in Nampa. The woman also contends the company retaliated against her for asserting her rights. Home Depot spokesman Matt Harrigan said the company disagrees with the claims in the lawsuit but declined to comment. The lawsuit, filed in U.S. District
Court, seeks at least $75,000 in damages. “It is unfortunate that a company such as Home Depot has not taken the appropriate steps to make sure its female employees who are pregnant and nursing are treated fairly,” attorney Shelly Cozakos, who is representing the woman, said in a statement to the newspaper. The lawsuit also said that store director scheduled the woman to work 10-hour shifts for seven consecutive days. The woman “had not been scheduled for shifts of this duration with no days off prior to going on her Family and Medical Leave Act leave and was surprised by the rigorous schedule” placed her on, Cozakos wrote. Copyright 2017 Associated Press.
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Wells Fargo Facing Insurance License Discipline in California
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ells Fargo was served with an accusation in December by the California Department of Insurance seeking to suspend or revoke its licenses for alleged improper insurance sales practices related to the company’s online insurance referral program. Such practices resulted in insurance products being purchased for consumers without their knowledge, according to the CDI. The accusation is the result of a department investigation that found that from 2008 to 2016, Wells Fargo customers were issued roughly 1,500 insurance policies and charged premiums without their knowledge or permission. The department is seeking to suspend or revoke Wells Fargo’s licenses to transact personal insurance in California. Wells Fargo paid $185 million in 2016 to government regulators to settle claims that the bank opened fraudulent deposit and credit card accounts. A bank review found that there were nearly 3.5 million unauthorized deposit and credit card accounts opened from 2009 to 2016. Bank employees opened these unauthorized accounts as part of an incentive compensation program that indirectly encouraged improper sales practices and was not adequately overseen by bank management. “Consumers should not be treated like chattel by corporations who take advantage of and abuse the consumers’ trust,” Insurance Commissioner Dave Jones said in a statement. “Companies licensed to transact insurance have an obligation to act with integrity, to obtain consumer consent before placing insurance, to disclose relevant and material information, and to comply with all state insurance laws.” INSURANCEJOURNAL.COM
Business Moves | NATIONAL USI, Wells Fargo
USI Insurance Services announced the closing on its acquisition of Wells Fargo Insurance Services USA, formerly part of Wells Fargo & Co. This purchase includes the commercial insurance brokerage and consulting, employee benefits and property/casualty insurance national practices of WFIS, along with its Safehold Special Risk, small business insurance, student insurance, individual health and private risk management business lines. Terms were not disclosed. The plan to sell the business to USI was announced in June. Wells Fargo Insurance Services writes or places about $9 billion worth of premiums annually, according to its website. USI, headquartered in Valhalla, New York, has more than $1 billion in revenue, employs more than 4,400 professionals and operates out of 140 local offices serving every state. Wells Fargo has said it is exiting the insurance business to focus on its core banking business. Wells Fargo’s personal lines insurance unit is not part of the sale to USI. However, Wells Fargo announced this month that it is winding down its personal insurance business. The company said the exit process should be finished during the first quarter of 2018.
Hartford
The Hartford has agreed to sell Talcott Resolution, its runoff life and annuity businesses, to a group of investors led by Cornell Capital LLC, Atlas INSURANCEJOURNAL.COM
Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group. The deal will complete the insurer’s exit from the life insurance business. Total consideration to The Hartford is $2.05 billion, comprised of cash from the investor group, a pre-closing cash dividend, debt included as part of the sale, and a 9.7 percent ownership interest in the acquiring company. The total consideration amount does not include $1.4 billion in dividends previously paid by Talcott Resolution in 2017. The sale is anticipated to close in the first half of 2018. The sale does not include the company’s group benefits or mutual finds subsidiaries, which will be transferred to another Hartford subsidiary. In addition, immediately after closing, Talcott Resolution will reinsure a portion of its fixed annuity, payout annuity and structured settlement businesses to a subsidiary of Global Atlantic Financial Group. As part of the transaction, about 400 Hartford employees will become employees of the new company and will be located at offices currently owned or leased by The Hartford in Windsor, Connecticut, and Woodbury, Minnesota.
NIF Group, Agency Intermediaries, A.I.I.
NIF Group Inc., a wholesale broker, program administrator and managing general agency, and its parent company JenCap Holdings LLC, have agreed to acquire privately held Agency Intermediaries Inc. and A.I.I. Insurance Brokerage of Mass.
Inc. Both affiliated entities serve as MGA/contract binding authorities and wholesale insurance brokerages, respectively located in Guilford, Conn., and East Douglas, Mass. Agency Intermediaries Inc. was formed in 1980 by Ray Connors Sr. and Manja Connors. Erina Connors joined in 1983, focusing on excess and surplus lines. Since 1998, A.I.I. has been led by Erina Connors and Julie Sonier. Agency Intermediaries Inc. and A.I.I. Insurance Brokerage of Mass. Inc. serve independent agents in Connecticut and Massachusetts in placing excess/specialty lines business. With offices located on the East and West coasts of the U.S., NIF has been serving agents and brokers since 1976. It was acquired by JenCap Holdings in December 2016. Through the acquisition of A.I.I., NIF now expands its footprint in the Northeast. JenCap Holdings was formed in March 2016 by The Carlyle Group and JCH management to consolidate specialty insurance distribution businesses.
The acquisition of Agency Intermediaries Inc. is the sixth such transaction by JCH, which is headquartered in New York, N.Y.
The Hilb Group, HR Knowledge, IOA Northeast NY
The Hilb Group LLC has acquired HR Knowledge in a transaction that became effective Nov. 1, 2017. Located in Mansfield, Mass., HRK provides employers across the nation with integrated HR services including payroll, employee benefits, human resources management and benefits brokerage and administration. Founded in 2001, HRK is one of the few brokers in the U.S. who has partnered with ADP to provide outsourced payroll and HR information management, utilizing ADP’s Workforce Now platform. HRK’s managing directors, Ken Bettenhauser and Jeff Garr, and their team will continue to operate out of the firm’s existing location. HRK views this move as an opportunity for
continued on page 12
DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 11
NATIONAL | Business Moves continued from page 11 its employees to build on the success and growth HRK has had over the years, and as a part of THG, its clients can now tap into a wider range of products, services and expertise to address their needs. In a separate deal, The Hilb Group also acquired the majority of the assets of IOA Northeast NY Inc., a division of IOA National Inc. The transaction became effective November 1, 2017. Located in Florham Park, N.J., IOANE provides property and casualty insurance to businesses throughout the nation. Led by Managing Director Jeff Miner, the IOANE team will continue operations in its current office location under THG’s name. Miner and his team have a background in the large, commercial property and casualty space that will help to further expand THG’s New Jersey operations, said THG CEO Ricky Spiro in a company press release. The Hilb Group is a Top 50 middle mar-
ket insurance agency headquartered in Richmond, Va., and is a portfolio company of Boston-based private equity firm, Abry Partners.
Hub International, Summit Financial Insurance Agency
Global insurance brokerage Hub International Limited has acquired the assets of Summit Financial Corporation and Summit Financial Insurance Agency Inc. Terms of the acquisition were not disclosed. Headquartered in Burlington, Mass., Summit provides plan design, consulting, actuarial, administration and investment-related services for both qualified and non-qualified employer-sponsored retirement plans, as well as similar services for employee benefit plans. Headquartered in Chicago, Ill., Hub International Limited is a global insurance brokerage that provides property and casu-
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alty, life and health, employee benefits, investment and risk management products and services from offices located throughout North America. Summit was founded by President Joe Bonasera and Vice President and CEO Brian Babcock in 1993. Hub’s acquisition of Summit strategically aligns both companies for the benefit of their clients, according to a press release issued by Hub. Summit’s leadership team and staff, including Bonasera, will join Hub and continue to operate out of Summit’s existing offices. They will report to Charles Brophy, president, CEO and regional president of Hub International U.S. East. This transaction creates a synergy that will benefit all of Hub’s clients, Brophy said in the release. He added that Hub continues to expand organically and through strategic mergers and acquisitions, and continued investments in operational efficiencies in distribution and client service will ensure its ability to deliver customized solutions to customers.
Arthur J. Gallagher & Co., Weiss Insurance Agencies
Arthur J. Gallagher & Co. has acquired Wayne, Illinois-based Weiss Insurance Agencies Inc. Terms of the transaction were not disclosed. Founded in 1905, Weiss Insurance Agencies provides a full range of employee benefits, property/casualty, financial and retirement products and services, and human resource consulting services to clients across Illinois and throughout the United States. John Weiss, James Parrilli Jr., Arthur Pizzello and their associates will continue to operate from their current locations in Wayne, Illinois, and Carmel, Indiana, under the direction of John Neumaier, head of Gallagher’s Great Lakes employee benefits consulting and brokerage operations, and Patrick M. Gallagher, head of Gallagher’s Midwest retail property/casualty brokerage operations. Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, is headquartered in Rolling Meadows, Illinois.
12/5/17 8:29 PM
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MyNewMarkets | NATIONAL
Used Car Dealers
Market Detail: KBK Insurance Group Inc. (www.kbkinsgroup. com) provides car dealer products and services including the basics of dealer liability, garage liability, dealers-open lot, personal injury and the critically important coverage for errors and omissions. KBK can also write more difficult to find coverages like location-medical payments, uninsured motorists, drive-away collision and federal odometer. Coverages include: garage liability; broad form coverage; dealers open lot; garage keepers legal liability; drive away collision; false pretense; title insurance; E&O; tow truck coverage; truth in lending; and federal odometer. Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All states except Alaska, Hawaii, and N.Y. Contact: Customer service at 800-229-5927
Family Entertainment Centers | AIR Elite
Market Detail: Britton Gallagher (www.brittongallagher.com) is the IAAPA-endorsed INSURANCEJOURNAL.COM
risk management program with insurance coverages and loss control resources only for IAAPA FEC members in North America. Members receive access to: risk solutions; coverage enhancements; competitively priced insurance program; online educational portal; training modules; and safety certification opportunities. The AIR Elite program is designed to enhance safety within the FEC industry. Britton Gallagher has partnered with Specialty Insurance Group to offer the FEC Industry a competitive and established insurance alternative. Available limits: As needed Carrier: Unable to disclose States: All states Contact: Eric Treend at 216658-7846 or e-mail: james. ovens@brittongallagher.com
Real Estate Agents & Brokers
Market Detail: Sun Coast General Insurance (www. SunCoastInsurance.com) offers residential real estate brokers E&O with liability limits up to $1 million/$1 million; deductibles up to $25,000; defense costs inside or outside the limits. Includes risk management,
business operations, occasional commercial, mortgage brokering, agent owned property, and auctioneers. Available limits: Minimum $500,000, maximum $1 million Carrier: Various, admitted and non-admitted available States: Ariz., Calif., Colo., Nev., and Utah Contact: Customer service at 800-300-8838
Residential Care Facility
Market Detail: NAS Insurance Services Inc. (www.nasinsurance.com) offers coverage for residential care facilities. NAS’ long-term care coverage addresses the evolving risk surrounding these facilities with enhanced coverage. Available limits: Minimum $1 million, maximum $3 million Carrier: Lloyd’s States: All states Contact: Matt Thoburn at 818-382-2030 or e-mail: mthoburn@nasinsurance.com
Auto added to Security Guard Program
Market Detail: Izzo Insurance Services (www.IzzoInsurance. com) has added an A XV admit-
ted auto market for security guards to compliment their portfolio of liability and workers’ comp carriers. The program is offered in every state. Izzo writes all lines of business for security guard industry including GL, umbrella/excess, WC, auto, performance & fidelity bonds and EPLI. Available limits: Minimum $2,500 any one unit, maximum $2 million any one loss. Carrier: Unable to disclose, non-admitted States: All states except Alaska Contact: Kelly Izzo at 800800-1704 or e-mail: KellyIzzo@ IzzoInsurance.com
On-Hook Coverage
Market Detail: NationsBuilders Insurance Services (NBIS) (www.nbis.com) offers loss prevention, risk management support, claims service, competitive rates and custom coverage. Programs include concrete pumping; crane & rigging; specialized transport and equipment dealers. Available limits: As needed Carrier: Unable to disclose, admitted and non-admitted available States: All states Contact: Customer service at 1-866-668-NBIS
This section brought to you by Insurance Journal’s sister website: www.mynewmarkets.com
Need a Market? Find it. FAST
DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 13
14 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
INSURANCEJOURNAL.COM Michael McCarron, is president, business insurance,
Lakeside Insurance Center Arvada, Colo.
Michael McCarron
book of business by specializing in the construction, technology, health care and manufacturing industries. McCarron says the key to success for independent agencies is specialized knowledge in industries. Lakeside Insurance is one
achieved the highest production for a new account director and established the firm’s presence in an untapped market segment. He became an owner of BKS in 2014 and was the first advisor to achieve partner in 2017. In 2017, Hammer
Partners (BKS). He specializes in the construction and real estate industries. Prior Baldwin Krystyn to joining BKS in 2010, he Sherman Partners led commercial insurance Tampa, Fla. and risk management growth and business deMatt Hammer is a partner velopment initiatives for an at Baldwin Krystyn Sherman agency in Tampa where he
Matt Hammer
Edward Mackoul is president of Mackoul & Associates Inc. He began
Mackoul & Associates Inc. Island Park, N.Y.
for Lakeside Insurance Center. He began his career as an underwriter with Safeco insurance in 1998. In 1999, he purchased Lakeside Insurance and since that time has helped significantly grow the agency and his personal
tionships with managers at property management firms. This focus has helped to grow the agency’s total book of business by more than 2,000 times its original size in the past 20 years. His keys to success: guidance provided by his father and
his career at his father’s insurance agency in 1995 as a life/health producer but jumped into the firm’s specialty habitational insurance business, which focused on insuring co-ops and condominiums. He began developing rela-
Edward Mackoul
Priya Huskins is senior vice president at Woodruff-Sawyer & Co., specializing in di-
Woodruff-Sawyer & Co. San Francisco, Calif.
Priya Huskins
watched the tech industry grow and evolve, her interest in risks emerged. Since joining Woodruff-Sawyer in 2003, Huskins has developed a large book of business in this sector. She says her success as a producer comes from
of three agencies in the state of Colorado to receive the Independent Insurance Agents & Brokers of America’s Best Practices award for the second straight year. McCarron has served as the Trusted Choice Insurance Agents of Colorado (TCCO)
established BKS’s Orlando office. Hammer’s says his keys to success include understanding his clients’ businesses and goals, and delivering insurance solutions to help promote growth and success. He also says that “leverag-
a remarkable agency staff, “which makes developing and retaining clients easy,” he said. Mackoul is quoted frequently on real estate insurance topics in the New York Times, Habitat Magazine, The Cooperator and other publications. He is an
association president and has been honored as both Young Agent and more recently as Insurance Person of the Year in Colorado. He is currently the chairman of the Arvada Chamber of Commerce.
ing analytics and claims management to reduce loss costs,” and “building off client successes through referrals” has helped him. Hammer is active in his church and serves on mission trips throughout the world.
active member of several professional organizations in both New York and New Jersey, including the Institute of Real Estate Management, the Community Associations Institute, and the Staten Island Chamber of Commerce.
want to work with a person and a firm with this kind of commitment to excellence,” she said. She is a frequent speaker and writer on D&O issues and currently authors a weekly blog, titled D&O Notebook.
towns big and small, and know the importance of giving back. Information included in this report was voluntarily submitted online by agents and was supplemented by other public information sources. There are many more agents who deserve mention than are profiled here.
technical expertise, clear communication and a total commitment to claims advocacy. “Commitment to these three pillars creates a virtuous cycle, and over the course of my career has resulted in an abundance of referrals to new clients who
and entrepreneurial skills, they also have shown they have a passion for what they do and a commitment to professionalism and, in many cases, specialization. For them, being an insurance agent is more than a job. Insurance Journal’s Agents of the Year come from all regions of the country, live and work in cities or
rectors and officers liability for private and public companies in the technology and life science space. She began her career as a corporate securities attorney at Wilson Sonsini working with innovative companies in the Silicon Valley. As she
Welcome to Insurance Journal’s inaugural Agents of the Year report. This report features 10 agents who define what it means to be a successful independent agent today. These agents are more than top sellers. While they have achieved impressive success in sales and demonstrated laudable business intelligence
2017 AGENTS of the Year
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DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 15
joined HRH Houston, which was later acquired by Willis (now Willis Towers Watson). In 2015 (at the age of 57), he joined the privately-owned Higginbotham. He says he has found great success with Higginbotham due to the outstanding support he start his own independent agency so instead began with a captive insurance carrier in 1996. “I started from scratch in my little hometown of 3,200 people. Everyone told me that there was no way I would make it,” he said. Then the sales ed The John Marshall Law School at night to earn his Juris Doctor and passed the Illinois bar exam. His education in law has positioned him to be a resource among colleagues especially when working with complicated insurance transactions and Georgia Power for 10 years. Bryan Burke, president BBWH Insurors, says “Jim has worked extremely hard and takes pride in helping the client in so many ways.” He graduated from the University of Georgia with a degree in Forestry and has when he began his career and built his book from the ground up. He credits his success to people skills and “a genuine interest and caring” for his clients. “That helped me get a good jump-start on the process of building a book
residential construction business. He joined his father’s agency in 1982 after Higginbotham Insurance college and then worked for Fort Worth, Texas a specialty underwriting organization from 1986-1998 Mark Hillard is a producer developing, marketing and for Higginbotham Insurance underwriting specialty prowho specializes in primarily gram business. In 1998, he Insurance Agency. He is from a family of entrepreneurs. After college in 1994, he planned to take over his father’s trucking company but the instability of the trucking industry led him to insurance. He didn’t have the money to clients in the manufacturing, distribution, professional service, real estate and technology sectors. Prior to joining The Horton Group, Richmond spent seven years at Thornton Powell in Oak Forest, Ill. During that time, he attendizes in agricultural risks including large commercial farms, dairies, fruit and vegetable packers, and small gentleman’s farms. Insurance was a mid-career move for Grindler. He began his insurance career in June 2008 after working with at Texas Associates Insurors specializing in the oil and gas, construction and marine industries. Prior to joining the firm in 2006, he served as a high school football coach for seven years. He knew “almost nothing” about insurance
James Russell is a partner/ insurance and risk advisor
Texas Associates Insurors Austin, Texas
James Russell
James Grindler is vice president of sales for BBWH Insurors where he special-
BBWH Insurors Statesboro, Ga.
James Grindler
Mike Richmond is a sales executive for The Horton Group with a strong mix of
The Horton Group Orland Park, Ill.
Mike Richmond
Joe Redshaw is owner/ agent of the Redshaw
Redshaw Insurance Agency Rushville, Ill.
Joe Redshaw
Mark Hilliard
Stuart Young is senior sales executive for USI Insurance Services specializing in
USI Insurance Services Vahalla, N.Y.
his death in 1982 and sold the firm two years later. He then developed a book of timeshare condominiums, apartments and hotels and sold that firm to a bank in 1994. For 14 years he worked for Wells Fargo Insurance Services before
real estate and hospitality. Young is a third-generation insurance industry professional. He obtained his property/casualty license in 1973 while still attending college. He worked for his father’s firm until he purchased the agency after
Stuart Young
of business,” he said. In the beginning he organized a strategic plan to build a quality book of business. “I worked that plan tirelessly and still do today,” he said. He credits his agency partners for playing a huge role in his success and also
earned a designation for Agricultural and Farm Insurance Specialist (AFIS), a certification for specialists in the agricultural and farm insurance industry. Grindler attributes his sales success to building dependable relationships with clients and
high-risk clients. That’s one reason his book of business is general versus specialized. “While the trend is to become more specialized, I’ve spent the past 13 years honing my skills on nearly every type of industry. I’ve had the benefit of working
started coming in. After 13 years, Redshaw decided it was time to break away from the captive world and go independent. “I bought a tiny little agency that allowed me to have some contracts.” Now eight years later, his agency is not large
receives from clients, staff, and management. “I believe specialization is the key to my personal success,” said Hillard. “I understand my clients’ business and have gained their confidence and trust,” he said. This specialized expertise also
the unit was sold to USI in 2014. Young believes that success in insurance comes with constant learning. His areas of specialty include large malls including a $2 billion project currently under construction; property managers with more than
cites his experience as a high school football coach: “Getting started, I simply worked the same amount of hours I did as a Texas high school football coach.”
trying to be available and responsive at all costs. “Returning calls and following up on both large and small issues is very important,” said Grindler. “Excellent service is key in our industry and we strive to do that with all our clients.”
with many areas of risk, which has made me a better advisor for my clients,” he said. “It has been a great experience building a book of business this way.” He is involved in many charitable causes in his local community.
but continues to grow in small town America. Redshaw recently purchased a new building that is four times the size of where he began. His tips for success: self-discipline, self-motivation and perseverance.
helps with insurance carrier relationships, he added. “Specialization also leads to greater efficiency and effectiveness in helping deliver extraordinary service and superior results to our clients.”
15,000 apartments; hotels and conventions centers, amusement parks and more. His advice: “Continually respond to clients with useful, timely information. Learning from others and helping clients understand their options is the future.”
NATIONAL | Special Report | The Charity Issue
Insurance Industry Week of Giving Set Records in Midst of Catastrophes By Don Jergler
H
undreds of volunteers from the insurance industry descended on the National Veterans cemeteries in October in Houston and Dallas-Fort Worth to assist with maintenance and cleanup. Volunteers in Chicago from several insurance companies worked together to sort and size clothing and prepare warm things for children in underserved communities to wear, while across town other volunteers read to children and led engaging
literacy activities. Volunteers in Philadelphia wrote wellwish cards to U.S. servicemen and servicewomen. And across the pond at White Chapel Mission in London homeless were served breakfast. Insurance Industry Charitable Foundation reported records for the number of volunteers, volunteer hours and number of cities for its Week of Giving in October 2017, despite it being a month that will be remembered by many in the insurance industry for ferocious hurricanes and
historic wildfires. The number of industry volunteers grew in 2017 by 20 percent from a year earlier for a total of nearly 10,200 insurance professionals joining together to support those in need, the group reported. IICF also reported more than 28,800 hours of volunteer service in 173 cities across the United States and the U.K. — that’s roughly 60 more cities than last year. Held this year from Oct. 14-21, IICF’s annual Week of Giving brings insurance industry professionals together for a weeklong series of volunteer projects to serve local nonprofits and charity organizations in their own communities. This includes volunteer events designed to support at-risk women, children and youth, the homeless and food insecure,
IICF Week of Giving Projects
F
ollowing are a few highlights of the Insurance Industry Charitable Foundation’s Week of Giving Activities around the world. IICF’s annual Week of Giving, held this year from Oct. 14-21, brings insurance industry professionals together for volunteer projects to serve local nonprofits and charity organizations.
ChildCareGroup, Early Literacy Initiative Fair – Dallas, Texas
The first IICF Week of Giving Early Literacy Initiative event kicked off in Dallas at ChildCareGroup, where volunteers led literacy activities in eight classrooms of children, ages 3 to 5 years old. The Cookie Monster joined the fun too.
National Veterans Cemetery Projects, Houston and Dallas, Texas
Volunteers served at the National Veterans Cemeteries in Houston and Dallas-Fort Worth to assist with maintenance and cleanup, and beautifying the grounds of fallen U.S. service men and women and their families. There were 300 volunteers participating.
Community Gardening: At Liberty State Park in Jersey City, N.J., dozens of volunteers helped out with weeding, mulching and planting flowers to help improve their community. White Chapel Mission Projects, London
Volunteers contributed at the White Chapel Mission in London through two projects. A team of 10 early rising volunteers prepared and served breakfast to service users of the mission, as many as 300 per day. Volunteers cleaned the kitchen and left it ready for the next day. In another project, 13 volunteers participated in the Mission Chapel clothing challenge, which involves the sorting and sizing clothing.
16 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
Childcare Group Dallas: The first IICF Week of Giving Early Literacy Initiative event kicked off in Dallas at ChildCareGroup, where volunteers led literacy activities in eight classrooms of children, ages 3 to 5 years old. Cookie Monster joined the fun too.
Outdoor Cleanups in the West
Seventy-five volunteers participated in the Ocean Beach, San Francisco Clean-up, in conjunction with Golden Gate National Parks Conservancy, picking up trash and providing general upkeep. Dozens of other volunteers helped clean up debris along hiking trails and picked up litter around the campgrounds and visitor center at Zion National Park in Southern Utah, and at Mount Diablo State Park in Northern
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those with disabilities, senior citizens, military veterans and other areas of focus for IICF divisions. Projects are designed to allow industry volunteers the opportunity to give back to the communities where they live and work, and support nonprofits providing vital services at the local level. The record turnouts for the Week of Giving this year, which followed a record last year, weren’t the biggest surprise for Bill Ross, CEO of the IICF. What surprised him was that the numbers were up at all considering the event took place as California was experiencing the worst wildfires in state history in October, a month that came on the heels of hurricanes Harvey, Irma and Maria. It was a time when many in the insur-
ance industry were busy responding to claims, dealing with clients and tallying up massive losses. “I think we were concerned that we might not see the level of performance that we had traditionally had,” Ross said. The lesson he took away from the pleasant surprise is that people enjoy getting out and giving.
‘Even with the challenge of the hurricanes and wildfires, I think that what we see is that people really want to get out and help.’ “Even with the challenge of the hurricanes and wildfires, I think that what we
see is that people really want to get out and help,” Ross said. He also credited the growth in participation to the growth of the IICF itself. Beside four U.S. divisions and one U.K. division, there are now nine IICF chapters, and in the past few years they launched eight associate boards, which involve younger people in the industry. Last year, the IICF expanded with boards in Washington and Houston. The group now has 22 boards in the U.S. and U.K. Since inception of the foundation in 1994 the group has organized more than 100,000 volunteers giving in excess of 270,000 hours, according to the IICF. The IICF is a nonprofit that reports contributing $28.7 million to hundreds of charities and nonprofit organizations.
Veterans Cemetery: Hundreds of IICF volunteers helped with maintenance and cleanup at the National Veterans Cemeteries in Houston and DallasFort Worth again this year during the Insurance Industry Charitable Foundation’s annual Week of Giving in October.
Cradles to Crayon: Volunteers from several different insurance companies worked together sorting and sizing clothing, and preparing warm clothing for children in Chicago’s underserve communities. They were participating in the Insurance Industry Charitable Foundation’s annual Week of Giving in October California volunteers completed trail repairs and maintenance.
Greater Philadelphia Week of Giving Projects, Philadelphia, Pa.
170-plus volunteers from one IICF board company completed an array of service projects, including preparing and distributing care bags for the homeless; writing cards for U.S. servicemen and servicewomen With A Million Thanks; preparing bed-
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side activity bags for pediatric patients at Children’s Hospital of Philadelphia; baking for transplant patients and their families at the Gift of Life Family House and more.
Midwest IICF Week of Giving volunteers supported Cradles to Crayons, Chicago
More than 100 volunteers gave of their time at Cradles to Crayons Chicago during the Week of Giving, helping to sort, size and package warm clothing for more than
130 children in Chicago who live in poverty. IICF volunteers also supported Cradles to Crayons in Boston and Philadelphia.
Community Gardening Volunteer Project at Liberty State Park, Jersey City, N.J.
Dozens of volunteers participated in gardening activities, including weeding, mulching and planting flowers to help improve their community.
DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 17
NATIONAL | Special Report | The Charity Issue
After the Storms: The Insurance Industry to the Rescue Bentley, vice president of marketing and comhen disaster strikes, the insurmunity affairs at Texas ance industry plays a critical role Mutual. “We had to close in helping affected individuals, businesses and communities get back on down our Houston office their feet. After all, an insurance policy is a for a week with 100 promise to pay when tragedy and catastroemployees there, but 15 phes hit home. employees were directly But at times insurance coverage isn’t affected — their homes enough. Individuals and businesses might and cars were destroyed be uninsured, or are underinsured, when or damaged,” he said. disasters strike. That's when insurance The insurer immediately companies, agents and brokers, and the delivered care packages and gift cards, and industry at-large, step in to help. This is a Lockton Cos. and its employees donated $550,000 loaned the company’s story not often told. cars to impacted employees. The tragic and historic 2017 natural $10,618,497 approved grants. “But then we got to thinking about what catastrophes presented an opportunity for It was the first time the insurer had could we do that would make a difference insurance professionals to shine, not only offered a direct service program for in the entire community,” Bentley disaster assistance and its policyholders said. In the past, Texas Mutual approved. made charitable donations to other “I broke down sobbing at my desk. God organizations for restoration efforts bless you,” Dr. Layne Spitzenberger at following large catastrophes. “But Circle Lake Ranch in Katy, Texas, said in we thought, how can we best restore response to the grant. normalcy and help these business “You guys are incredible; you have done es get back to work and get their more for me than my own homeowners employees back to work?” he said. insurance did,” said Eric Blayney with Helping businesses stay afloat would Castleblayney Construction of Kingwood, allow those businesses to pay their Texas. employees. “It became evident that Texas Mutual was not the only insurer to the thing we could do to help the give back in the wake of Hurricane Harvey. AIG donated $1 million to relief and recovery efforts. most would be to set a disaster fund A very partial list includes: up for policyholders.” • American International Group Inc. as professionals, but also as humanitarians. Two and a half weeks after Harvey hit Many people went above and beyond their the shoreline, Texas call of duty to help. Mutual began accept This 2017 season was the first time that ing grant applications three Category 4 hurricanes — Harvey, for a $10 million proIrma and Maria — made landfall in the gram for policyholders. United States and its territories in a one “We gave out up year period. All three hurricanes caused to $10,000 at a time devastating loss of life and property. to policyholders that Hurricane Harvey, which made landfall were affected,” Bentley on Aug. 25 about 180 miles southwest said. In total, 1,107 of Houston, hit on home turf for Texas applications were Mutual Insurance Co., the largest workers’ approved by Texas compensation insurer in the state. The Mutual and the insurer storm affected not only policyholders tallied the final total at An NFP-chartered plane took supplies to Puerto Rico after Maria. but also many employees, said Jeremiah
By Andrea Wells
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18 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
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• • •
donated $1 million in aid to organizations focused on emergency relief and ongoing recovery following Hurricane Harvey. AIG allocated $500,000 to Houston-based nonprofits for immediate local relief efforts and the remaining $500,000 supported critical medium- and longer-term recovery efforts in partnership with The Center for Disaster Philanthropy. The Travelers Companies Inc. committed $600,000 to Hurricanes Harvey, Irma and Maria relief efforts. Plus, employees of Travelers made financial contributions of their own to help fellow employees. Tokio Marine Group companies donated a total of $250,000 to assist with Hurricane Harvey relief efforts. The Assurant Foundation, the charitable arm of Assurant Inc., sent the American Red Cross $100,000 for its Hurricane Harvey relief efforts.
The insurance industry committed more than $15 million dollars directly to Harvey relief efforts, according to Alisa Breese, director, marketing and communications, Insurance Industry Charitable Foundation (IICF). Many insurers donated to the IICF disaster relief funds set up specifically for Hurricanes Harvey, Irma, Maria and the California wildfires. These storms were unprecedented, as was the amount of contributions made to IICF’s relief funds. Collectively, a total of $554,000 was raised, which Breese said “is by far the largest IICF disaster relief campaign ever.” Donations came in from insurance carriers primarily, but more than 1,000 individual donors from the industry also contributed. The funds support local nonprofits working directly in affected areas. “And 100 percent of donations from the campaign go directly to the relief effort; there’s no administrative cost to it,” she said. Agents and brokers helped, too. The Trusted Choice Disaster Relief Fund was created to assist agents and their employees as they rebuild following natural catastrophes, says Madelyn H. Flannagan, vice president, agent develINSURANCEJOURNAL.COM
opment, education and research, at the Independent Insurance Agents and Brokers of America (IIABA). It was set up after Hurricane Katrina and helps every year. However, this year it’s been very active. “Each year we give out whatever we have but this year has been a tremendously large year considering the hurricanes, floods and fires,” she said. To date, the Trusted Choice Fund has given out more than $400,000 in 2017 to member and nonmember agents of the IIABA to help them recover, but anyone affiliated with the insurance industry can apply, she said. The fund is supported by insurance carriers, as well as agents that want to help. Agents are a very giving bunch. “The minute that something happens state associations, agent leaders and agency groups jump in to donate to the fund. We receive huge donations from agents. They want to help their fellow agents,” said Flannagan. Lockton Companies’ employees created a disaster relief fund of their own. The brokerage’s associates from around the world donated to the Lockton Disaster Relief Fund to provide assistance to affected employees and communities in the wake of the 2017 natural disasters. This aid included a truckload of much needed supplies to Houston for associates, their families and friends, and the local community. Lockton agreed to match employee contributions to the fund up to $250,000.
According to Jennifer Schuler, Lockton’s organizational communications manager, the fund generated more than $550,000 for relief efforts, $300,000 from Lockton employees. After Hurricane Maria hit Puerto Rico, it became clear that help was needed at NFP’s Puerto Rico office, Ikon, which housed 75 NFP and Ikon employees. “It became very clear, very quickly that there were not enough provisions of emergency supplies,” said Lara Nichols, senior vice president of procurement for NFP. “Food and water were of primary importance, but we also knew we needed to put some supplies in the hands our people to help customers,” she said. NFP partnered with Univision and Ankura for hurricane relief. Univision and NFP chartered a passenger plane rigged as a freight plane with 2,000 pounds of supplies that arrived within days of the hurricane. The supplies included transistor radios, prepaid cell phones, batteries, food items and other necessities. Two more shipments of 2,500 pounds of food and 30 generators also were sent, funded by NFP’s GoFundMe page to which employees also donated. There are countless stories of charitable efforts by the insurance industry beyond those in this issue of Insurance Journal. As IICF’s Breese says, “The industry has been incredibly responsive and generous during this very difficult disaster driven year.”
Texas Mutual Insurance established a $10 million grant program for policyholders. DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 19
NATIONAL | Special Report | The Charity Issue
The Keane Insurance Group John Keane, president of The Keane Insurance Group, founded the Keane Charitable Group in 2010 after the earthquake in Haiti. Since then, The Keane Group has raised more than $1 million to build an orphanage, a well, a school and a medical clinic. It has sent more than 120 doctors, nurses, dentists and orthodontists to Haiti to provide medical care for families in Gonaives. The Keane Charitable Group’s future focus is in orphan prevention through economic development so families can provide for themselves and stay together.
Plastridge Insurance
Plastridge Insurance has supported the South Florida local communities since 1919 with a commitment to integrity and trust. Its endurance in the industry is a testament to its vision of consistency and exceptional relationships within the community. Plastridge Insurance is a family owned and operated business. Its team focuses on giving back, and Delray Reads is one of its favorite annual events to help inspire young children to read for themselves, grow their skills and pave a better future. This year's book was 'Thunder Boy Jr.' by Sherman Alexie.
Higginbotham Higginbotham established the Higginbotham Community Fund in 2011 in partnership with the North Texas Community Foundation to provide monetary support to nonprofits operating in its markets. It is funded by employee donations and pledges. Grants from the donor-advised fund are distributed to nonprofits selected by an advisory committee comprised of Higginbotham employees. Since inception, the Higginbotham Community Fund has amassed more than $1.4 million and granted more than $980,000 to hundreds of nonprofits in Texas and Oklahoma.
Insurance Professionals of Los Angeles Inc. The Crichton Group
The Crichton Group, a Middle Tennessee-based independent insurance agency, started the Crichton Throw Down cornhole tournament in 2016 to benefit the Cystic Fibrosis Foundation. In its inaugural year, it raised more than $70,000. In 2017, it raised $90,000. The Crichton Group's co-chair and former president Bob Jackson’s niece and nephew both suffer from cystic fibrosis. In addition to the Throw Down, The Crichton Group donates more than $200,000 to the Middle Tennessee community.
Target Markets Program Administrators Association
Tomlinson & O'Neil Insurance Agency Inc.
On Nov. 28, 1942, Thomas O’Neil, his wife, Catherine, his sister, Isabelle, and her date, Dr. William O’Connor, were overcome by fire at Boston nightclub, the Cocoanut Grove. Dr. O’Connor survived with burns to his hands, but the O’Neils perished. Even after 70 years, Thomas and Catherine’s grandchildren thought all who perished that night should be remembered. Hence, the Thomas H. and Catherine D. O'Neil Charitable Foundation was established to raise and distribute funds for the benefit of pediatric burn patients and their families in memory of all 492 victims of the Cocoanut Grove fire.
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IPLA is a non-profit organization. It is a chapter of the International Association of Insurance Professionals. As members, one of its goals is to support the community. It does this by volunteering services or donating to various causes. IPLA has contributed to MEND, Food Bank of San Fernando Valley, Dress for Success and Rachel's House, as well as others. Each year, the organization decides which group or cause to support. This December, it is building survival bags for the homeless to be distributed to those in need.
Preferred Insurance Services
Preferred Insurance Services' team focuses on family support in the community. It volunteers at local homeless shelters once a month, providing warm breakfast foods and organizing a fundraiser once a year. It also works with the local ReStore each month. During the summer, Preferred works with HomeAid of Northern Virginia to collect new backpacks for homeless children. For the holiday season, it adopts a family. Additionally, it is an official drop-off location annually for the Toys for Tots holiday campaign.
TMPAA Charities has provided more than 1,000 care packages to active duty military personnel, funded educational sponsorships for the Academy of Risk Management at St. Joseph’s University, made grants totaling more than $100,000 for groups supporting education and job development and made hundreds of micro loans in third world countries. Funds are raised through member donations and the Annual TMPAA Charities Networking Golf Tournament. TMPAA Charities was created in 2006 to allow members of the Target Markets Program Administrators Association to share their financial success with others in need of assistance. INSURANCEJOURNAL.COM
Risk Management Solutions
Each year, RMS selects outstanding candidates with relevant professional expertise and a passion for creating a positive impact from its employee and client base to participate in a 10-day international trip to build more resilient housing and schools with Build Change. While working with Build Change, RMS employees and clients facilitate the organization’s mission to greatly reduce deaths, injuries and economic losses caused by housing and school collapses due to earthquakes and typhoons in emerging nations.
Pacific Specialty Insurance Company
Fisher Brown Bottrell Insurance Inc.
This year for Halloween, Fisher Brown Bottrell Associates volunteered at the annual Halloween at the YMCA for special needs kids in downtown Pensacola, Fla. They welcomed 319 children with special needs from area schools for a morning of trick-or-treating, face painting, characters, dancing, food and fun. Fisher Brown Bottrell has participated as a sponsoring organization for the past three years and won this year’s theme and spirit contest. Fisher Brown Bottrell’s winning theme was Alice in Wonderland.
HUB International Northeast
HUB International Northeast has participated in the Insurance Industry Charitable Foundation “Week of Giving” since 2010. For this year’s project, it chose Feeding America, whose mission is to collect food and deliver it to soup kitchens, food pantries, homeless shelters and community food programs. As part of their week long “Help the Hungry” campaign, employees throughout HUB Northeast’s regional offices hosted food drives and fundraising events. As a result of their efforts, over 70 boxes of food and monetary donations were collected to benefit those in need.
During the California fires, the Pacific Specialty Insurance Co. claims department worked to aid those dealing with the destruction. Hundreds of structures insured by PSIC were either demolished or heavily damaged. This disaster hit close to home. Because of this, the PSIC claims team took a more personal approach to customer care. Some even left the confines of the Northern California offices and went on site to meet with individuals who needed to file a claim. All hands have been on deck to provide support and assistance to policyholders.
LP Insurance Services Inc.
Destiny Insurance & Investment Services
Destiny Insurance & Investment Services helps youth reach their potential by taking them to community projects. The firm has previously taken them to the first year health and wellness symposium. As it was preparing for the one this year, the area was hit by Hurricane Harvey. The firm turned its attention to Recover Houston by donating clothes and household goods to those hit by the storm. The firm is also involved in a faith-based nonprofit organization that helps people rise up mentally and spiritually after a disaster like Harvey. INSURANCEJOURNAL.COM
Bryan Insurance Agency
In 2012, Bryan Insurance Agency began Bryan Cares. Through this program, each employee is given up to one paid day off per quarter to volunteer. Team members have helped feed firefighters who were in Graham during the Possum Kingdom Lake fires, worked in a food pantry and shopped to fulfill Angel Tree wishes. Bryan employee Denise Kunkel used her Bryan Cares day this quarter to volunteer for Open Door Christian School’s Fall Fest. The school puts on an annual Fall Festival and Pumpkin Run to raise money for scholarships and school equipment.
KMRD Partners Inc.
KMRD Partners is delivering spiral cut hams to the Keystone Opportunity Center, located in Souderton, Pa. KMRD employees will be delivering nearly 1,500 pounds of ham – enough to feed more than 200 families during the holiday season. KMRD has again partnered with Leidy’s Simply Delicious, which has been feeding pork products to hungry people for over 100 years. KMRD was also a participant and Corporate Sponsor for the first annual Doylestown, Pa., Swamp STOMP 5k & Walk on Oct. 14. KMRD helped raise over $20,000 to support the nonprofit, Bringing Hope Home.
LP Insurance Services Inc. supports and is involved with numerous organizations, including the American Heart Association's Go Red for Women campaign, the Northern Nevada Food Bank, St. Vincent's Dining Room at Catholic Charities and its own local softball league. The firm is a supporter of local universities and high schools, as well as builder's organizations and business groups. The firm's annual giving benefits more than 100 entities throughout its footprint, and its team member involvement includes hundreds of hours of support.
DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 21
NATIONAL | Special Report | The Charity Issue
Crocker Insurance Associates
Heffernan Insurance Brokers Grand General Agency
This year, Grand General Agency’s annual fundraiser, the Worm Burner Golf Outing, benefited HUGS Ranch, which provides free equine therapy to hurting kids and teens in the community. The ranch depends on volunteers and donations. Last summer, over 300 children battling depression, anxiety, bi-polar, abuse, homelessness, loss and more visited the ranch. “This really works. It changes lives for the better. I’ve seen it happen at HUGS Ranch in an old barn staffed by volunteers and funded by donations,” said an employee.
Heffernan believes giving back is the right way to do business. It holds an annual Heffernan Day of Service where employees can bring their family to volunteer with them in their local communities. Each year, Heffernan volunteers with more than 20 local nonprofit organizations doing work such as painting, gardening, working in soup kitchens, beach clean-up and habitat restoration. Heffernan also offers college scholarships and work study through ICA/Cristo Rey programs. In 2017, the company sent a group to Houston to assist with Hurricane Harvey Recovery.
Irving Weber Associates Inc.
Irving Weber Associates (IWA) ran a hurricane relief campaign for businesses affected by the hurricanes in the South. The agency set up a "Go Fund Me" account to collect funds. IWA solicited donations and assistance from industry leaders both in the insurance community and the dry-cleaning industry, and the Drycleaning and Laundry Institute (DLI), the national association for the industry, joined in on the efforts with a donation. IWA collected more than $7,000 by the end of the campaign.
The Starr Group
The Starr Group’s "Best of the Best" and "Fun Committees" look for ways to make an impact. Employees who want to wear jeans on “Casual Fridays” each donate $2 that goes to a charity of the company’s choosing. In the fall, the company does a food drive for a local food bank. More than 135 pounds of food was collected by its Hunger Task Force in the past few months. Each year, employees also select a new charity to be supported office-wide. Since 2016, the company has supported the Make-A-Wish foundation, helping two kids and raising almost $7,200. In the spring, it holds a community blood drive at its office. This year, it donated enough units of blood to help save 75 lives.
Every September, Crocker Insurance Associates participates in North Texas Giving Day, which this year raised more than $39 million in donations for local non-profits. On a community level, Crocker Insurance contributes to the North Texas Community Food Pantry and to a metroplex outreach program for the homeless Metro Relief. It also supports area animal rescue groups such as Humane Tomorrow, Animal Investigation and Response and Angies Freinds. The agency said it has non-profits as clients and knows how hard they struggle, so although it is small, it tries to give whatever it can.
Tokio Marine Group Munich Re America
This year, Munich Reinsurance America Inc. sponsored an Epic Day of Giving that culminated in a $50,000 donation for the National Day of Giving. All employees were invited to submit an application on behalf of a local non-profit organization. The Charitable Giving Committee narrowed the applications down to five finalists, and employees cast their vote for the “winner” based on the community impact of the organization. The Foster and Adoptive Family Services was selected and received a $50,000 donation at the end of November.
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Coffey & Company
Coffey & Company encourages staff to support community nonprofits. The business has dedicated resources to No More Stolen Childhoods, an organization founded in 2004 to address childhood sexual abuse. Thanks to the support of Coffey & Company, No More Stolen Childhoods completed a research-based white paper on the systematic challenges for mandated reporters and abuse victims, began working on videos to educate adults on the need for intervention and partnered with local therapists to provide counseling services for abuse victims.
Earlier this year, several Tokio Marine Group companies in North America joined together to participate in the One Warm Coat® Challenge. One Warm Coat is a non-profit organization whose mission is to provide those in need with a warm coat, free of charge. Together, employees collected more than 1,200 coats, over 250 winter accessories, and more than $16,000 for the organization, warming 33,000 people nationwide. Participating Tokio Marine Group companies included: Tokio Marine America, Philadelphia Insurance Cos., Safety National Casualty Corp., Reliance Standard Life Insurance Co., First Insurance Co. of Hawaii, and TMNA Services. INSURANCEJOURNAL.COM
Insgroup Inc.
Pearl Insurance Empower Insurance
Empower Insurance worked quickly to aid its Houston agents who were in distress in the aftermath of Hurricane Harvey. It launched the Empower Hurricane Harvey Relief Project to provide financial support to its agency partner’s whose homes and businesses were damaged by Harvey. Thanks to the Relief Project, Empower donated $100,000 to more than 100 agents and their families. Empower later met with its Houston agents and celebrated the recovery efforts for Hurricane Harvey at the After the Storm Celebration.
An 8-foot giant squid and a sunken pirate ship are not usually what you find among underwriters, customer service agents, and sales executives, unless you are walking through Pearl Insurance in Peoria Heights, Ill., during Spirit Week. For the 15th year in a row, Pearl Insurance hosted a week of Halloween-themed events for its employees and their families in support of the Heart of Illinois United Way. The privately held company has raised over $160,000 since 2008 through their creative and engaging annual event. "Whoever said insurance isn’t fun obviously doesn’t work for Pearl," joked CEO, Gary Pearl, whose father founded the company in 1954.
Infinity Insurance
"Read Conmigo" represents one of Infinity Auto Insurance’s largest investments in the community. By providing parents with free bilingual books, apps, and online resources, Read Conmigo bridges the gap for many parents who hesitate to read to their children in English or Spanish due to language barriers. The program has already distributed more than 1 million free books to classrooms and families, and receives support from more than 15,000 educators with a member base of 146,000 families.
Safety National
USLI
Giving back is important to USLI. “We practice what we call “Capitalism with Heart” – harnessing our day-to-day success and seeking out ways to give back so that we can make a sustainable difference,” the company said. It raised $67,000 for Breastcancer.org, a breast cancer information resource, through an online auction. It also gave 1 percent of all new business premium for a total of $250,000 to help Breastcancer.org. With support from USLI’s customers, it donated thousands of dollars to the Red Cross to help those affected by Hurricanes Harvey, Irma and Maria. It also put a drive together to collect food, hygiene and survival items to ship to Puerto Rico. INSURANCEJOURNAL.COM
Insgroup experienced first-hand the destruction of the flood waters of Hurricane Harvey when reports came in of employees losing everything. “Suddenly our employees that helped support our surrounding community were the ones in need,” the company said. Insgroup setup an internal program for those employees who needed financial assistance for losses not covered by insurance. After six weeks of dealing with the claims of Hurricane Harvey, Insgroup supported employees in the Houston Corporate Run 5K at Memorial Park. The event promoted health and fitness in the workplace.
AIG
AIG has been a partner of Junior Achievement as part of its financial education and workforce readiness commitment. Since 2014, nearly 1,000 employees have volunteered to support programs that empower young people to achieve financial success. In 2016, AIG invested over $500,000 to support 14 U.S. and six international cities, helping nearly 24,000 students in 1,022 different classrooms. In addition, over 380 AIG employee volunteers served Junior Achievement by volunteering in the classroom, serving on board, and hosting fundraisers and student activities in their local offices.
Knight Magee Insurance
On July 18, 2017, the KMI team presented a $2,000 donation to Sanctuary Rescue in Midlothian Va., through the Safeco Insurance Change Agents campaign. The program rewards independent agents whose volunteer efforts make a difference in their local communities. Sanctuary Rescue specializes in helping pets in need, such as pregnant dogs, those with still-nursing puppies, or orphaned puppies. “We know that Sanctuary Rescue is helping to save dogs who might not get a chance otherwise, and that’s something we support 100 percent,” the company said.
In October, Safety National held a fundraiser to benefit the United Way of Greater St. Louis, which funds 170 non-profit charitable agencies in the St. Louis metropolitan area. Donations were collected throughout the day. That evening, Safety National’s band, "Driven to Excess" (comprised of employees), took the stage in the United Way’s Battle of the Corporate Bands. The winner of the battle was determined by the corporation that brought in the most donations. Safety National competed against four other area corporate bands.“Driven to Excess” was awarded first place from its fundraising efforts. Of the nearly $30,000 total raised at the event, nearly $12,000 was a result of Safety National’s employee donations.
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NATIONAL | Special Report | The Charity Issue
Rogers & Gray Insurance Rogers & Gray Insurance employees and their families contributed this year to Together We Rise, which supports programs for children in foster care. The team bought, decorated and filled 160 duffle bags for local Cape Cod, Nantucket and Southeastern Massachusetts foster children. After learning that the children are going into foster care with their belongings stuffed into trash bags, the Rogers & Gray team knew they wanted to support the “Sweet Cases” program. The bags were donated to Child & Family Services.
Robertson Ryan & Associates The Wellness Committee at Robertson Ryan & Associates this year spearheaded the organization of a staff Community Service Day, and 124 Robertson Ryan employees hit the streets of greater Milwaukee and La Crosse, Wis., and Ft. Myers, Fla., to take on various projects benefiting charities and non-profits. The employees performed tasks such as painting, seasonal grounds cleanup, making blankets and baking. “We recognize our business is about people and want to thank those who have helped us succeed along the way,” said Allan Degner, Robertson Ryan & Associates.
First Insurance Company of Hawaii Ltd. PIIB
In October, California wildfires destroyed over 5,000 structures in a handful of days. PIIB affiliates had more than 200 total losses including the house of one of its agency’s principals. PIIB donated $5,000 to assemble care packages for agencies to give to their clients and asked affiliates to donate what they could. Within 24 hours, PIIB affiliates donated more than $7,500. 150 care packages were assembled that included general toiletries, a blanket, masks and gloves, and a $50 gift card.
South & Western General Agency
HNI Risk Services, LLC
HNI Risk Services Inc. supports the community through its CARE committee. CARE is an acronym for Community Advocates Responding Effectively, and the committee leads by example, encouraging team members to give time, talent and treasure. In 2017, HNI instituted a payroll deduction option for its Charity Match program and increased donations by 45 percent over the prior year. HNI also provides all employees with four hours of paid volunteer time per year, and employee volunteer hours increased 66 percent in 2017. HNI’s 2017 all-location charity of choice was Kid’s Chance, and employees in each of the company's four locations selected a local charity to support.
Hawaii Meals on Wheels (HMOW) is a local nonprofit that has been organizing lunch deliveries to elderly and infirm residents on Oahu for more than 35 years. First Insurance Company of Hawaii Ltd.'s partnership with HMOW spans 10 years, with associates delivering approximately 800 meals annually to homebound residents who live near its Honolulu office. Every Thursday and Friday, fOur associate volunteers pick up meals prepared by a nearby hospital and transport them to the homes of HMOW service recipients.
Capstone Search Group
Capstone Search Group in Clive, Iowa, believes in the power of giving and is proud of its employees’ philanthropy and volunteerism. Each year, employees choose a charity to support. In 2017, the chosen charity was St. Jude Children’s Research Hospital. Employees donated money each month, and because of those donations, they were able to dress casually at the office. Capstone matched 50 percent of their total donation and together, the team raised $1,000 for St. Jude's. For Thanksgiving, Capstone employees again came together to stock the shelves of an in-house food pantry at a local elementary school.
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Norman-Spencer
Norman-Spencer Agency Inc.’s nonprofit, NS Cares, helped more than 30 national and local charities in 2017. Through Brackets For Good, an online, bracket-style fundraising tournament, NS Cares raised $28,797 through 156 individual donations. As the 2017 Brackets For Good Cincinnati champion, NS Cares received an additional $10,000 grant from title sponsor, Bingham Greenebaum Doll. The money supported the Leukemia & Lymphoma Society's Tri-State Southern Ohio Chapter, Pink Ribbon Girls, Brigid’s Path, YWCA Dayton and Pets in Need.
Each year, South & Western employees look forward to giving back to the local community. South & Western is currently working with a small, local no-kill animal shelter called Texas Little Cuties, whose founder and sole operator has proven that passion for work can go a long way. Each weekend, South & Western employees volunteer their time to get animals adopted, and this year, have also held several fun, interactive events to raise money that will directly help these abandoned dogs and cats enjoy their second chance at life. The dog toy Christmas drive is one of S&W's favorite events.
INSURANCEJOURNAL.COM
Baldwin Risk Partners
Brightway Insurance Hanson & Ryan Inc.
Hanson & Ryan Inc. is involved with various charities over the course of the year. Every month, employees participate in “Blue Jean Fridays,” in which employees donate $10 per month for the right to wear jeans on Fridays. This money is donated to a local charity or cause nominated by Hanson & Ryan employees. This year, employees chose the Wayne Animal Shelter. In addition to buying supplies for the Wayne Animal Shelter, a group of employees donated their time volunteering at the shelter.
While Brightway is involved with many community organizations and charities throughout the year, the primary recipient of the company’s giving is the United Way of Northeast Florida. At the beginning of the year, Brightway kicked off a campaign to encourage employees to donate to the United Way. Employees who wanted to donate could write a check or sign up for payroll deduction, where a portion of each paycheck goes to the United Way. Brightway founders David and Michael Miller also support the Community Foundation of Northeast Florida.
Church Mutual Insurance
Church Mutual and its employees have long supported a variety of charitable organizations. In 2016, Church Mutual established its CM CARES foundation to make an even bigger impact locally and nationally. CM CARES makes contributions to charitable, educational and religious causes that advance the human condition. The foundation has given support to more than 100 causes, including education programs at Jewish schools, city park programs, memorial events, ministries that mentor at-risk children and more.
Frank H. Furman Inc.
Tompkins Insurance Agencies
Tompkins Insurance Agencies presented a donation in May to the Brockport Ecumenical Food Shelf, a not-for-profit organization supported by the churches, service organizations and the generosity of residents of the Brockport community. Founded in 1972, the mission of the Brockport Ecumenical Food Shelf is to reduce hunger by providing food relief to eligible residents.
INSURANCEJOURNAL.COM
Baldwin Risk Partners is dedicated to championing the communities it serves. Colleagues are encouraged to invest in charitable foundations that are special to them, and each colleague is afforded 24 hours of community service time. One of the group’s most passionate projects has been in support of a founding colleague who was fiercely fighting liver cancer. In addition to donations raised through the company’s Casual for a Cause program, homemade meals, and hundreds of cards and care packages were sent to Patrick Markey and his family.
Philadelphia Insurance Cos.
Philadelphia Insurance Companies' TEAMPHLY believes in health and wellness for a greater purpose. PHLY has contributed more than $34 million dollars to charitable organizations since 1980. In 2002, PHLY implemented a Jeans Day program in which employees are able to wear jeans to work on Fridays for making a $1 donation. In addition, PHLY contributes $1,000 per organization. PHLY also has been a long-time supporter of the March of Dimes. As the title sponsor for the run event, PHLY helped to support a Kid's Fun Run which was an incredible success this year.
MJ Insurance
Each year, Indianapolis-based MJ Insurance chooses two "Charities of Choice" in which to focus volunteer and fundraising efforts and actively gets involved in the charity itself. In addition, MJ’s associate volunteer service hours and charitable donation matching programs are designed to reinforce and encourage this culture of giving back to the community. MJ associates volunteer with dozens of other organizations, serving several thousands of hours per year. The agency recently completed a 30in-30 campaign where in 30 weeks, more than $30,000 was raised.
The staff at the Furman H. Agency concentrates on giving back to children’s charities that will help advance their education and give them an opportunity to succeed in life. The agency sponsors local walks and runs, hosts school supply drives and holiday toy drives, funds college scholarships and supports local events. The holiday season is truly about being thankful, caring, generosity, and most importantly, enjoying the holidays with loved ones.
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NATIONAL | Special Report | The Charity Issue
CSIS Northern California Insurance Professionals Every year, insurance professionals from Northern California and beyond gather together for a day of skiing and snowboarding in the name of charity at the Annual Northern California Insurance Professionals Ski Day. The 2nd annual event, held this year in Norden, Calif., benefitted Lilliput Children’s Services. The event raised over $2,500 and gathered hundreds of coats for children. The Northern California Insurance Professionals will host its 2018 Ski Day on March 8-9 in Bear Valley, Calif.
Harford Mutual Insurance Harford Mutual Insurance celebrated 175 years of protecting policyholders in 2017. Paying homage to its beginnings in 1842 as The Mutual Fire Company of Harford County, Hartford Mutual Insurance thanked its local firefighters by serving a dinner from Mission BBQ to all 11 fire houses in the county. Over a five-week period, the company served more than 650 volunteer firefighters and EMS crews at their monthly station meetings. Additionally, Hartford Mutual Insurance gave $175 to every employee to donate to any charity of their choice.
XS Brokers Inc.
XS Brokers serves as the main corporate sponsor for the Boston's Biggest Disco's annual fundraiser event, a non-profit organization committed to providing support for cancer patients being treated by the Dana-Farber Cancer Institute. In just two years, the organization has raised and donated just more than $150,000.
ProAssurance
York International
York International has a long-standing history of community involvement, with a focus on Westchester County. In September of this year, York International Cares participated in a Fall Bake Sale for Charity, in which York Employees and their families took time to make homemade goods. York International matched the funds raised and all proceeds went to help the various charities in Westchester. Additionally, York International participated in Giving Tuesday – Lifting Up Westchester – at the Samaritan House Women’s Shelter this November. Through this event, employees volunteered to help paint halls, metal doors and bathrooms at the shelter.
The employees at CSIS Insurance are more than coworkers; they are family. Many CSIS Insurance employees have had a personal tie to cancer, and through these hard times, the company's family environment has been beneficial in working together to overcome battles and support each other. CSIS Insurance has continuously supported cancer research through its participation in annual walks. It has participated in five walks collectively as an office. This October, the company participated in a walk for breast cancer and raised more than $1,000 to donate to the American Cancer Society.
Federated Insurance
More than 50 businesses and several hundred private citizens gathered at The Saint Paul RiverCentre in St. Paul, Minn., on Sunday, August 6, 2017, for the 13th annual Federated Challenge for Kids of Minnesota. Corporate sponsors and attendees generated more than $2.7 million during this charitable event. The money raised was donated to Minnesota’s three Big Brothers Big Sisters agencies to support operations and the Federated Challenge Scholarship Fund.
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Eastern Insurance
Eastern Insurance Group LLC gives back to the community it works in through its parent company, Eastern Bank, and the Eastern Bank Charitable Foundation, which has donated more than $100 million to non-profits and charitable foundations since 1999 and supports more than 1,500 charities annually. In 2017, Eastern Insurance employees volunteered more than 2,300 hours of their time to charitable foundations and non-profit organizations in their communities and around the world.
This fall, ProAssurance’s headquarters in Birmingham, Ala., raised more than $219,000 for the United Way of Central Alabama Inc. The Birmingham office has supported United Way for 20 years and established a Campaign Committee to organize fundraising events. During the campaign finale, the Campaign Committee presented donations to the United Way of Central Alabama with snacks, prizes and a photo presentation of the week’s events. ProAssurance Companies support local United Way campaigns nationwide. Pictured: ProAssurance presenting a check to United Way of Central Alabama.
INSURANCEJOURNAL.COM
Westfield Insurance
Ross & Yerger Insurance Inc. All Risks Ltd.
To the employees of All Risks Ltd., helping individuals rebuild after catastrophic events means going beyond the insurance function of servicing claims. When Hurricanes Harvey, Irma, Maria and Nate struck, All Risks answered the call to aid the many families, communities and organizations affected by the storms. The firm and its employees, located across 30 offices, donated more than $49,000 to hurricane relief and rebuilding efforts. Associate Broker Jason Wagner drove 16 hours from Phoenix to Houston to deliver non-perishable food items, water, supplies and clothing.
Ross & Yerger gives a percentage of its operating profit each year to various nonprofit organizations in its communities. Over the years, it has supported more than 130 charities throughout Mississippi and Louisiana through its "R&Y Cares" Charitable Contributions Committee. One organization Ross & Yerger has supported for more than 20 years is the Juvenile Diabetes Research Foundation (JDRF). Each year, the company has various fundraisers to raise money for its R&Y JDRF One Walk Team. This year, it raised more than $30,000 for the walk.
Minnesota Insurance Group
Minnesota Insurance Group hosted a class at the beginning of December that taught individuals how to properly do CPR on adults, children and babies, along with AED training. The event was free to attend, and all donations went toward the purchase of a portable AED that the agency is donating back to a local business. Minnesota Insurance Group hosted this class in honor of an employee who it lost to sudden cardiac arrest in November 2017. The agency knows that having current CPR knowledge and a level of comfort with the use of an AED are critically important skills.
Insurance Council of Texas Education Foundation
Allegiance Insurance Services
Allegiance Insurance Services Inc. has been in business for 13 years, and three years ago, it recognized it was missing out on the opportunity to give back to its community. Each year since, it has raised money for a local charity called Disabled Patriots Fund, it has a Thanksgiving food drive, it is a drop-off site for Toys for Tots, and it also takes on any opportunity to have a collection and support local schools. Allegiance Insurance Services likes to take on any opportunity to give back.
INSURANCEJOURNAL.COM
Westfield Insurance and the Westfield Insurance Foundation exist as a dedicated community and industry partner, concentrating resources to have an impact on business and community safety, long-term disaster recovery and family stability. The Foundation donates $3 million annually to a variety of charities. On Monday, Dec. 4, Westfield shared its 2017 Holiday Card via a video on social media with an ask to share the video. The more the video is shared, the more Westfield will donate to the Center for Disaster Philanthropy, its disaster recovery partner.
Swiss Re
Swiss Re's charitable commitments focus on the Swiss Re locations where it runs the Charity of the Year (COTY) program. Each year, Swiss Re employees in offices with more than 50 employees elect a local charity to be their COTY. The chosen charities benefit from a financial contribution from the Swiss Re Foundation as well as volunteer involvement and fundraising efforts. In 2017, Swiss Re organized – in collaboration with its COTYs – a total of 24 Community Days in the Americas. More than 500 employees participated and served more than 2,000 volunteer hours.
New Empire Group Ltd.
New Empire Group Ltd. is a family owned MGA located in Long Beach, N.Y. Since its foundation, New Empire Group has made it a priority to be involved in and give back to its community. New Empire Group has a designated Community Service Team which participates in and organizes charitable events throughout the year. A few of these events have included collecting coats for the annual Long Beach Lions coat drive, collecting canned goods and purchasing turkeys for the Long Beach Soup Kitchen, and participating in walks and runs to raise money for organizations.
In 2002, the Insurance Council of Texas (ICT) recognized the need to encourage students to consider careers in the property/casualty insurance industry. ICT began funding scholarships to Baylor University, the University of Texas at Austin, and the University of North Texas in support of their insurance and risk management programs. Funds for the scholarships come from insurance companies who sponsor ICT’s annual property/ casualty symposium and individual donations from industry professionals. The program has now given more than $1 million in scholarships and education funds to 12 schools and nearly 500 students.
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Idea Exchange
The Wedge
New Year’s Letter to My Boss
By Randy Schwantz Dear Charlie,
A
fter having worked for you for 22 years, I can attest, you’re a great guy and a great friend. I appreciate the times you were there for me when I was having personal hardship; it truly means a lot. Charlie, you’re one of the nicest guys I’ve ever met. As a producer working for you, I’ve built a $275,000 book of business over these past 22 years. In a way, that’s a lot to be proud of. With our 40 percent payout, I make $110,000. That’s more than most people in America. It’s enabled me to take care of my family and provide them a good place to live. Charlie, you leave us alone as producers. You’ve never made me go to any sales training. You’ve never made me use any prospecting systems. You’ve never made me pick a specialty or develop an expertise. Your sales meetings are like marshmallow sessions; you always take it easy on us. Charlie, you’re the nicest guy. Charlie, you have some innate talents the rest of us don’t seem to have. I’ve been impressed with how you’ve been able to build a book of business much larger than mine. I never could figure out how you did it. While I’m making $110,000, you’re making $400,000. You drive a very nice car, I
drive a car. You belong to a great country club, I go to public courses to play golf. I’m not envious of you, I’m envious of a producer I met from a different firm. I admit, he doesn’t have it as good as I do. He said his boss is a slave driver and makes him come to sales meetings. They put their guys on a hot-seat and make them defend their reason for working on an account. Heck, you let us quote on anything. His boss makes him manage a pipeline of prospects. You don’t. You said we’re all adults and you treat us that way. His boss makes him do in-depth goal setting for his life not just for current year new business. All you ask is for us to give you a new business number; then you never say anything when we don’t hit it. His boss makes him get competitor proposals to learn about the competition. You told us, don’t worry about the competition; just to sell ourselves. His boss virtually makes him be more successful. You don’t make us into any-
28 | INSURANCE JOURNAL | NATIONAL DECEMBER 18, 2017
thing and that’s why I’m writing you this letter. His boss makes him work on larger accounts. You’ve always said you like small business. Charlie, I always thought I could be a better producer. But, you’re my head coach, and it seems that you don’t believe in me enough to push me, train me or coach me. I know the producer I met at the other firm; his boss believes in him. That’s why he expects so much. I’ve started to wonder recently… just how big would my book be if I worked for him? If I had his coaching and guidance? Charlie, I know what you’re going to say: “Give it some time and things will be better.” Charlie, it’s been 22 years and this guy I met is only three years into the business and his book is bigger than mine already. Charlie, if I could ask you to do one thing, here it is: Expect more of your producers. They deserve it. Treat them like men and women who have big financial responsibilities at work and at home.
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Charlie, I hope you’ll accept my resignation in a respectful way. Sincerely, Robert “Don’t Want to Be Average Anymore” Belldinger P.S. - Charlie, I know that having everyone like you is more important to you than anything. When you raise your expectations, don’t expect everyone to be cheering. On the inside I think they all want to be better too, but on the outside, they won’t show it. We’re all a little afraid of the idea that maybe we can’t measure up to expectations. They will probably push back, moan and groan. But, please Charlie, don’t give up. It’s their future that’s at stake here. It will impact where kids go to college. It will impact how much fun they can have when they retire. And it impacts how they see themselves today. Charlie, please, help them be more of who they can be.
Dear Reader, this is a fake letter, but a real situation.
Just recently, a producer came to my workshop. I asked him why he was there, and what he wanted to accomplish. He told me he’d read some of my information about increasing your savings capability by 10 times, and specifically the part that most producers should be saving between $45,000 and $65,000 per year. He wasn’t close to that after 22 years in the business. He asked his boss if he would pay for him to go to the workshop, and his boss said he didn’t feel it would be useful. So, he decided to pay his own way to the workshop. After getting to know him and what he wanted to do for himself and his family, I introduced him to a young guy who was about 26 years old, who’d been in the business for three years. Once he compared his old-world agency to a new-world agency, he decided it was time to make a move. We’re coming upon a New Year. Some
people will make excuses for why things are the way they are, and others will make decisions to change it. If you’re not happy with your current situation, change it. It’s the most fair thing you can do for your family and yourself.
Schwantz is founder of The Wedge Group. Phone: 214-446-3209. Website: www.thewedge.net. Email: randy@thewedge.net.
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DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 29
Idea Exchange
Minding Your Business
6 Industry Trends to Exploit for 2018 adapting quickly will usually be in a better position than those that do nothing. The trends discussed in this article can impact agencies at the macro level, the micro level or both. The macro level includes changes that start outside the agency and then trickle down somehow to the agency itself. Micro level changes are seen immediately in the agency. Below are the six key trends insurance agencies should be tracking for 2018.
By Catherine Oak and
Bill Schoeffler
T
o prepare for the future, business owners need to observe what trends are occurring and then evaluate how those trends could impact their business. It is a guessing game, but an educated guess is usually proven to be better than a random guess, or no action at all. The insurance industry is so intertwined into the economy and society that just about any noticeable change in either will have some impact for the insurance industry. For the insurance agency, much of what affects the business has external origins. Agencies are not in charge of regulations, government policies, technology, actuarial analysis, consumer demands, etc. That is why it is imperative for agency owners to watch and learn about major trends when they start. Those that start
Federal Government Policies and Legislation
The two biggest federal policies and the most discussed issues are healthcare and taxes. Surprisingly, one year into the Trump administration, there has been no definitive legislation on either of these. Even the policy approach has been modified over time, especially toward the Affordable Care Act. The “repeal and replace” movement has been muted with a plan in the house. As of the writing of this article, tax reform/legislation has been proposed but not yet voted on. From the insurance agency perspective, tax reform will have its initial and perhaps biggest impact directly on owners’ and employees’ personal income taxes. This includes any changes to corporate taxes since most agencies are privately held. There will be a cascading effect across the economy, but this won’t happen right away; it will take time to develop and will be broad in scope. The current approach in the proposed legislation is to reduce corporate taxes and then offset that with the elimination of some deductions. The range of personal tax rates might be the about same, however, the number of brackets would be reduced. The intent is to grow the economy by incentivizing businesses with a lower tax rate. Many agencies tend to be S-corporations and LLCs, which are often “pass through” entities, meaning the business taxes flow through the owner’s personal taxes. Therefore, a lowering of
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corporate taxes will not change much for many agency owners. Most likely capital gains will stay the same or be reduced, but that only affects owners if they sell their agency. Health care has a much bigger impact on the agency business. First, most agencies offer insurance to their employees. So, obviously, any changes to the Affordable Care Act will have ramifications on the business’s financials and the policy toward employee benefits. Next, any changes will also impact the business model for those agencies that sell health insurance. It is possible that a change to the current system could affect premiums, commission rates and even the ability to sell health insurance. Despite the lack of new legislation, there have been a few executive actions that need to be tracked. President Trump eliminated the reimbursement to health insurance companies that President Obama allowed via executive order. This will mean that any losses companies face will not be subsidized. The companies have increased their 2018 rates to cover previous losses in anticipation of these change.
Technology
The pace of technological change is breathtaking. This overall trend will influence insurance agencies on many levels. Trends in technology will reshape society, INSURANCEJOURNAL.COM
how insurance works, how insurance companies operate and its final use at the insurance agency. The ubiquitous use of smart phones is a multi-level trend for agencies. For example, people now have the expectation that they can do just about anything instantaneously because they not only carry a telephone but also a computer with internet access. Distracted driving due to smart phones has caused a spike in the severity of auto accidents and insurers will increase rates to account for the jump in claims. However, in the long term, technology will resolve the distracted driver problem. The proliferation of self-driving cars is perhaps less than 10 years away, which could eventually lead to the elimination of personal lines auto insurance. Smart phones are becoming the preferred tool for consumers to handle their insurance needs. Most insurance companies have a phone application, which allows the insured to file a claim at the scene of an accident, with pictures and all the details needed. Consumers want to access and pay for their accounts on their phone. There are also lots of tools that allow for agency producers to perform sales and service on their phone. Other long-term technology trends to watch are artificial intelligence, blockchain technology, the built-in use of technology in products and wearable technology. These trends will shape the role of insurance and how it operates within the next 10 years.
For example, artificial technology will reduce the need for jobs like underwriters, customer service staff and even sales staff. Blockchain technology of some form, which started with bitcoin will become the way data is collected, stored and distributed since it allows for total transparency, it is not corruptible, and it is widely distributed. Wearable and builtin technology will reduce risk, and cause a shift in how liability is assigned.
Market Conditions Impact
The current trend is that rates are starting to somewhat firm in commercial lines. Soft market pricing trends have shown up in various lines and in various regions around the country from about 2007 through 2016. According to sources such as the IVANS Index and Market Scout, premium rate increases are occurring across most commercial lines. Workers’ compensation and business owner packages are the most notable exceptions as they continue to show a downward trend for 2017. Personal auto insurance will continue to see rate increases as the losses increase due to distracted drivers and more expensive cars. Homeowners most likely will be regionally impacted by the hurricanes and fire disasters that marked 2017. Health insurance premiums will continue their upward climb. No matter what market conditions apply, most agencies continue to improve internal, organic growth by selling more. They either cross sell or sell additional coverages to new customers. Value added services should be offered and a fee charged, to increase revenue. Many agencies have been giving away these value-added services for free for years.
Business Succession and Merger & Acquisition Activity
We expect the large amount of M&A activity to continue during 2018. If insurance agencies remain profitable, there will be buyers. The current prices paid by publicly traded brokers, large regionals and agencies funded by private equity firms are already extremely high and will likely not increase except for those very valuable, desirable firms, as the supply is dwindling. Two of the fastest growing national brokers are Acrisure and HUB. Acrisure completed 102 deals in 2017 and expects to do the same level of deals in 2018. They doubled their volume in 2017 from $560 million to more than $1 billion this year. Hub International also completed more than 50 transactions in 2017. The firm expects to focus now on adding to its existing offices in 2018, while being more selective on new offices. Other national brokers are also putting resources into the middle market arena and have specific capital to do so. The main reason is that many of the larger independent agencies have already been bought up or do not intend to sell. Local peer buyers and internal buyers cannot compete at those rates since they need to pay out of cash flow. So, there will continue to be a price differential between those that receive offers from the well-funded buyers and those that sell internally or to local competitors. Â Private equity firms have been buying up insurance agencies for their investors. This makes a lot of sense because the return on investment is typically 20 percent, plus or minus, which is greater than
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Idea Exchange continued from page 31
most other available investments today. Private equity firms and venture capitalists that fund BroadStreet Partners, Assured Partners and NFP continue to aggressively solicit and buy independent agencies. They have large amounts of capital to attract independent agencies that are dynamic but struggling with their perpetuation plan. Some firms, like Risk Strategies Co. that completed 10 deals in 2017, are being more selective and buying agencies with specific niches such as employee benefits, healthcare, real estate and transportation agencies. Private equity firms are paying typically eight to 10 times EBITA (earnings before interest, taxes, depreciation and amortization) and sometimes even more. When the value is translated to a multiple of revenue this means two to three times revenue. However, many independents prefer not to sell to a much larger, or publicly traded firm. The existing firm often is completely transformed a few years later, and not always for the better. There is often a sense of pressure to produce and write larger accounts. These criteria are not a good fit for even medium-sized, service-oriented independent agencies. In addition, producers in these acquired agencies usually do not get paid for commercial lines accounts
Minding Your Business below $5,000 in commission. It is getting more difficult for small- and medium-sized agencies to perpetuate internally. Often, it seems that the next generation does not have both the management and financials skills to pull it off. These are the firms that will have to bring in good hires, merge with a peer agency or sell to a larger firm that has capital to acquire. Also, as owners reach retirement age, many competitors approach them with great offers, so the retiring principals are guaranteed their money versus the chance that internal candidates may not be able to perpetuate the firm and the customers and pay the retiring owners. If an owner sells internally, it is usually for less than the value of an external sale. There is risk that the internal candidates might not work out, nor do they often have the money to do a buy-out. Often the retiring principal needs to finance the deal for the internal candidate. Most owners, however, don’t want to do this, and would rather the internal buyer get their own loan outside of the agency, for at least the down payment. Then they can use the agency’s profits to finance the retiring principal, if those internal buyers can continue to manage and grow the firm, once the key owner retires. If not, the internal buy-out will not likely work out.
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Usually the terms are 25 to 30 percent down, with the buy-out over five to 10 years, depending on the agency’s cash flow and whether the internal buyer has any money of their own. An internal buy-out rarely has an earn-out component, so the value should be conservative and not jeopardize the internal buyer’s ability to use the agency’s cash flow to pay off the loan over time. Buyers often want the retiring owners to move on after a few years, so they can manage the firm without their influence.
Agency Profitability and Equity
Agency owners should be able to increase productivity and profitability if management is proactive, performs account rounding, and conducts work in a paperless environment. It’s also important that account managers do a better job for the customer and should have great assistants and clerical support. There are outside support organizations for commercial lines service through organizations such as Resource Pro with U.S.-based staff to support independent agencies, as well as Patra with resources available on an hourly basis utilizing staff in China and India. Having outside help assists account managers so they can perform more client service and less clerical
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the use of clusters or networks are becoming more common. Generally, the individual agency in a cluster can maintain some, if not all their autonomy, while getting higher commission and contingents than from an aggregator.
Summary
work. These services are becoming very cost effective. One bonus is that the staff is trained off-site and the work is managed elsewhere.
From the insurance agency perspective, tax reform will have its initial and perhaps biggest impact directly on owners’ and employees’ personal income taxes. Independent agencies must remain profitable, consistently grow and target larger commercial lines accounts, high value personal lines accounts and employee benefits accounts to receive the highest prices. With the economy continuing to improve and the ability to get credit lines from banks, the value of agencies is still good, especially because there are so many acquirers. There is often a misunderstanding about the “real price” being offered. Many of the deals have a sizable portion of the “price” based on earn-outs for future performance. The number of well-capitalized buyers (both national and larger independents) is impacting the ability of agencies to do acquisitions. The prices being paid today do not always cash flow, which makes it harder for both small and medium sized firms to match. National and regional brokers seem to still have a large amount of capital to INSURANCEJOURNAL.COM
acquire so prices paid are usually much higher than peer independents can match, like in the 1.75 to 2.50 range, as commission multiples are seven to even eight times EBITDA. Sellers today still get prices from other peer independents in the 1.25 to 1.75 times range, if there is at least close to a 25 to 30 percent profit margin. As a multiple of EBITDA these values are in the six to seven range. In the earn-out portion of the price the seller is expected to grow the business, not just maintain it. Terms based on future growth should be discounted when determining value based on cash today. Therefore, if an agency gets 1.75 to 2.25 times revenue today, this is actually a “price” closer to 1.3 to 1.6 times revenue, projected three years out.
Entry into Insurance is Easier
Perhaps partially because of the current M&A frenzy there is spike in the number of new agencies and producers creating their own business. The use of aggregators and franchise type agencies has made starting a new agency much easier than in the past. Historically, small- to medium-sized firms could individually maintain the number of quality markets they need to compete today with larger firms. Through an aggregator or as a member of a cluster, an agent can access great standard markets with the concern of volume commitments. For agencies above the “mom and pop” level,
Oak & Associates feels the key trends in this article are important for owners to pay attention to for the coming year. Agency owners need to establish business and marketing plans. Being proactive and knowing how current trends will affect the firm is the first step. Managing the agency in a way that exploits these trends will then allow the firm to succeed. Having good communication within the firm and meetings and planning sessions is a good way to get everyone involved and headed in the right direction. Contact Oak & Associates if templates for sales and marketing or business planning Share this article with a are desired.
colleague. IJMAG.COM/1218EI Oak is the founder of the international consulting firm, Oak & Associates, based in Northern California. Schoeffler is an associate of the firm. The firm specializes in financial and management consulting for independent insurance agencies, including valuations, mergers acquisitions, clusters, sales and marketing planning as well as perpetuation planning. Phone: 707-935-6565. E-mail: catoak@gmail.com.
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DECEMBER 18, 2017 INSURANCE JOURNAL | NATIONAL | 33
Closing Quote What Story Will You Tell Over the Holidays?
By Marguerite Tortorello
T
he calendar has flipped to December and, for many, the dates are filling up with holiday parties, festive children’s school events, and gatherings with colleagues, family, and friends. What will your holiday chit chat include? I hope your holiday banter will include some stories about the amazing innovation and opportunities underway in the insurance industry. You might not realize it, but by doing this you could help your friends and family and your industry. Chances are that at some upcoming holiday gathering you will talk with someone that has a millennial in their family or has a millennial friend. And, chances are that the millennial will be carrying the burden of around $40,000 in student debt, which is the current student debt average. That same millennial may also be one of the 22.9 million people between the ages of 18 and 34 who still live with their parents. You could help by pointing out the career opportunities in the insurance industry.
By stepping into the insurance industry young professionals could enter a career that has impressive and stable career growth opportunities. According to a recent study by the National Association of Realtors and the American Student Assistance group, only a fifth of millennial respondents own a home and 83 percent of non-owners cited student debt as the reason they are not buying. More millennials need to realize the massive career opportunities on the horizon in the insurance industry. Nearly 25 percent of the insurance industry’s workforce will be ready to retire by next year. In the U.S., the industry needs to fill 400,000 positions by 2020 to remain fully staffed. The Jacobson Group recently highlighted that millennials and Gen Zs will make up 80 percent of the U.S. workforce by 2020. Yet, less than 5 percent of millennials are interested in working in insurance. We need to change the way we tell our story and find ways to connect
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with young professionals on areas that are important to them to spark their interest. While munching on holiday cookies, you could also share with family and friends how the industry is giving back. Your stories could inspire young professionals to give insurance a chance. Millennials want to give back and make a difference, a Deloitte study shows that 76 percent of millennials view business as a force for positive social change, which is aligned with what insurers do every day. Work into your holiday chatter how your company helped with Thanksgiving food drives, is participating in Toys-for-Tots drives or is helping others in need during the holidays. You can also talk about the collective positive force of the industry by noting the industry’s great work via charitable contributions. Drones on your holiday gift shopping list? As you chat with family and friends about the latest toy craze, you can also drop in your conversation how
insurers are using drones to help respond to severe weather events and in the claims process. People talking about posting their holiday pictures on social media? You can chime in how insurers are using social media to connect with people and respond quickly in times of need. While talking about taking an Uber to a holiday party, staying in an AirBnB on a holiday vacation, or checking out the autonomous cars as an outrageous holiday gift, you can help millennials see how insurers are immersed these latest technology trends. Wherever the holidays may take you, I hope you will share with others the amazing opportunities and innovation in the insurance industry. Through stories you can inspire a young professional to pursue a career that would be an amazing gift to themselves. Wishing you all a happy holidays. Tortorello is the managing director of the Insurance Careers Movement and is president of Tortorello Communications Co. INSURANCEJOURNAL.COM
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