Insurance Journal West 2018-07-02 by Insurance Journal

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Contents July 2, 2018 • Vol. 96 No. 13 • West

West

National

W1 Colorado Hailstorm Carries $169M Insurance Price Tag

8 Middle Market U.S. Manufacturers Predict Growth, Changing Risk: Report

W2 Report: California Self-Insured Workers’ Comp Claims Rose Only Slightly Last Year W2 Beverly Hills Doctor Sentenced to 10 Years in Workers’ Comp Scam W8 California Workers’ Comp Rating Bureau Exploring Blockchain, Behavioral Science

10 Small Businesses Face Additional Cyber Attacks When They Fail to Make Changes

W4 PARTNERING WITH INSURTECH TO

TRANSFORM RATHER THAN DISRUPT INSURANCE

24 Research & Trends: 6 Things to Know About the Flood Insurance Market

W4 Partnering with Insurtech to Transform Rather Than Disrupt Insurance

SR1 Special Report: 2018 Super Regional P/C Insurers Revealed

28 The Changing Nature of the Agent-Carrier Relationship

34 Ask the Insurance Recruiter: Highlight Experience in Resumes

14 Rising Homeowners Losses Hurt P/C Insurers: Fitch 20 Closer Look: Sea Level Rise Puts $117.5B at Risk from Chronic Flooding

Idea Exchange

32 Tech Talk: Young Agents Show the Way in Digital Marketing

14 Catastrophes Hit Homeowner Insurers: A.M. Best

27 Lloyd’s Index Shows $92B at Risk in North American Cities

20 SEA LEVEL RISE PUTS $117.5B AT RISK

FROM CHRONIC FLOODING

36 The Competitive Advantage: Agency E&O: Know Your Coverages 38 The Perfect Storm: Are you Prepared?

Departments

42 Closing Quote: Finding a Better Course to Navigate Disasters

11 Declarations 11 Figures 16 Business Moves

42 A BETTER COURSE TO NAVIGATE DISASTERS 4 | INSURANCE JOURNAL | WEST JULY 2, 2018

40 MyNewMarkets

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OPENING NOTE

Write the Editor: awells@insurancejournal.com

Disconnecting Consumers

Publisher Mark Wells mwells@wellsmedia.com

EDITORIAL

SALES

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

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

East Editor Elizabeth Blosfield eblosfield@insurancejournal.com

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

Chief Content Officer Andrew Simpson asimpson@insurancejournal.com

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

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

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

Insurance Markets Manager Kristine Honey (619) 584-1100 X132 David Pieffer, MaryBeth Fischer, khoney@insurancejournal.com Denise Johnson, Barry Koestler II, Tom Santos Social Media Manager Ly Short (619) 890-7735 IJ ACADEMY OF INSURANCE Lshort@insurancejournal.com Director Patrick Wraight Classifieds, Jobs, pwraight@ijacademy.com Agencies Wanted/For Sale Sr. Sales & Marketing Coordinator Kelly De La Mora (800) 897-9965 X125 ADMINISTRATION kdelamora@insurancejournal.com Chief Financial Officer Mark Wooster DESIGN/WEB mwooster@wellsmedia.com Chief Technology Officer/ Chief Innovation Officer MARKETING Joshua Carlson Marketing Director jcarlson@insurancejournal.com Derence Walk dwalk@insurancejournal.com V.P. of Design Guy Boccia Marketing Administrator gboccia@insurancejournal.com Gayle Wells gwells@insurancejournal.com Senior Web Developer Chris Thompson NEW MEDIA cthompson@insurancejournal.com New Media Producer Bobbie Dodge Web Developer bdodge@insurancejournal.com Jeff Cardrant jcardrant@insurancejournal.com Videographer/Editor Ashley Waldrop Web Developer awaldrop@insurancejournal.com Terrance Woest twoest@wellsmedia.com Contributing Writers

CIRCULATION

Circulation Manager Elizabeth Duffy eduffy@wellsmedia.com

s the insurance industry meeting customers’ expectations when it comes to connectivity? One new survey says maybe not. According to a survey by MuleSoft, a provider of technology for application networks, customer loyalty is at risk for organizations unable to provide seamless experiences across all channels and timely access to information. Globally, more than four out of five (81 percent) consumers believe that organizations in at least one of the four sectors surveyed (banking, insurance, retail, government) provide a disconnected experience. Government services was viewed as the worst performer (66 percent) while banks were the best performers. However, even in banking, still more than half (55 percent) of consumers said they have been at the receiving end of disconnected experiences. As a result of disconnected experiences, more than two-thirds (69 percent) of global consumers would consider changing a service provider. Consumers were most likely to consider changing retailers (57 percent), closely followed by insurance providers (56 percent), and banks (51 percent). Younger consumers (18-34 years old) reported the least tolerance, with 76 percent saying a disconnected experience would make them consider changing a provider. “Technology has fueled an on-demand culture and created a world in which consumers expect connected experiences across all channels,” said Ross Mason, founder and vice president of product strategy at MuleSoft, which conducted the survey of more than 8,000 consumers globally to analyze whether organizations are meeting customer expectations for a connected, personalized experience. “Millennials especially are increasing the pressure on organizations to provide a connected experience, yet it is clear many organizations are still falling short,” Mason said. For example, nearly half of consumers say they gave up on an activity or request when information sharing with an organization was too difficult. Sixty percent of global consumers said they would prefer to shop by having an Amazon Go experience (aka: “just walk out shopping” in which consumers can purchase goods in-store without using a cashier or checkout machine). The younger generation (18-34-year-olds) were particularly keen on this concept, with 77 percent saying they would be in favor of shopping this way. Nearly two-thirds (65 percent) of global consumers would like to use popular messaging FOR QUESTIONS services such as WhatsApp, Viber, Facebook REGARDING SUBSCRIPTIONS: Call: 855-814-9547 Messenger or iMessage to securely interact Outside the U.S., call 847-400-5951 or you may subscribe or change your address online at: with organizations. That number was higher insurancejournal.com/subscribe (78 percent) among 18-34-year-olds. Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media MuleSoft says the survey shows how orgaGroup, 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 nizations are already struggling to provide a per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this pubconnected experience and the demands on lication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended IT will only continue to increase as consumto 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 ers’ expectations of technology continue to Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. evolve. Insurance Journal is a publication of Wells Media Group, Inc.

Andrea Wells Editor-in-Chief

6 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

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

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National

Middle Market U.S. Manufacturers Predict Growth, Changing Risk as Technology Transforms the Industry: Report

he business climate for manufacturing in the U.S. has improved over the past few years, driving both revenue and employment growth for middle market manufacturers. But the industry is also experiencing a period of transformation that is both benefiting and challenging manufacturing companies nationwide. That’s according to a new report from the National Center for the Middle Market (NCMM) and Chubb on the state of manufacturing in the U.S., which found that while many are optimistic about new opportunities for growth, 62 percent of companies rank increased competition and rising raw material costs as their top concerns, with potential trade tariffs adding to their worries. According to the report, globalization was cited most frequently as the number 8 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

one factor impacting the competitive business environment. Increasing demands for expediency are affecting both ends of the supply chain, and technology is transforming what manufacturers make and how they make it. “Middle market manufacturers are experiencing overlapping waves of change — more intense competition, rapid changes in manufacturing technology, the need to offer new kinds of products and services, and more,” said Thomas A. Stewart, executive director of NCMM. “This change presents opportunities for companies that can take advantage of this industry evolution, while it creates huge risks for those who are unprepared.” The report is based on interviews with 250 strategic and financial decision makers from middle market manufacturing com-

panies between March 26 and April 6, 2018. The vast majority — 86 percent — say the business landscape is more competitive. Technology is transforming the manufacturing process. In the past year, manufacturers have invested in automation, robotics and advanced manufacturing techniques, and 20 percent of companies now utilize smart technology wearables on the factory floor. But these advances come at a cost. Not only is there an increased need for capital, but it also exposes companies to greater cybersecurity risks. “Along with opportunities comes risk,” said Mike Williams, Chubb’s EVP and manufacturing industry practice leader. “It has never been more critical for companies to review their risk mitigation strategies and ensure they have responsive insurance solutions in place.” INSURANCEJOURNAL.COM

NATIONAL | News & Markets

Small Businesses Face Additional Cyber Attacks When They Fail to Make Changes: Hiscox

hile 47 percent of small businesses suffered at least one cyber attack in the past year, only 35 percent of them took action following a cyber security incident to mitigate against another. Forty-four percent of small businesses that reported a cyber attack in the past year experienced two, three or four attacks. The 2018 Hiscox Small Business Cyber Risk Report also found that barely half (52 percent) of small businesses have a clear strategy around cyber security. That’s despite the fact that two-thirds of small businesses surveyed reported cyber risk as a top concern for potential business impact on their organization in the coming year. Less than a quarter (21 percent) of small businesses have

a standalone cyber insurance policy, compared to 58 percent of large companies. About half of small firms blame a lack of finances for their failure to address cyber. Less than one-third (32 percent) of small businesses have simulated phishing experiments to assess employee behavior and readiness in the event of an attack. While budgeting for cyber-related resources is critical, people, processes and technology must also be incorporated to ensure cyber readiness, according to the report from the specialty insurer. “Small businesses are less likely to have strategies in place to ward off attacks, detect them early if they do occur, and reduce the damage. And, they are less likely to be able to withstand the financial impact

10 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

‘Small businesses are less likely to have strategies in place to ward off attacks, detect them early if they do occur, and reduce the damage.’ of a hack or breach,” the report says. The report acknowledges that all businesses face trade‑offs when allocating limited resources, but warns that the cost of a cyber incident can be significant and it increases as a company grows. Small businesses estimated their average cost for incidents in the last 12 months to be $34,604. Among large companies (more than 1,000 employees), the annual average cost of cyber crime was $1.05 million,

according to the report. When it comes to cyber security, Hiscox says there are steps that are not complex or costly that businesses can take. The insurer recommends small businesses consider the following steps as best practices: • Prevent. Involve and educate employees at all levels within the business. Have a formal budgeting process in place and ensure cyber security is considered and prioritized in decision-making. • Detect. Include intrusion detection and ongoing monitoring on all critical networks. Track violations (including those that are successful and thwarted), and generate alerts using both automated monitoring and manual logging. • Mitigate. Create a plan for all incidents, from detection and containment to notification and assess ment, with specific roles and responsibilities clearly defined. Regularly review response plans to integrate emerging threats and new best practices. Insure against financial risks with a stand alone cyber policy or endorsement. For the survey, Hiscox commissioned Forrester Consulting to assess organizations’ cyber readiness. In total, 4,103 professionals responsible for their organization’s cyber security were contacted (1,000 plus each from the UK, U.S., and Germany, and 500 each from Spain and the Netherlands). Respondents completed the online survey between October 12, 2017, and November 10, 2017. INSURANCEJOURNAL.COM

West

Colorado Hailstorm Carries $169M Insurance Price Tag

housands of Fountain and Colorado Springs, Colo., area residents were busy cleaning up and meeting with insurance adjusters after an unusual early morning June 13 storm pounded vehicles and roofs golf and baseball-sized hail. The storm caused an estimated $169 million in insured losses resulting from 26,000 auto and homeowners insurance claims filed so far, according to the Rocky Mountain Insurance Information Association. INSURANCEJOURNAL.COM

RMIIA’s damage estimates include 17,351 car insurance claims adding up to more than $104 million and 8,648 property insurance claims at more than $65 million. The estimate ranks this storm as the state’s 12th most expensive hailstorm and is the most damaging Southern Colorado storm since a July 2016 Colorado Springs hailstorm caused an estimated $366.8 million in insured losses. “This is yet another reminder from Mother Nature of why Colorado is

ranked No. 2 in the nation for hail insurance claims,” said Carole Walker, RMIIA’s executive director. “The size and amount of hail that battered Colorado Springs is unfortunately part of a pattern of catastrophic events the state has been experiencing during the past several years, so we need to be financially prepared for the unexpected-check your insurance to know what it covers, what it doesn’t and how much protection you have when you need it the most.” JULY 2, 2018 INSURANCE JOURNAL | WEST | W1

WEST | News & Markets

Report: California Self-Insured Workers’ Comp Claims Rose Only Slightly Last Year

alifornia public self-insured workers’ compensation claims from fiscal year 2016-2017 rose less than 0.4 percent compared to the corresponding data from the prior year despite a 2.9 percent increase in covered employees, according to a report from the California Workers’ Compensation Institute. The average paid loss per claim rose by $177, pushing aggregate loss payments up 6.3 percent to a record $372.1 million, while first report incurred losses (paid plus reserves) on the FY 2016-2017 public self-insured claims hit an all-time high of nearly $1.27 billion, according to the CWCI. CWCI reported on the California Office of SelfInsurance Plans’ summary

of public self-insured claims data, which provides the first measure of public self-insured claims experience based on claims data reported to the state by cities and counties; local fire, school, transit, utility and special districts; and joint powers authorities for the 12 months ending June 30, 2017, as well as updated figures on claims reported for each of the four prior years. Public self-insured entities included in the FY 201-2017 summary covered roughly 2.13 million California workers, or nearly 60,000 more employees than in the FY 2015-2016 initial report, with wages and salaries of covered employees totaling nearly $121.2 billion. Even with public sector

employment on the rise, public self-insured entities reported just 116,251 claims last year, only 0.4 percent more than the FY 2015-16 first reports. To control for the effect yearto-year fluctuations in the work force have had on claim volume, the CWCI calculated the

claim frequency rates for each of the 10 years. The most significant decline was in FY 2013-2014, immediately following the enactment of SB 863, the state’s workers’ comp reform law, though frequency rebounded sharply the following year.

Beverly Hills Doctor Sentenced to 10 Years in Workers’ Comp Scam

University of Washington to Pay $123K to Settle Free-Speech Lawsuit

Beverly Hills, Calif., doctor has been sentenced to 10 years in federal prison for his role in a massive fraud scheme. Dr. Ronald Grusd was convicted in December of 39 charges, including conspiracy, honest services wire and mail fraud and health care fraud. He was sentenced in late June. Prosecutors say Grusd’s companies, California Imaging Network Medical Group and Willows Consulting Co., in Southern California, paid more than $100,000 in bribes to phy-

he University of Washington will pay $122,500 to settle a lawsuit filed after the college billed a Republican club security fees for a rally. The UW College Republicans sued, saying the bill for $17,000 to cover security costs for the campus event violated freespeech and other constitutional rights. The UW will pay legal fees to the College Republicans. The school did not admit liability but rescinded its policy around security for student group events. College Republicans had

sicians and others in exchange for referrals of patients with workers’ compensation claims to his clinics. A news release from the U.S. Attorney in San Diego says Grusd would seek reimbursement from insurance companies for services given to workers, omitting his agreement with physicians and others. Grusd’s two companies were ordered to pay a $500,000 fine each. Copyright 2018 Associated Press. All rights reserved.

W2 | INSURANCE JOURNAL | WEST JULY 2, 2018

invited the conservative political group Patriot Prayer to speak at a campus rally Feb. 10. One day before the event, a federal judge in Seattle blocked the university from billing the club. Skirmishes broke out and several people were arrested at the rally that also drew counter-protesters. Copyright 2018 Associated Press. All rights reserved. INSURANCEJOURNAL.COM

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Idea Exchange

Tech Transformation

Partnering with Insurtech to Transform Rather Than Disrupt Insurance By Stephan Hochburger

he insurance industry is experiencing a convergence with technology that is transforming the way it develops products, underwrites, prices and sells policies, and services its customers. This change can seem disruptive, so it’s critical that insurance companies better understand how technology and digitalization can be an enabler and help them succeed in today’s business environment. In a recent poll conducted by Munich Reinsurance America during a National Association of Mutual Insurance Companies Insurtech trends webinar, insurance industry participants were W4 | INSURANCE JOURNAL | WEST JULY 2, 2018

asked to name the top three technology factors they are confronting. Of the roughly 350 respondents, 82 percent named data analytics as a top concern followed by improved customer experience (71 percent) and new products/services (61 percent). Insurance companies that can successfully navigate each of these concerns will have a much greater chance of succeeding in today’s highly competitive business landscape.

New Exposures Require New Data

Historically, the insurance industry has operated more slowly than less regulated industries in terms of new product development. Since insurance rates have to be risk-adequate, fair and nondiscrim-

inatory, the rate assumptions underlying these new products were based on the sound mathematical analysis of the past predicting the future. Today, the insurance industry is being confronted, at a seemingly ever-increasing pace, with new exposures that require the rapid development of new insurance products and service solutions. To meet this demand, the industry increasingly needs to rely on new and different data to come up with the right coverage — and the right pricing — for exposures such as cyber risk, the sharing economy, the gig economy, intelligent homes, autonomous vehicles, to name just a few.

continued on page W6

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Ten years ago, people didn’t think, “I need an insurance product to help protect me when I rent my home to strangers or use my personal car to drive people around for a fee.” Another example of a risk not previously contemplated by the insurance industry is the “intelligent home,” which is equipped with sensor technology and represents an entirely different exposure than what is reflected in past loss experience. Insurance products and services need to catch up with the fast pace of change — and data analytics and data science can help. For insurance carriers, the differentiators going forward will be the ability to harvest and analyze both traditional and new data intelligently. To be a winner in the future, it is critical for insurers to build tailor-made solutions and to do so by leveraging data in a new way. Where will the “new data” come from? Few insurance companies, if any, would have the data available in-house that would be necessary to address the question of what the risk-adequate premium might be for new exposures. Most of the new data will have to come from sources outside of the insurance industry. This requires significant human capital, both to acquire the right data and to develop insights from that data. The good news is that insurance companies don’t have to do it alone. For those insurers that don’t have the resources, insurtech companies, reinsurers and other business partners can provide value by building data capabilities and offering services to help insurance carriers better understand and interpret data to help with risk assessment and pricing.

viduals and small business owners typically purchase insurance coverage, submit a claim or make a payment. Going forward, these functions must all be easily executable on a mobile device. People demand ease of doing business, and they want it 24/7/365. Technology can help the industry meet the needs of the new customer experience. So, it is no surprise that many carriers in the personal lines and small commercial lines space are trying to digitize the underwriting, pricing and claims process as much as possible. While many business coverages are just too complex to forgo the expertise of an agent or broker, individuals and small business owners increasingly expect to be able to purchase policies online with the swipe of a finger or click of a mouse. Automating this segment of the insurance business is about improving customer service, but it’s also about the ability to offer customers the products they need at more attractive prices.

Today, the insurance industry is being confronted, at a seemingly ever-increasing pace, with new exposures that require the rapid development of new insurance products and service solutions.

Improving Customer Experience

Technology can be a tremendous enabler when it comes to improving the customer experience. Consider how indiW6 | INSURANCE JOURNAL | WEST JULY 2, 2018

Convergence Versus Disruption

Insurance carriers can partner with insurtech companies and their reinsurers to find ways to help improve the customer experience and to offer personal and commercial lines coverages that meet the new exposures they are facing. Investment in insurtech appears to be moving toward optimizing and modernizing traditional insurance distribution rather than completely disrupting the industry. Insurtech companies have come to recognize that the insurance

industry is too regulated and too complicated to go at it alone; they need insurance partners to help them succeed. Today, startups are more dedicated to helping insurance companies optimize their capabilities. They are focused on developing symbiotic relationships with the insurance industry. They’re focused on convergence — coming together with insurance companies. And reinsurers with their vast reach can often function as valuable facilitators, bringing the right solution providers in contact with the insurance carrier in need of assistance. The benefits of joining forces with insurtechs is obvious: It increases co-development opportunities by bringing in different perspectives, more data, more people and more digital expertise. Partnering with the insurtech most suitable to address an insurance carriers’ needs and pain-points can result in a true win-win for the insurance industry as well as insurtech companies. This industry has always been about change — from insuring wooden ships laden with spices crossing treacherous oceans to autonomous vehicles. Those insurers that are ready to use technology and digitalization to provide solutions to a world of new risks will be the ones that succeed over the long term. This article was originally published by Carrier Management. Hochburger is senior vice president and client executive in the reinsurance division at Munich Reinsurance America Inc. Hochburger can be reached at SHochburger@munichreamerica.com. INSURANCEJOURNAL.COM

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WEST | News & Markets

California Workers’ Comp Rating Bureau Exploring Blockchain, Behavioral Science By Don Jergler

ne wouldn’t normally associate blockchain with workers’ compensation, two completely different industries that seem worlds apart. But as it turns out, the technology is of value to at least one very important entity in the space. The Workers’ Compensation Insurance Rating Bureau in California is looking into using blockchain technology as a better, safer, way to get workers’ comp carriers and agents and brokers access to the massive amount of data the WCIRB collects. The organization isn’t stopping there. It’s funding efforts to look into using behavioral science, machine learning and other digital and technological innovations under an ongoing modernization effort. Bill Mudge, president and CEO of the WCIRB, the provider of actuarial-based information and research and advisory rates for a state that comprises roughly one-fifth of all the nation’s workers’ comp premiums, talked about these changes with Insurance Journal. This has been edited for brevity and clarity.

Insurance Journal: We’ve been hearing

the WCIRB has been in the midst of some technological/digital changes. Can you talk about what’s been going on and why? Mudge: Tech enablement for us over these past six years as a company is really core to our transformation as an organization to a much more customer-focused company, with a broader perspective really across the entire California workers’ compensation community. For insurers, but for also employers, and agents and brokers. This industry, technology and data have really shifted the landscape of our business to provide really greater meaning about workers’ comp system dynamics and much more granular analyses than we ever have. W8 | INSURANCE JOURNAL | WEST JULY 2, 2018

Let me give you an example, our recent insights and heat maps that we have out about geographical cost differences across California, you know California geographic cost differences are really dramatic now that we’ve teased them out and understanding those cost drivers is critical for buyers and for sellers. The investment we’ve made in these modern technologies, and tools, and quite frankly talent that thinks differently about the business, to expand our horizons, insights, as well as greater access to data for our customers and their ability to self-service has really been, I think, sort of core to what we have Bill Mudge evolved to in the last several years as a company. Now, I’ll give you a little perspective on that. Today through our various mediums, right, WCIRB.com, it’s open to the entire public, it’s our public-facing website, WBIRB Connect is for insurers and agents and brokers to do business that they need to do in transacting insurance, and our analytics portal, WCIRB Inquiry, for insurers, there’s just a wealth of capabilities available today that didn’t exist just a few years ago. I’ll give you context to that, we’re on pace this year to reach more than 2.5 million customer interactions through those various channels.

IJ: Specifically, what are carriers getting from all this change?

Mudge: For carriers the business is

really shifted in my three decades doing this and much more so in the last several years where workers’ comp today for us and for carriers is really much more of a data-driven business, from the macro view of systemic cost drivers to the ability to benchmark outcomes and book a business performance across a variety of variables. We’re integral to all of that, as we have the entire insurance industry and dataset sitting here electronically within the WCIRB and spanning across decades and data about every insured risk. We started to provide that data in an appropriate, authorized, authenticated way to carriers. It’s really critical to their

continued on page W10 INSURANCEJOURNAL.COM

WEST | News & Markets continued from page W8

decision making and, in a broader sense, I think also the stability of a healthy competitive market. I mentioned WCIRB Inquiry and it really provides insurers the ability to have data access at their fingertips and benchmarking capabilities that doesn’t exist with any other bureau. We also provide carriers now, we got into the web services business, something we call X-Mods and More as a product that can deliver machine-to-machine data that’s accurate at the point of need in a just-intime way to really facilitate more efficient insurance transactions. For carriers it’s greater insight about this long-tail line of business and the system changes that are going on underlying California comp, and then their ability to have access and know where they are in their own books of business and then also be able to get data in a just-in-time way to make the transaction of insurance a lot more efficient than it’s ever been.

IJ: What about agents and brokers, what changes are you making that will affect them and what should they take away from all of this? Mudge: There’s a lot of real positive changes for agents and brokers. We started embracing them as a customer group in a much broader way several years ago. They’ve been big fans of our call center. We take about 80,000 calls a year at the WCIRB believe it or not, and the largest user population is agents and brokers. Let me start briefly with WCIRB.com, that front door, if you will, electronically to our company. We revamped it last year and one of the key landing pages we put up there is for agents and brokers. We launched something earli-

er this year called the agent broker toolkit. It’s on their landing page. It’s organized in icons around kind of the typical sequence and conversation that an agent would have with a client about the key topics in workers’ comp, from where the business is located, as I said geography matters a lot in California as a cost driver, to classifying their business. How do 500,000 businesses in the state of California get fit into about 500 industry classifications? From experience rating to ownership changes and how those effect experience modifications, to preparing for final audits, all that stuff and knowledge is now at the fingertips of the agent and it’s mobile enabled. Also, I’ll tell you, agents can find on

‘There’s a lot of real positive changes for agents and brokers. We started embracing them as a customer group in a much broader way several years ago.’

continued on page W12

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WCIRB.com a class search tool to enable them to help in the classification of their client’s business and x-mod estimators for the company that produces the x-mods, the WCIRB, to assist their clients as well in doing sort of what if or risk management scenarios if certain types of claims are able to be eliminated from the workplace. We built something a few years ago called WCIRB Connect, and I mentioned that, it’s really the work horse system for insurers and for agents and brokers. It logs over a million customer sessions now annually. On Connect, agents and brokers can do a lot of their business right there.

IJ: The board approved some R&D fund-

ing recently to take a look at some technological innovation, specifically in areas of data and behavioral science. What’s going on with this and why is behavioral science pertinent to workers’ comp? Mudge: In California, we’re the single largest workers’ compensation market in the country, not surprisingly given one of the largest economies in the world. We comprise about 20 percent of all the nationwide workers’ comp premiums. We’re a little over $17 billion dollars on a first dollar premium basis and it’s a dynamic system and an innovative business climate in California. We have to continue to innovate as well to remain relevant to the communities we serve, and our board gets that. We went to the board and said, boy, we’d like to explore some future-thinking things like machine learning, like web scraping, like insurtech, like behavioral science W12 | INSURANCE JOURNAL | WEST JULY 2, 2018

you’re asking me about, to see how new tech can enhance our value proposition. Here’s the thing on behavioral science, it’s really particularly intriguing to me. I think one of the reasons I’ve stayed in workers’ comp for so many years is because workers’ comp’s all about human beings and how do human beings react in this system. What we’re thinking is we could blend our actuarial or data science with the humanistic side of science. We can sometimes get caught up in the data or [what] people call it big data, and yet workers’ comp it’s more about how people relate to or react to the system that I’d suggest portends future trends that we’ll later see in the data. Rather than look in the rearview mirror, if you will at our actuaries, and we kind of get a confused, some might say, “Well that was great, you told us what happened, right?” We want to start looking out the windshield with the assistance of behavioral scientists, not people from the workers’ comp arena. We’ll bring that side of the equation, but people who study human behavior at places like UC Berkeley and we’re looking to partner our actuaries and medical researchers with their behaviorists to study the workers’ comp system from a humanistic and sort of data-istic, if you will, way. Now, that’s a mouthful, right? It’s a big undertaking. IJ: Blockchain is something you wouldn’t relate to workers’ comp, so can you tell us a little bit about what WCIRB is doing with this technology?

Mudge: We haven’t done anything with it yet. I guess you could say we’re going to school on the possibilities of it and particularly as we learn about blockchain, as we watch others, whether it be in the banking or financial services world, or the retail world, and their business, we’re really interested in this area of blockchain called smart contracts. We collect a lot of data at the WCIRB. In fact, we collect tens of millions of records annually. In that collection of the data, there’s just a lot of process and movement of data through various secure channels and human involvement. It’s not an inexpensive proposition. Blockchain maybe offers the opportunity to say, well, what if the data never moved, right? What if it stayed at its home, its source of truth? What if through a smart contract those that are authorized to access certain data for specific purposes could do so through the blockchain. Let me give you an example, all insurance policies that are written by insurers in California, those all sit in their systems with those insurers who wrote those policies. Today, they pretty much all sit in digital form. As the designated statistical agent for workers’ comp, that’s us the WCIRB, those policies and all the data surrounding them is to be reported to us, so the data moves. What if we, the insurers, were all parties to a private digital ecosystem, a blockchain, for policy and statistical purposes with rules and governance and of that that’s built right within the chain, this so-called smart contract, right? It’s really intriguing to us. We’re exploring the development of a business case or two and thinking about a proof of concept to see maybe the art of the possible on this. It’s not going to happen overnight, but, boy, I can envision if this could work out it could be a real game changer.

Audio Resource Visit InsuranceJournal.tv to hear the full audio interview.

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111

Figures

Declarations Medical Marijuana

“Prosecuted or not, the fact remains that Twin Rivers would be forced to commit a federal crime if it complied with the directive of the Workers’ Compensation Board.”

The number of pedestrians killed on Georgia roads as of June this year – an increase of 16 percent over the same time last year, according to the Georgia Department of Transportation. In all of 2017, 260 pedestrians were killed on state roads, up from 232 in 2016.

— Maine Supreme Court Associate Justice Jeffrey L. Hjelm

stated in an opinion in which the Maine Supreme Court ruled employers are not required to reimburse employees for medical marijuana under the Maine workers’ compensation system because federal law preempts state law. The case came about after an injured employee of Twin Rivers Paper Company LLC petitioned the state Workers’ Compensation Board to require Twin Rivers to pay for his medical marijuana. Although prescribed medical marijuana use in Maine is permitted by the Maine Medical Use of Marijuana Act (MMUMA), Twin Rivers opposed the petition, arguing it would violate the federal Controlled Substances Act (CSA), which bars the prescribed use of medical marijuana.

1 MILLION

Oregon’s inventory of marijuana is staggering for a state its size. There are nearly 1 million pounds of usable flower in the system, and an additional 350,000 pounds of marijuana extracts, edibles and tinctures.

$100,000

A Delaware couple has been arrested for insurance fraud after filing false medical claims for an automobile accident that never occurred, leading their insurance provider to be billed more than $100,000. Diliana Legros and her husband, Joseph Aubourg, both of Milford, Del., were indicted by a Delaware Grand Jury on June 4 for insurance fraud and arrested after turning themselves in to Capital Police on June 11.

2,138,975 The number of employees in Louisiana’s civilian labor force as of June 15, according to the Louisiana Workforce Commission. It’s the highest number of individuals in Louisiana’s labor force since March 2016. As of the end of May, the state reported a year-over-year employment increase of 44,453. INSURANCEJOURNAL.COM

Driverless Trucks

“Motorists headed out to visit Grand Island from Lincoln aren’t going to be sharing the road with driverless trucks anytime soon … there’s still a lot to be worked out.” — Nebraska Trucking Association President Kent

Grisham says despite a new law allowing autonomous vehicles to operate on Nebraska public roads as long as the vehicle includes safety features, follows state road rules and is properly insured, it will take “several years, if not decades” before fully automated trucks are cruising down public roads.

Changing Face

“Our real goal is to change the face of cannabis.” — Jax Finkel, executive director of Texas NORML, the state’s

chapter of the National Organization for the Reform of Marijuana Laws, says in its push for the legal use of medical marijuana in the state, the group is concentrating on West Texas and other rural areas. It wants to change public perception of a typical marijuana user from that of a ‘70s hippie to one of a hardworking, active person who needs medical pot to stay that way.

Coffee and Cancer

$132,000

The amount Sarah Goodman says an insurance company wants her family to pay after her 5-year-old son accidentally knocked over a sculpture during a wedding reception at a city community center in Overland Park, Kan. She says the sculpture was unprotected at the crowded center. City spokesman Sean Reilly says the work was on loan to the city and that it was obligated to file a claim with its insurance company for the damage.

“OEHHA has determined that exposures to Proposition 65-listed chemicals in coffee that are produced as part of and inherent in the processes of roasting coffee beans and brewing coffee pose no significant risk of cancer.” — The California Office of Environmental Health

Hazard Assessment has proposed to exempt coffee from a state regulation that requires businesses to warn consumers about carcinogens in their products.

They Deserve Better

“I believe victims of the Pulse shooting deserve better. We deserved better. We deserved to be rescued sooner by law enforcement.” — Keinon Carter, a victim of the June 12, 2016,

Orlando nightclub shooting, who has filed a lawsuit against the city and its police officers. More than 35 victims have joined the lawsuit, which claims the city and police didn’t do enough to try to stop the shooter and that the Constitutional rights of the shooting victims were violated.

JULY 2, 2018 INSURANCE JOURNAL | NATIONAL | 11

NATIONAL | News & Markets

Catastrophes Hit Homeowner Insurers; Combined Ratio Moves Above 107: A.M. Best

fter four years of sub-100 combined ratios for the U.S. homeowners insurers, the segment saw its combined ratio deteriorate to 107.1 in 2017 as a result of numerous catastrophes, according to an A.M. Best report. The new Best’s Market Segment Report, titled, “Homeowners Insurers Endured Major 2017 Catastrophes,” notes that the 2017 combined ratio was just above the 25-year median of 106.9. Results from 2013-

2016 benefitted from benign catastrophe activity, as well as favorable reinsurance pricing, terms and conditions and improvements in underwriting analytics. Despite the numerous catastrophes in 2017, the majority of U.S. homeowners insurers were able to absorb the losses due to healthy levels of capitalization, according to the analysis. The favorable reinsurance environment kept 2017 from becoming even worse year for primary homeowners insurers. A large proportion of losses were within these companies’ retentions. The 2017 accident-year ceded loss & loss adjustment expense (LAE) ratio of 93.5 was the third highest of the past 20 years, but the net loss & LAE ratio of 79.3 was just the sixth highest. “U.S. personal

lines insurers have been pressured to improve the profitability of their homeowners books to balance the worsening results and increasing competition in the personal auto segment. Homeowners insurers have continued to invest in and utilize technology to improve their underwriting and pricing tool set,” A.M. Best said. The report says that predictive modeling has allowed for more sophisticated and accurate risk classification, segmentation and pricing, and by-peril pricing has become the standard for the segment. This more granular pricing has improved rate adequacy and enabled insurers to purchase reinsurance more effectively and efficiently, according to the analysts. “Although implementation costs can be prohibitive due to the large number of statistically significant rating variables the availability of third-party data has allowed more companies to implement by-peril pricing and its use by companies has steadily increased. Those companies late to embrace these technology initiatives are likely to be adversely selected against or risk losing market share,” the report adds. While 2017 was a clear outlier in terms of the number of major catastrophes, ongoing underwriting discipline, pricing sophistication and continued risk management initiatives remain critical for this segment’s future profitability, A.M. Best said.

Rising Homeowners Losses Hurt P/C Insurers: Fitch

ersonal lines underwriting losses rose in 2017 for the fourth year in a row, Fitch Ratings found in a new report. There’s a twist, however. In the three years prior to 2017, personal auto insurance contributed largely to underwriting losses. It is showing some improvement now, but homeowners insurance is now a major loss ingredient. “The homeowners line is traditionally a more volatile product segment, which experienced a higher combined ratio than personal auto for the first time since 2012,” said Managing Director James Auden. According to Fitch, industry statutory 14 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

personal lines combined ratios rose to 103.8 in 2017, even as written premiums continued to grow. Higher catastrophe losses are largely to blame for the losses, while growing auto insurance losses were the cause in the previous three years. While personal automobile insurance still generated big underwriting losses in 2017, there were improvements, thanks to price increases in recent renewals. Fitch tracked a combined ratio of 102.6 for 2017, down almost four points for the year. Personal auto grew the fastest among personal lines segments over the last two years, generating more than 7 percent in

net written premium growth. Fitch sees that continuing in 2018 because of price increases. Homeowners insurance, on the other hand, dipped over the previous three years and was only 2 percent in 2017. Fitch sees a quicker expansion in 2018. For 2018, Fitch expects auto insurance to get close to a 100 combined ratio and homeowners to improve, assuming there are no large catastrophe losses as in 2017. Fitch said its sector outlook for the U.S. personal lines sector remains negative, though the rating outlook for most personal lines writers is stable. INSURANCEJOURNAL.COM

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NATIONAL | Business Moves Starkweather & Shepley Insurance Brokerage, East Boston Savings Bank

Risk Strategies, Corporate Benefit Audits

Risk Strategies, a privately held, national insurance brokerage and risk management firm, has acquired Corporate Benefit Audits, a firm providing claim outsourcing and audit services to the medical stop loss, managed care and self-funded industries. Terms of the deal were not disclosed. Founded in 1992 and based just outside of Boston, Mass., CBA offers outsourced claim auditing services ranging from general claim consulting and complex claim reviews to targeted and randomized claim audits. The companyâ&#x20AC;&#x2122;s clients include stop loss carriers, managing general underwriters (MGUs), reinsurance companies and self-funded employers. CBA works with both plan sponsors and their reinsurance partners to ensure the integrity of stop loss claim adjudication and payment. Risk Strategies employee benefits practice has grown through targeted acquisitions of companies with expertise in the implementation of a prac-

tical, non-traditional approach to benefits programs. Risk Strategies serves commercial companies, non-profits, public entities and individuals.

Talcott Resolution, Cornell Capital

Talcott Resolution, The Hartfordâ&#x20AC;&#x2122;s run-off life and annuity businesses, has been acquired by an investor group led by Cornell Capital LLC, Atlas Merchant Capital LLC, TRB Advisors LP, Global Atlantic Financial Group, Pine Brook and J. Safra Group. Although Talcott Resolution is no longer affiliated with The Hartford Financial Services Group Inc. or any of its subsidiaries, The Hartford will retain a 9.7 percent ownership interest in Talcott Resolution. Talcott Resolution will now be an independent, standalone insurance company headquartered in Windsor, Conn., with an office in Woodbury, Minn. As part of the transaction, approximately 375 employees of The Hartford are now employees of Talcott Resolution.

16 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

Starkweather & Shepley Insurance Brokerage Inc. and East Boston Savings Bank have formed a strategic alliance, offering a full line of commercial, personal and life insurance products. The two firms have a mutual client base throughout New England. Established in 1879, S&S provides commercial and personal insurance, health and employee benefits, surety bonding and risk management services. These services are provided nationally and internationally through its partnership with Assurex Global. S&S has a local presence in Malden, Mass., and 15 office locations. EBSB is a Massachusettschartered stock savings bank originally founded in 1848. It is a wholly owned subsidiary of Meridian Bancorp Inc.

Hub International Limited, Flather & Perkins Inc.

Hub International Limited, a global insurance brokerage, has acquired the shares of Flather & Perkins Inc. Terms of the acquisition were not disclosed. Headquartered in Washington, D.C., and founded in 1917, Flather & Perkins handles commercial and personal insurance for a variety of nationwide clients including museums, galleries, collections and fine arts dealers. Flather & Perkins President Bruce Perkins will join Hub Mid-Atlantic and report to Hub Mid-Atlantic President Norman Breitenbach. Hub International Limited is headquartered in Chicago, Ill.

Affinity Worldwide, First Consulting and Administration

A group of investors that own Affinity Worldwide and National Real Estate Insurance Group (NREIG) and led by Tim Norris, has purchased First Consulting and Administration Inc., a Kansas City-based insurance compliance service company. Established in 1969, First Consulting and Administration previously was owned and managed by Francine Fetyko. The purchase was finalized in May. The terms were not disclosed. First Consulting and Administration provides compliance services including drafting, filing, licensing and other operational compliance consulting to life/health and property/casualty insurance firms. First Consulting and Administration will retain its current name and location in Kansas City.

AssuredPartners, Bell Insurance

AssuredPartners Inc. has acquired Dallas-based Bell Insurance. Bell Insurance has delivered quality insurance products and services to individuals and businesses throughout Texas for over 30 years. The team of 23 will continue operations under the leadership of President Vince Bell. Bell Insurance reports approximately $4 million in revenues. Headquartered in Lake Mary, Fla., AssuredPartners acquires and invests in insurance brokerage businesses across the U.S. and in London. INSURANCEJOURNAL.COM

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NATIONAL | Closer Look | Floods

Sea Level Rise Puts $117.5B at Risk from Chronic Flooding By Don Jergler

hose interested in risk management are starting to take climate change a bit more seriously. The evidence is anecdotal, but for that proof one can just ask Phil Renaud, executive director for the Risk Institute at Ohio State University, a risk-management research organization. Researchers at the institute recently took a deep dive into enterprise risk management strategies in the face of weather and climate risk and how businesses can build resilience. The institute advises organizations around the country on how to mitigate risks. Members of the institute include carriers Nationwide, State Auto, Ohio Mutual and FM Global. Broker members include Aon, Gallagher Bassett and Oswald Cos., a big regional broker in Cleveland. Numerous firms from other industry sectors, such as law firms, food makers and sellers, and credit card companies, are members as well. The institute holds regular seminars on various topics related to, of course, risk management, and how to address emerging risks.

The latest series of seminars focused on weather and climate risk and building business and property resilience. Organizers say they were overwhelmed by the number of those in attendance. “When we held our cyber session last year it was our best attended provisional development session,” Renaud said. “When we hosted our weather and climate events sessions, they were our second best attended events.” He noted that the institute has direct access to climate data from the Byrd Polar and Climate Research Center, known internationally as a leader in polar, alpine, and climate research, and it has integrated those findings into its seminars. “As we read in the newspaper every single day, there’s another weather event, and they’re getting closer together and the severity of those weather events is growing in intensity,” Renaud said. He referenced as an example the 1,000-year storm last month in Ellicott City, Md., the second time in two years a massive rainstorm devastated the city with flash flooding,

wreaking havoc on city infrastructure, toppling cars, and inundating buildings and businesses with water. “That’s a different animal,” he said. “That’s very different than what we’ve experienced.” Renaud said the institute has made it a goal to try to help its members and others in the business community prepare for more devastating storms, the likes of which few are currently prepared for. The institute is encouraging developers to make better choices on where to build, and for new and existing buildings to be made more resilient. They are also looking at the risk dangers to global supply chains posed by climate change. “Businesses need to understand where the gaps are in their vendor relationships,” he said.

Union of Concerned Scientists

Accelerating sea level is putting 311,000 U.S. coastal homes worth roughly $117.5 billion at risk from chronic flooding over the next 30 years, a new report by the Union of Concerned Scientists shows. The report, released in late June, also indicates that some 14,000 coastal commercial properties assessed at a value of roughly $18.5 billion are at

risk during that timeframe. Expect things to get worse as time passes. By the end of the century, more than $1 trillion could be at risk. That’s 2.4 million homes ($912 billion) and 107,000 commercial properties ($152 billion). The analysis uses property data from Zillow, and it offers three sea level rise scenarios developed by the National Oceanic and Atmospheric Administration.

‘Sustainable use of natural resources is critical for the future success of most businesses.’ The report examines how many residential and commercial properties along the coastline in the lower 48 states are at risk of becoming “chronically inundated” from high tides and flooding in the coming decades — even in the absence of major storms. “What’s striking as we look along our coasts is that the significant risks of sea level rise to properties identified in our study often aren’t reflected in current home values in coastal real estate markets,” Rachel Cleetus, a report co-author, said in a statement. “Unfortunately, in the years ahead many coastal

in Louisiana, Maryland, New Jersey and North Carolina, according to the report.

Allianz

communities will face declining property values as risk perceptions catch up with reality. In contrast with previous housing market crashes, values of properties chronically inundated due to sea level rise are unlikely to recover and will only continue to go further underwater, literally and figuratively.” The report shows the chronic flooding in some communities could translate into eroding property values and unlivable houses, which would eventually lead to falling tax revenues. Small rural communities could feel it the worse, experiencing a loss of between 30 percent and 70 percent of their

property tax revenue, the report states. It’s probably no surprise that Florida leads the U.S. with the most homes at risk. Climate Central, a nonprofit news organization that analyzes and reports on climate science, last year ranked the state for having the most cities at risk for flooding. And last year data analytics firm GridLex issued a report on flooding that shows Florida was the top U.S. state with Census tracts next to the ocean with 547 tracts and 1.9

million people living in 1.2 million homes. The Union of Concerned Scientists report shows Florida has roughly 1 million homes and $351 billion in decreased property values at risk of chronic flooding by century’s end, followed by New Jersey (250,000 homes), and New York (143,000 homes). Nearly 175 U.S. coastal communities may expect to see 10 percent or more homes at risk of chronic flooding by 2045, the report shows. Places that could be hit hardest include communities

Failure to manage natural resources puts businesses at critical risk, according to new report from Allianz. In its report, “Measuring And Managing Environmental Exposure: A Business Sector Analysis of Natural Capital Risk,” Allianz analyzed more than 2,500 companies and found that the oil and gas, mining, food and beverage and transportation sectors have the highest natural capital risk exposure. The report states that a failure to manage natural capital can bring new interruption and liability scenarios that wipe out profits as resource scarcity, regulatory action and pressure from communities and society grows. “Companies around the world are increasingly confronted with the negative implications of natural capital depletion,” Chris Bonnet, the manager for environmental, social and governance business services for Allianz Global Corporate & Specialty, said in a statement. “Sustainable use of natural resources is critical for the future success of most businesses. Yet while corporate awareness of their natural

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Floods | Closer Look | NATIONAL continued from page 21 capital footprint is growing, many still need to gain a better understanding of the specific threats that can impact their industry sector and company in particular, as well as the mitigation options available.” The report looked at the natural capital risk exposure in 12 industries based on five factors — biodiversity, greenhouse gas and non-GHG emissions, water and waste. The oil and gas, mining, food and beverage as well as the transportation sectors ranked highest in risk exposure, all are in the “danger zone” of natural capital risks. Companies in the oil and gas and mining sectors have a high level of natural capital risk exposure due to the nature of their industry. Transportation falls into the “danger zone” due to its biodiversity impact and GHG and non-GHG emissions. Transportationrelated carbon emissions have increased by 250 percent since 1970 and now account for 23 percent of all global emissions, according to the report. The food and beverage sector is listed as being in the “danger zone” because of its reliance on natural capital in its supply chains. Seven industry sectors rank in the “middle zone,” meaning risk and mitigation levels are roughly in balance: construction; utilities; clothing/apparel; chemical; manufactur-

ing; pharmaceutical and automotive. Telecommunications is the only sector to be classified in the “safe haven” zone, meaning it is without have a high level of risk exposure. According to the report, natural capital risks evolve through three phases before impacting the bottom line of a business: • First Phase: Awareness of the risk grows; • Second Phase: Natural capital risk will potentially start affecting individual companies in their supply chains or own operations through regulatory change or social pressure; • Third Phase: Once the risk cannot be mitigated, it materializes, leading to damages such as liability costs, higher production expenses or business interruption, ultimately affecting the financial performance of the organization. “The key question is how risks can be mitigated as early as possible — both on a technical operational level and in regard to overall enterprise risk management (ERM),” Bonnet said. “Local water scarcity, for example, can be addressed by

rainwater harvesting in day-today management or, on a more strategic level, by deciding not to expand an existing plant due to risk of water shortages.”

‘Unfortunately, in the years ahead many coastal communities will face declining property values as risk perceptions catch up with reality.’ Colorado

Colorado’s governor has ordered his state to adopt California’s vehicle pollution rules. Gov. John Hickenlooper last month signed an executive order to direct the Colorado Air Quality Control Commission to draft rules to adopt the same standards as California by the end of the year. Twelve states plus Washington, D.C., have adopted California’s stringent vehicle emissions standards: Connecticut; Delaware; Maine; Maryland; Massachusetts; New Jersey; New York; Oregon; Pennsylvania; Rhode Island; and Vermont. Colorado’s order comes a few months after federal regulators said they weren’t going to implement stricter new

emissions rules, which would have started with the 2022 model year, that were adopted by the Obama administration. The Obama administration rules stated that each automaker’s fleet must get roughly 36 miles per gallon on average by 2025. California has a waiver under the federal Clean Air Act allowing it to impose tougher standards than the federal rules, and other states can’t set their own standards but they can elect to adopt California’s rules. The Alliance of Auto Manufacturers, which didn’t like the rules, tweeted that “this could impose many burdens on the state’s drivers & taxpayers.” Hickenlooper cited climate change as a reason for the move, and he noted that Colorado’s elevation makes pollution worse. “Our communities, farms and wilderness areas are susceptible to air pollution and a changing climate,” his order said. “It’s critical for Coloradans’ health and Colorado’s future that we meet these challenges head-on.”

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NATIONAL | Closer Look | Flood

6 Things to Know About the Flood Insurance Market Below are highlights from Insurance Journal’s recent report on “Top Private Flood Insurances, 2017 Market Study.” For additional information, or to download the full report visit: https://www. insurancejournal.com/research/

–1–

ten of $630 million, an increase of $217 million over 2016.

–2–

Though the flood insurance market saw many new entrants in 2017, 98 percent of the growth was attributed to five major carrier groups: Assurant, Zurich Re, FM Global, Liberty Mutual and Berkshire Hathaway.

During 2017, the private flood Introduction market expanded considerably with 50 new companies reporting to the NAIC as writing In 2016, the annual statutory financial statement filings for property casualty insurers were modified –flood–insurance line flood coverage. In total,to include a private private item. Now with two years of performance available, we can reportof on the The 2017 top five writers insurers reported direct private progress of the private flood market with greater accuracy. flood insurance premiums writ- direct written premium for

Flood Insurance Premiums

Figure 1: Private Flood Grows By $217MM

private flood insurance in the commercial market were: FM Global ($263,281,599); Zurich Re ($63,839,162); Berkshire Hathaway ($27,603,275); RSUI ($13,224,505); and Allianz ($11,704,696).

The private flood insurance The 2017 top five writers of market has been making signifdirect written premium for icant in-roads during the past private flood insurance in year when compared against the National Flood Insurance the residential market were: Assurant ($89,826,939); Program (NFIP). As of March 2018, NFIP premiums writAIG ($58,245,862); Swiss ten reached $3.55 billion, an Re ($41,571,428); Chubb increase of $11 million over ($9,977,894); and Liberty March ofthe 2017. Combined, Mutual Fire ($8,849,770). On June 16, 2016, the NAIC adopted modification to Property/Casualty Exhibit surplus lines premium and and Losses (Statutory Page flood insurance – of Premiums – direct private 14) and Insurance Expense Exhibit, Parts II In 2017, 10 states experienced premiums written increased and III of the NAIC Annual Statement Blank private flood insurance growth $250Flood” million which added “Line 2.5 - Private for to $1.028 billion, in excess of $5 million gaining writers ofin thenew private market coverage.22 percent of the overall market. business written. These states The definition of private flood insurance to

be reported: Private market coverage (primary standalone, first dollar policies that cover the flood peril and excess flood) for flood insurance that is not offered through Figure 6:Flood Geographic GrowthEx2017 the National Insurance Program. DirectSewer/water Premiums Written clude: backup coverage issued as an endorsement to a homeowner or commercial policy.

$412,724,516

2017 private 2016In 2017, 10 states experienced flood insurance growth in excess of

Statutory Reporting of Private Flood Insurance by State and Carrier

$5 million in new business written, as

in expanded Figure 6.considerably These states During 2017, the private illustrated flood market with 50 new 63% of all business written companies reporting onrepresent line 2.5. In total, insurers reported direct private

Figure 2: The Growth in Came Major Carrier Groups 2017.from Most5 significant growth came

flood insurance premiums written of $630 million, an increase of $217 to the Florida market, with an increase million over 2016. of 12 carriers, most impactful being Assurant’s American Security, writing $24

Assurant 40%

million in new business. The remaining states experienced modest Zurichmore Re 29% growth, with no single carrier increas-

FMthan Global 15% ing its book by more $3 million.

Berkshire Hathaway 7% Liberty Mutual 7% Other 2%

–6–

–4–

$630,085,447

Geographic Growth

represent 63 percent of all business written in 2017 – Florida; California; Texas; New York; New Jersey; Ohio; Louisiana; Massachusetts; Pennsylvania; and Georgia.

Florida

As private flood insurance is written through additional means that are not re$23,165,578 we California ported within this statutory line item recognize that there remains a segment we cannot measure and the figures presented $20,781,178 Texas are to provide context and a benchmark based upon the best available data. $20,241,834 New York

$36,577,082

Figure 3: Commercial Still Leads in 2017 New Jersey Ohio Louisiana Massachusetts Pennsylvania Georgia

$11,824,195 $8,586,883 $7,557,923 $6,267,542 $5,590,632

3 Commercial 64% Residential 35% Non-Specified 1%

$5,198,628

Statutory Reporting of Private Flood Insurance by State and Carrier

24 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

Statutory Reporting of Private Flood Insurance by State and Carrier

7 INSURANCEJOURNAL.COM

WE ALL MAKE BADNews CHOICES. & Markets | NATIONAL

Your insurance carrier doesn’t have to be one of them. its insurance coverage. “It’s all about relationships, with brokers and underwriters.” Insurance professionals “are an extension” of the risk management department, he said. “You have to make sure you have the team that can understand your business and your needs as a company.” Both panelists noted that risk managers are looking for ways to customize their insurance coverage. That has led many businesses that previously relied on a single broker to scout for multiple brokers.

said, reminding that brokers also work closely with insurers and could share information that might adversely affect the client in the event of a coverage dispute. She said any broker who is provided with potentially sensitive company information should be required to sign a confidentiality or nondisclosure agreement first.

Good Brokers

Linde offered several other tips that can help distinguish a good broker. Brokers who want to be Issuing RFPs responsive to a client’s insurance needs will go the distance The panelists urged risk to show their interest and learn managers to consider issuing a request for proposals (RFP) to the client’s industry, she said. identify well-qualified brokers. Typically, they will make mulThe benefits of RFPs go beyond tiple visits to the office or work simply selecting the best insursite throughout the year and By Kathy Finn tionship has gone stale they ance professional, they said. will work closely with insurers “You’ll actually learn a lot may not be giving you that to shape appropriate coverage. broker who does not A good broker should help to information,” Linde said. “You about what’s going on in the fully understand a clieducate the company on insurhave to ask the questions.” industry through the RFP proance products, propose ways to Joining Linde in the session cess,” Linde said. ent’s business or lacks Offering samples of generic minimize risk and stay abreast titled “What has your broker direct links with insurers may not only fall short in advising RFP documents, the panelists of changes in the client’s done for you lately?” was on coverage, but can cause explained that risk managers industry, Linde san the client’s Craig Hoffman, risk manager headaches on all sides of the should carefully customize the industry, Linde said. in the for Wakefearn Food Corp., a insurance relationship, accordRFP to a business and allow client’s industry, Linde said. Keasby, N.J.-based company that is the largest retailing to an attorney representing time for brokers to respond A good broker should help to er-owned cooperative in the policyholders. with a thoughtful proposal. educate the company on insurance products, propose ways to Selena Linde, a partner with United States. A business should provide Hoffman, who in recent minimize risk and stay abreast the Seattle law firm of Perkins the brokers with as much Coie LLP, told attendees at the of changes in the client’s indusyears has overhauled his comuseful information as possible try, Linde said. pany’s risk management proRisk Insurance Management — including key financial data gram, said a key to effectively Hoffman added that gement Society 2015 conference that and past claims information — SM theyour wide-ranging teamsexperience. often tasdfl;k ms often choosing an insurance broker give themaanbetter opportunity to When life gets a littlemanaging messy, customertoneeds insurance risks employers of all sizes tasdfl dsfadfasasdfklasdf asdfcarefully can be crucial to evaluate the company’s needs his Enjoy this article? Share routinely face is making sure effectively managing risk in and provide a meaningful Lend a hand and lead them to a choice they won’t regret: The Foremost Choice®! it with a colleague IJMAG. the right people are on hand nearly any company. response. COM/1205GB to guide the company through “Talk to your broker and see But in providing information policy decisions, claims filing what services they can offer to a broker, Linde emphasized and every other insurance-reyou,” she advised risk managthat the relationship is not ers. lated function. privileged. “Brokers have a lot of tools “We do things the old-fash “You do have to be careful in their arsenal that are really ioned way,” he said of his comin discussing (sensitive) information with your brokers,” she quite helpful, but if your relapany’s approach to designing

What Risk Managers Expect from Their Insurance Brokers: RIMS

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NATIONAL | Special Report

2018 Super Regional P/C Insurers

Demotech Inc. Reveals Leading Multi-State Property/Casualty Insurers

qualifying criteria and thresholds evaluated as of Dec. 31, 2017 were used:

• • • • • • • •

n order to continue the discussion regarding what constitutes a Super Regional P/C Insurer™ and to give definition to this important group of insurers, Demotech, Inc. analyzed year-end 2017 data for property/casualty insurance companies. This data was utilized to classify and stratify insurers reporting data to the National Association of Insurance Commissioners. This marks the 11th year of this effort, as the original criteria and objective definitions for Super Regional P/C Insurers™ and other company classifications were established in Insurance Journal in 2007. In recognition of the continued stratification of carriers using Demotech’s Company By Barry J. Classification System, Koestler II Insurance Journal and Demotech created the Super Regional P/C Insurer™ Conference. For more information on the conference, visit www.superregional.net.

Demotech Classification System

Active, individual companies; Reporting data using the property/ casualty annual statement format; At least $1 million of direct premium written in each of two to 34 states; Less than 90 percent of direct premium written in any one state; Less than 90 percent of direct premium written in any one line of business; Policyholders surplus of at least $100 million; Net premium written of at least $50 million; and Direct premium written of at least $25 million.

2018

In general terms, a Super Regional is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers, and reinsurers are not eligible for the Super Regional category as they are assigned to their own classifications. Prior to the establishment of an industry-wide definition, a number of property/ casualty insurers had referred to themselves as Super Regionals. Demotech,

The Demotech Company Classification System categorizes property/casualty insurers, not groups or families of insurers, into one of 11 categories based on an analysis of the data reported by the companies. The 11 categories that comprise the system are Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus 2018 Property/Casualty Insurance Cos. Lines Carriers, Reinsurers and Demotech Company Classifications companies with less than $1 million in direct premium Direct Premium written. A company cannot Written Less than Near Nationals 2% $1 million 4% be assigned to more than one Nationals 2% Reinsurers 2% Super Regionals 6% category. Therefore, a comSurplus Lines Carriers 7% pany not designated as a Super Risk Retention Groups 9% Regional is given another clasRegionals 8% sification.

Super Regional Criteria and Thresholds

To determine the companies for the 2018 Super Regional Property/Casualty Insurer™ list, these specific, objective

SR1 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

Strategic Subsidiaries 18%

State Specialists 28%

Coverage Specialists 14%

INSURANCEJOURNAL.COM

the official research partner of Insurance Journal, has compared the data to the criteria and updated the list of Super Regionals for 2018.

The 2018 Super Regional Property/ Casualty Insurers™

For 2018, 155 Super Regional Property/ Casualty Insurers™ were identified. They are presented in this Insurance Journal special report both alphabetically and by size as ranked by direct premium written as of Dec. 31, 2017. For 2018, there are 11 Super Regional companies that were not classified as Super Regionals in 2017, as well as

17 insurers identified as Super Regionals in 2017 that have been reclassified into another category this year. Of the 155 Super Regionals for 2018, 74 have been designated as such for all 12 years that the Company Classification System has been applied. Super Regional insurers are critically important to the insurance industry, and of particular importance to their agents, producers, and insureds. These companies are strong, stable markets that work hard for their agents, insureds, and their reinsurers. Insurers and interested readers are

encouraged to review the selection criteria and thresholds used to determine the 2018 Super Regionals. The selection criteria remain quantitative and transparent. Demotech is focused on setting benchmarks at levels that accurately categorize the industry. The relative consistency of the company type distribution over time suggests that the categorizations that have been established are valid and effective in classifying the industry. It is important to reiterate that the Demotech Company Classification System is an objective stratification of the companies that comprise the indus-

2018 Super Regional Property/Casualty Insurers™

Alphabetical Listing

ACUITY, A Mutual Insurance Co. Alaska National Insurance Co. All America Insurance Co. Allied World Specialty Insurance Co. American Commerce Insurance Co. American Family Home Insurance Co. American Family Mutual Insurance Co., S.I. American Hallmark Insurance Co. of Texas American Mercury Insurance Co. American Road Insurance Co. American Security Insurance Co. American Select Insurance Co. American Strategic Insurance Corp. Amerisure Insurance Co. Amerisure Mutual Insurance Co. AMEX Assurance Co. Arbella Protection Insurance Co. Atlantic States Insurance Co. Auto Club Group Insurance Co. Auto Club Insurance Association Automobile Insurance Co. of Hartford, Connecticut Auto-Owners Insurance Co. AXA Insurance Co. Bay State Insurance Co. BITCO General Insurance Corp. Brethren Mutual Insurance Co. Builders Mutual Insurance Co. California Casualty Indemnity Exchange Cambridge Mutual Fire Insurance Co. Capitol Indemnity Corporation Central Mutual Insurance Co. Central States Indemnity Co. of Omaha Cherokee Insurance Co. Citizens Insurance Co. of America Columbia Insurance Co. Columbia Mutual Insurance Co. Concord General Mutual Insurance Co. Contractors Bonding and Insurance Co. COUNTRY Mutual Insurance Co. Courtesy Insurance Co. CSAA Affinity Insurance Co. Cumberland Mutual Fire Insurance Co. Cypress Insurance Co. Dentists Insurance Co. Developers Surety and Indemnity Co. Donegal Mutual Insurance Co. Electric Insurance Co. EMCASCO Insurance Co. Erie Insurance Co. Erie Insurance Exchange Executive Risk Indemnity Inc. Explorer Insurance Co.

INSURANCEJOURNAL.COM

Farm Bureau Property & Casualty Insurance Co. Farm Family Casualty Insurance Co. Farmers Alliance Mutual Insurance Co. Farmers Automobile Insurance Association Farmers Insurance Co. Inc. Farmers Insurance Exchange Farmers Mutual Insurance Co. of Nebraska Farmington Casualty Co. Farmland Mutual Insurance Co. FCCI Insurance Co. Federated National Insurance Co. Fire Insurance Exchange Frankenmuth Mutual Insurance Co. General Security National Insurance Co. Goodville Mutual Casualty Co. Grange Insurance Association Grange Mutual Casualty Co. Gray Insurance Co. Great Midwest Insurance Co. Grinnell Mutual Reinsurance Co. Harco National Insurance Co. Harford Mutual Insurance Co. Hartford Insurance Co. of Illinois Hastings Mutual Insurance Co. Imperium Insurance Co. IMT Insurance Co. Insurance Co. of North America Lightning Rod Mutual Insurance Co. Lititz Mutual Insurance Co. MemberSelect Insurance Co. Merchants Mutual Insurance Co. Mercury Casualty Co. Merrimack Mutual Fire Insurance Co. Mid-Continent Casualty Co. Middlesex Insurance Co. Milbank Insurance Co. Mitsui Sumitomo Insurance Co. of America Motorists Commercial Mutual Insurance Co. Motorists Mutual Insurance Co. Motors Insurance Corporation Mountain West Farm Bureau Mutual Insurance Co. Mutual Benefit Insurance Co. Mutual of Enumclaw Insurance Co. Nationwide Mutual Fire Insurance Co. NGM Insurance Co. North River Insurance Co. North Star Mutual Insurance Co. Oak River Insurance Co. Occidental Fire and Casualty Co. of North Carolina Old Republic General Insurance Corp. Old United Casualty Co. Owners Insurance Co.

Pacific Employers Insurance Co. Pacific Specialty Insurance Co. Peerless Insurance Co. Pekin Insurance Co. PEMCO Mutual Insurance Co. Penn National Security Insurance Co. Pennsylvania National Mutual Casualty Insurance Co. Philadelphia Contributionship Insurance Co. Physicians Insurance A Mutual Co. Preferred Mutual Insurance Co. Progressive Casualty Insurance Co. Progressive Northern Insurance Co. Progressive Preferred Insurance Co. Protective Property & Casualty Insurance Co. Providence Mutual Fire Insurance Co. Quincy Mutual Fire Insurance Co. Redwood Fire and Casualty Insurance Co. Rockwood Casualty Insurance Co. SECURA Insurance, A Mutual Co. Selective Insurance Co. of America Selective Insurance Co. of New York Selective Insurance Co. of South Carolina Selective Insurance Co. of the Southeast Selective Way Insurance Co. Shelter Mutual Insurance Co. Society Insurance, a Mutual Co. St. Paul Fire and Marine Insurance Co. St. Paul Mercury Insurance Co. Star Insurance Co. State Auto Property & Casualty Insurance Co. State Automobile Mutual Insurance Co. Stillwater Insurance Co. Toyota Motor Insurance Co. TransGuard Insurance Co. of America Inc. Trinity Universal Insurance Co. Triton Insurance Co. Truck Insurance Exchange United Financial Casualty Co. United Fire & Casualty Co. United Ohio Insurance Co. United Property & Casualty Insurance Co. Utica First Insurance Co. Utica Mutual Insurance Co. Vanliner Insurance Co. Vermont Mutual Insurance Co. West Bend Mutual Insurance Co. Western Agricultural Insurance Co. Western National Mutual Insurance Co. Western Reserve Mutual Casualty Co. Westfield Insurance Co. Westfield National Insurance Co.

JULY 2, 2018 INSURANCE JOURNAL | NATIONAL | SR2

try based on their business models. It is not equivalent to or suggestive of ratings of the individual insurers. Moreover, inclusion on the list of Super Regionals does not imply that a company is superior to companies that were not included in that classification. Future issues of Insurance Journal will

report on the other categories within the Demotech Company Classification System. Since 1985, Demotech has been providing independent Financial Stability RatingsÂŽ of property/casualty insurers and title underwriters. Please send suggestions or comments to Barry Koestler at bkoestler@demotech.

com or Andrew Simpson, vice president of content for Insurance Journal, at asimpson@insurancejournal.com. Koestler II is the chief ratings officer of Demotech Inc., a financial analysis firm specializing in evaluating the financial stability of regional and specialty insurers. Website: www.demotech.com.

NEW 2018 Super Regionals Company Name Allied World Specialty Insurance Co. Arbella Protection Insurance Co. Cypress Insurance Co. Developers Surety and Indemnity Co. Explorer Insurance Co. General Security National Insurance Co. Mutual Benefit Insurance Co. Occidental Fire and Casualty Co. of North Carolina PEMCO Mutual Insurance Co. Providence Mutual Fire Insurance Co. Rockwood Casualty Insurance Co.

2018 Demotech Company Classification

2017 Demotech Company Classification

2016 Demotech Company Classification

2015 Demotech Company Classification

2014 Demotech Company Classification

Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional

Near National Regional State Specialist Strategic Subsidiary State Specialist Coverage Specialist Regional

Near National Regional State Specialist Regional State Specialist Coverage Specialist Regional

Super Regional

Near National

Super Regional

Near National

Super Regional Super Regional Super Regional

State Specialist Regional Regional

State Specialist Super Regional Regional

RECLASSIFIED 2017 Super Regionals Company Name

Alterra America Insurance Co. AmGUARD Insurance Co. BITCO National Insurance Co. Century-National Insurance Co. Civil Service Employees Insurance Co. Farmers Mutual Hail Insurance Co. of Iowa Federated Rural Electric Insurance Exchange Federated Service Insurance Co. General Casualty Co. of Wisconsin Hallmark Insurance Co. Integon National Insurance Co. Jewelers Mutual Insurance Co. MHA Insurance Co. National Lloyds Insurance Co. Pennsylvania Lumbermens Mutual Insurance Co. Pharmacists Mutual Insurance Co. Unigard Insurance Co.

2018 2017 Demotech Demotech Company Company Classification Classification

2016 Demotech Company Classification

2015 Demotech Company Classification

2014 Demotech Company Classification

Strategic Subsidiary Near National Strategic Subsidiary Strategic Subsidiary Regional Coverage Specialist Near National Near National Near National Regional Near National Near National N/A

Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional

Super Regional Super Regional Super Regional Super Regional Super Regional Coverage Specialist Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional

Strategic Subsidiary Super Regional Super Regional Super Regional Super Regional Coverage Specialist Super Regional Super Regional Super Regional Regional Super Regional Super Regional Super Regional

Strategic Subsidiary Super Regional Super Regional Super Regional Super Regional Super Regional Super Regional Near National Super Regional Regional Super Regional Super Regional Super Regional

Regional Near National Near National Regional

Super Regional Super Regional Super Regional Super Regional

Super Regional Near National Super Regional Super Regional

Super Regional Super Regional Regional Super Regional

Regional Super Regional Regional Super Regional

Why Company Does Not Qualify as a 2018 Super Regional States < 2, NPW, DPW States > 34 NPW PHS, NPW PHS LOB > 90% States > 34 States > 34 States > 34 PHS States > 34 States > 34 12/31/17 data not available PHS States > 34 States > 34 PHS

LOB = Line of Business; NPW = Net Premium Written; PHS = Policyholders Surplus

SR3 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

INSURANCEJOURNAL.COM

2018 Super Regional P/C Insurersâ&#x201E;¢

As developed by Demotech Inc. for Insurance Journal. Ranked by Direct Premium Written as of 12/31/2017. Company

12/31/2017 DPW OOOs omitted

Group Name

State Of Domicile

Number/States Greater than $1 Million DPW as of 12/31/2017

American Family Mutual Insurance Co., S.I.

$4,950,972

American Family Insurance Group

19 - AZ,CO,GA,ID,IL,IN,IA,KS,MN,MO,NE,NV,ND,OH,OR,SD,UT,WA,WI

2 3

Erie Insurance Exchange Farmers Insurance Exchange

$4,715,710 $4,439,788

Erie Insurance Group Farmers Insurance Group

PA CA

Auto-Owners Insurance Co.

$3,392,232

Auto Owners Group

Owners Insurance Co.

$1,826,529

Auto Owners Group

COUNTRY Mutual Insurance Co.

$1,672,711

7 8

Progressive Casualty Insurance Co. Progressive Northern Insurance Co.

$1,662,539 $1,569,167

Country Insurance & Financial Services Group Progressive Group Progressive Group

OH WI

9 10 11

Shelter Mutual Insurance Co. Fire Insurance Exchange ACUITY, A Mutual Insurance Co.

$1,545,026 $1,446,575 $1,438,732

Shelter Insurance Group Farmers Insurance Group N/A

MO CA WI

United Financial Casualty Co.

$1,420,211

Progressive Group

13 14

Erie Insurance Co. Nationwide Mutual Fire Insurance Co.

$1,349,426 $1,339,849

Erie Insurance Group Nationwide Corp Group

PA OH

$1,215,284

Iowa Farm Bureau Group

Farm Bureau Property & Casualty Insurance Co. Westfield Insurance Co.

12 - DC,IL,IN,KY,MD,NC,OH,PA,TN,VA,WV,WI 34 - AL,AZ,AR,CA,CO,GA,ID,IL,IN,IA,KS,ME,MD,MI,MN,MO,MT,NE,NV,NJ, NM,ND,OH,OK,OR,PA,SD,TN,TX,UT,VA,WA,WI,WY 26 - AL,AZ,AR,CO,FL,GA,ID,IL,IN,IA,KS,KY,MI,MN,MO,NE,NC,ND,OH,PA, SC,SD,TN,UT,VA,WI 25 - AL,AZ,AR,CO,FL,GA,ID,IL,IN,IA,KS,KY,MN,MO,NE,NC,ND,OH,PA,SC, SD,TN,UT,VA,WI 31 - AL,AK,AZ,AR,CO,CT,GA,ID,IL,IN,IA,KS,KY,MA,MI,MN,MO,NV,NH,NJ, NY,ND,OH,OK,OR,PA,TN,VT,VA,WA,WI 20 - AZ,AR,CA,CO,CT,DC,HI,KY,MD,MA,MO,NV,NY,OH,PA,RI,TN,TX,VA,WA 22 - CT,DE,IL,IA,KY,ME,MN,NE,NV,NH,NM,NY,OK,OR,PA,RI,SC,SD,VT,VA, WI,WY 14 - AR,CO,IL,IN,IA,KS,KY,LA,MS,MO,NE,NV,OK,TN 17 - AL,CA,CO,IA,MI,MN,MO,MT,NE,NV,ND,SD,TX,UT,WA,WI,WY 25 - AZ,CO,ID,IL,IN,IA,KS,KY,ME,MI,MN,MO,MT,NE,NV,NM,ND,OH,PA,SD, TN,TX,UT,WI,WY 28 - AK,AZ,AR,CA,CO,DE,ID,KS,KY,ME,MD,MA,MN,MT,NV,NH,NM,NY,ND, OH,PA,RI,SD,TX,UT,VT,WA,WV 13 - DC,IL,IN,KY,MD,NY,NC,OH,PA,TN,VA,WV,WI 30 - AL,AZ,AR,CA,CT,DE,DC,GA,IL,IN,KY,ME,MD,MI,MS,NH,NY,NC,OH,OK, OR,PA,RI,SC,TN,TX,VT,VA,WA,WV 8 - AZ,IA,KS,MN,NE,NM,SD,UT

$1,204,605

Westfield Group

17 18 19 20

West Bend Mutual Insurance Co. MemberSelect Insurance Co. Farmers Insurance Co. Inc. Truck Insurance Exchange

$1,193,688 $1,076,871 $1,019,937 $924,178

N/A Automobile Club MI Group Farmers Insurance Group Farmers Insurance Group

Citizens Insurance Co. of America

$900,805

The Hanover Insurance Group

22 23

Progressive Preferred Insurance Co. American Security Insurance Co.

$887,868 $881,810

Progressive Group Assurant Inc. Group

24 25

$712,882 $676,128

United Ins. Holdings Group State Auto Mutual Group

United Property & Casualty Insurance Co. State Auto Property & Casualty Insurance Co. Central Mutual Insurance Co.

$673,747

United Fire & Casualty Co.

$661,378

Central Mutual Insurance Co. Group United Fire & Casualty Group

American Strategic Insurance Corp.

$648,219

Progressive Group

Selective Insurance Co. of South Carolina

$637,900

Selective Insurance Group

30 31 32

$618,338 $605,507 $571,399

Frankenmuth Group Monarch Delaware Group Travelers Group

MI FL CT

$561,190 $557,095

Pennsylvania National Insurance Group Selective Insurance Group

Frankenmuth Mutual Insurance Co. Federated National Insurance Co. Automobile Insurance Co. of Hartford, Connecticut Pennsylvania National Mutual Casualty Insurance Co. Selective Insurance Co. of the Southeast

Selective Insurance Co. of America

$534,089

Selective Insurance Group

36 37 38 39 40 41 42 43 44 45

$518,699 $476,219 $458,426 $452,697 $450,355 $448,744 $445,407 $437,592 $429,371 $420,062

N/A FCCI Mutual Insurance Group N/A Berkshire Hathaway Group Grange Mutual Casualty Group Motorists Mutual Group N/A Secura Insurance Group Automobile Club MI Group IAT Reinsurance Co. Group

Courtesy Insurance Co. FCCI Insurance Co. PEMCO Mutual Insurance Co. Cypress Insurance Co. Grange Mutual Casualty Co. Motorists Mutual Insurance Co. Hastings Mutual Insurance Co. SECURA Insurance, A Mutual Co. Auto Club Group Insurance Co. Occidental Fire and Casualty Co. of North Carolina St. Paul Fire and Marine Insurance Co.

$413,786

Travelers Group

Amerisure Insurance Co.

$410,235

Amerisure Co. Group

Pekin Insurance Co.

$408,535

Pekin Insurance Group

SR4 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

OH 25 - AL,AZ,AR,CO,DE,FL,GA,IL,IN,IA,KY,MD,MI,MN,MO,NM,NC,OH,PA,SC, TN,TX,VA,WV,WI WI 11 - IL,IN,IA,KS,KY,MI,MN,MO,NE,OH,WI MI 10 - GA,IL,IN,IA,MI,MN,NE,ND,OH,TN KS 5 - AR,IA,KS,MO,OK CA 32 - AL,AZ,AR,CA,CO,CT,ID,IL,IN,IA,KS,MI,MN,MO,MT,NE,NV,NJ,NM,NY, OH,OK,OR,PA,SD,TN,TX,UT,VA,WA,WI,WY MI 24 - AZ,CA,CO,CT,GA,IL,IN,ME,MA,MI,MN,MO,NH,NJ,NY,OH,PA,RI,SC, UT,VT,VA,WA,WI OH 10 - AZ,CO,GA,HI,MN,MO,NV,NM,OH,PA DE 33 - AL,AK,AZ,CA,CO,CT,FL,GA,IL,IN,KY,LA,ME,MD,MA,MI,MN,MS,MO,NV, NJ,NY,NC,OH,OK,PA,RI,SC,TN,TX,UT,VA,WA FL 10 - CT,FL,GA,LA,MA,NJ,NC,RI,SC,TX IA 30 - AL,AZ,AR,CO,CT,GA,IL,IN,IA,KS,KY,MD,MA,MI,MN,MS,MO,NC,ND,OH, OK,PA,SC,SD,TN,TX,UT,VA,WV,WI OH 19 - AZ,CO,CT,GA,IL,IN,KY,MA,MI,NH,NM,NY,NC,OH,OK,SC,TN,TX,VA IA

30 - AL,AZ,AR,CA,CO,FL,ID,IL,IN,IA,KS,KY,LA,MI,MN,MS,MO,MT,NE,NM, ND,OH,OK,OR,SD,TN,TX,UT,WI,WY 31 - AL,AZ,CO,CT,FL,GA,IL,IA,KS,KY,MD,MA,MI,MN,MS,MO,NE,NV,NJ,NM, NC,OH,OK,OR,PA,SC,TN,UT,VA,WA,WI 22 - CT,DE,GA,IL,IN,IA,KY,MD,MA,MI,MN,MO,NJ,NY,NC,OH,PA,RI,SC, TN,VA,WI 14 - AL,GA,IL,IN,KY,ME,MI,NH,NC,OH,SC,TN,VT,WI 6 - AL,FL,GA,LA,SC,TX 32 - AL,AZ,AR,CO,CT,DC,GA,ID,IL,IN,KS,KY,ME,MD,MN,MS,MO,MT,NV,NH, NY,NC,OH,OR,PA,SC,TN,TX,UT,VA,WA,WI 10 - AL,DE,MD,NJ,NC,PA,SC,TN,TX,VA

28 - AL,AZ,CT,DE,DC,FL,GA,IL,IN,IA,KY,LA,MD,MA,MI,MN,MS,MO,NY,NC, OH,PA,RI,SC,TN,TX,VA,WI NJ 26 - AZ,CA,CT,DE,DC,GA,HI,IL,IN,IA,MD,MA,MI,MN,MO,NJ,NY,NC,OH,PA, RI,SC,TN,VA,WA,WI FL 19 - AL,CA,CO,FL,GA,IL,MD,MA,NH,NJ,NM,NC,OH,PA,SC,TN,TX,VA,WI FL 18 - AL,AR,FL,GA,IL,IN,KY,LA,MD,MI,MS,MO,NC,OH,SC,TN,TX,VA WA 2 - OR,WA CA 6 - AL,AR,CA,GA,SC,TN OH 9 - GA,IL,IN,KY,OH,PA,SC,TN,VA OH 6 - IN,KY,MI,OH,PA,WV MI 6 - IL,IN,IA,MI,OH,WI WI 12 - AZ,CO,IL,IN,IA,KS,KY,MI,MN,MO,ND,WI MI 6 - IN,IA,MI,NE,ND,WI NC 28 - AL,AK,AZ,CA,CO,CT,FL,GA,IL,IN,KY,LA,MD,MA,MI,MS,NV,NJ,NY,NC, OH,PA,SC,TN,TX,UT,VA,WA CT 22 - AR,CA,CO,FL,IL,KS,KY,LA,MI,MS,MT,NM,NY,ND,OH,OK,PA,TX,UT, VA,WV,WY MI 26 - AL,AZ,AR,FL,GA,IL,IN,IA,KS,KY,LA,MD,MI,MN,MS,MO,NE,NY,NC,PA, SC,TN,TX,UT,VA,WI IL 6 - AZ,IL,IN,IA,OH,WI

INSURANCEJOURNAL.COM

Company

12/31/2017 DPW OOOs omitted

Group Name

State Of Domicile

State Automobile Mutual Insurance Co.

$408,183

State Auto Mutual Group

Redwood Fire and Casualty Insurance Co.

$405,223

Berkshire Hathaway Group

51 52

North Star Mutual Insurance Co. Farm Family Casualty Insurance Co.

$404,889 $388,973

American Road Insurance Co.

$385,550

North Star Co Group American National Financial Group N/A

Amerisure Mutual Insurance Co.

$381,661

Amerisure Co Group

55 56 57

Farmers Mutual Insurance Co. of Nebraska Vermont Mutual Insurance Co. NGM Insurance Co.

$378,697 $375,763 $368,425

N/A Vermont Mutual Group Main Street America Group

NE VT FL

EMCASCO Insurance Co.

$366,442

EMC Insurance Company Group

59 60 61 62

American Commerce Insurance Co. Grinnell Mutual Reinsurance Co. Merrimack Mutual Fire Insurance Co. BITCO General Insurance Corp.

$361,015 $351,470 $345,100 $343,499

Mapfre Insurance Group Grinnell Mutual Group Andover Group Old Republic Group

OH IA MA IL

Westfield National Insurance Co.

$340,285

Westfield Group

64 65 66 67 68

Donegal Mutual Insurance Co. American Select Insurance Co. Preferred Mutual Insurance Co. Western National Mutual Insurance Co. Old Republic General Insurance Corp.

$337,339 $336,492 $322,178 $311,194 $298,827

Donegal Group Westfield Group N/A Western National Mutual Group Old Republic Group

PA OH NY MN IL

69 70

Mutual of Enumclaw Insurance Co. Motors Insurance Corp.

$292,604 $290,950

Mutual of Enumclaw Group Ally Insurance Holdings Group

OR MI

71 72 73

Western Agricultural Insurance Co. Builders Mutual Insurance Co. Electric Insurance Co.

$289,423 $281,706 $268,579

Iowa Farm Bureau Group Builders Group Electric Insurance Group

IA NC MA

Mitsui Sumitomo Insurance Co. of America

$266,119

MS & AD Insurance Group

California Casualty Indemnity Exchange

$264,378

76 77

Alaska National Insurance Co. North River Insurance Co.

$264,038 $256,289

California Casualty Management Group N/A Fairfax Financial Group

Star Insurance Co.

$254,736

AmeriTrust Group

79 80 81

Selective Way Insurance Co. Farmers Automobile Insurance Association Farmington Casualty Co.

$249,754 $239,852 $232,805

Selective Insurance Group Pekin Insurance Group Travelers Group

NJ IL CT

82 83 84

Peerless Insurance Co. Pacific Specialty Insurance Co. Vanliner Insurance Co.

$231,121 $226,398 $220,701

Liberty Mutual Group Western Service Contract Group American Financial Group

NH CA MO

85 86 87 88 89 90

Atlantic States Insurance Co. Quincy Mutual Fire Insurance Co. Auto Club Insurance Association Merchants Mutual Insurance Co. Arbella Protection Insurance Co. Utica Mutual Insurance Co.

$218,740 $213,446 $206,616 $206,418 $205,057 $204,444

Donegal Group Quincy Mutual Group Automobile Club MI Group Merchants Mutual Group Arbella Ins Group Utica Group

PA MA MI NY MA NY

91 92

Cherokee Insurance Co. Farmland Mutual Insurance Co.

$203,024 $201,645

N/A Nationwide Corp Group

MI IA

Allied World Specialty Insurance Co.

$199,847

Fairfax Financial Group

94 95 96

$199,389 $193,060 $192,121

Mercury General Group N/A Mountain West Farm Group

CA WI WY

Mercury Casualty Co. Society Insurance, a Mutual Co. Mountain West Farm Bureau Mutual Insurance Co. American Family Home Insurance Co.

$190,660

Munich Re Group

AXA Insurance Co.

$181,393

Axa Insurance Group

AMEX Assurance Co.

$179,040

N/A

100 Harco National Insurance Co.

$175,913

IAT Reinsurance Co. Group

101 Old United Casualty Co.

$175,898

Berkshire Hathaway Group

SR5 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

Number/States Greater than $1 Million DPW as of 12/31/2017

OH 27 - AL,AZ,AR,CO,CT,GA,IL,IN,KS,KY,MD,MA,MI,MN,MS,MO,NC,ND,OH,PA, SC,SD,TN,TX,VA,WV,WI NE 29 - AZ,CA,CO,CT,DE,GA,HI,ID,IL,IN,IA,KS,KY,MD,MI,MN,MO,NE,NV,NJ,NY, NC,OK,PA,SC,TN,TX,UT,VA MN 7 - IA,KS,MN,NE,ND,OK,SD NY 12 - CT,DE,ME,MA,NH,NJ,NY,PA,RI,VT,VA,WV MI

AK NJ

34 - AL,AZ,AR,CA,CO,CT,FL,GA,IL,IN,IA,KS,KY,LA,MD,MA,MI,MN,MS,MO, NE,NJ,NM,NY,NC,OH,OK,OR,PA,SC,TN,TX,VA,WI 29 - AL,AZ,AR,CA,CO,FL,GA,IL,IN,IA,KS,KY,LA,MD,MI,MN,MS,MO,NJ,NY, NC,OK,PA,SC,TN,TX,UT,VA,WI 2 - NE,SD 7 - CT,ME,MA,NH,NY,RI,VT 22 - AZ,CT,DE,FL,GA,ME,MD,MA,MI,NV,NH,NJ,NY,NC,PA,RI,SC,TN,TX, UT,VT,VA 33 - AL,AZ,AR,CO,CT,GA,ID,IL,IN,IA,KS,KY,LA,MI,MN,MS,MO,MT,NE,NV, NC,ND,OH,OK,OR,PA,SC,SD,TN,TX,UT,VA,WI 20 - AZ,CA,CO,CT,FL,ID,IL,IN,KS,KY,ME,MO,NJ,NY,OH,OR,RI,TN,TX,WA 11 - IL,IN,IA,MN,MO,NE,ND,OH,OK,SD,WI 8 - CT,IL,ME,MA,NH,NJ,NY,RI 33 - AL,AZ,AR,CO,FL,GA,ID,IL,IN,IA,KS,KY,LA,MD,MI,MN,MS,MO,MT,NE, NM,NC,OK,OR,PA,SC,SD,TN,TX,VA,WA,WI,WY 21 - AZ,CA,CO,DE,GA,IL,IN,IA,KY,MD,MI,MN,NM,NC,OH,PA,SC,TN,VA, WV,WI 15 - AL,DE,GA,IN,IA,MD,NE,NM,NC,OH,PA,TN,TX,VA,WI 15 - CO,GA,IL,IN,IA,KY,MI,MN,NC,OH,PA,TN,VA,WV,WI 4 - MA,NH,NJ,NY 10 - AZ,CA,IL,IA,MN,ND,OR,SD,WA,WI 23 - AZ,CA,CO,CT,FL,HI,IL,IN,LA,MD,MA,MI,MO,NV,NJ,NY,NC,OK,PA,SC, TN,TX,VA 5 - AZ,ID,OR,UT,WA 30 - AL,AR,CA,CO,FL,GA,IL,IN,IA,KS,LA,MI,MN,MS,MO,NE,NJ,NM,NY,NC, ND,OH,OK,PA,SC,SD,TN,TX,WV,WI 8 - AZ,IA,KS,MN,NE,NM,SD,UT 9 - DC,FL,GA,MD,MS,NC,SC,TN,VA 33 - AL,AZ,CA,CO,CT,FL,GA,IL,IN,KS,KY,LA,ME,MD,MA,MI,MN,MO,NH,NJ, NY,NC,OH,OK,PA,SC,TN,TX,UT,VT,VA,WA,WI 33 - AL,AZ,CA,CO,CT,FL,GA,HI,IL,IN,KS,KY,LA,MD,MA,MI,MN,MS,MO,NV, NJ,NY,NC,OH,OR,PA,SC,TN,TX,UT,VA,WA,WI 18 - AL,AZ,CA,CO,CT,DE,GA,IN,KS,MD,MN,NV,NM,OK,PA,TN,TX,VA 6 - AK,CA,ID,LA,OR,WA 34 - AL,AZ,CA,CO,CT,FL,GA,HI,IL,IN,KY,LA,MD,MA,MI,MN,MS,MO,NV,NH, NJ,NY,NC,OH,OK,OR,PA,RI,SC,TN,TX,VA,WA,WI 31 - AZ,AR,CA,CT,FL,GA,IL,IN,IA,KS,KY,MD,MA,MI,MN,MO,NE,NH,NJ,NY, NC,ND,OK,PA,SC,SD,TN,TX,VT,VA,WI 10 - DE,DC,GA,MD,MI,NJ,NY,PA,SC,VA 4 - IL,IN,IA,WI 32 - AL,AZ,AR,CO,CT,DE,DC,GA,IL,IN,KS,KY,LA,MD,MI,MN,MS,MO,NH,NM, NY,NC,OK,OR,PA,RI,SC,SD,TN,TX,UT,VT 21 - CA,CT,DE,GA,IL,IN,KY,ME,MD,MA,NH,NY,NC,OH,PA,RI,SC,TN,TX,VT,VA 7 - AZ,CA,CO,CT,NJ,OK,TX 33 - AK,AZ,CA,CO,CT,FL,GA,IL,IN,IA,KS,KY,MD,MA,MI,MN,MS,MO,NE,NV, NJ,NY,NC,OH,OR,PA,SC,TN,TX,UT,VA,WA,WI 11 - DE,GA,IN,IA,MD,MI,NE,OH,PA,TN,VA 4 - CT,MA,NY,RI 4 - IL,MI,MN,WI 9 - MA,MI,NH,NJ,NY,OH,PA,RI,VT 4 - CT,MA,NH,RI 24 - CT,DE,GA,IL,IN,KY,MD,MA,MI,MN,MO,NH,NJ,NY,NC,OH,PA,RI,SC, TN,TX,VA,WA,WI 19 - AL,AR,CA,FL,IN,KS,KY,MI,MS,MO,NE,NC,OH,OK,PA,SC,TN,TX,VA 33 - AL,AZ,AR,CA,CO,FL,GA,ID,IL,IN,IA,KS,KY,MI,MN,MS,MO,MT,NE,NC, ND,OH,OK,OR,PA,SC,SD,TN,TX,UT,WA,WI,WY 33 - AL,AZ,CA,CO,CT,FL,GA,IL,IN,KY,LA,ME,MD,MA,MI,MN,MS,MO,NV,NJ, NM,NY,NC,OH,OK,OR,PA,SC,TN,TX,UT,WA,WI 5 - AZ,CA,NV,NY,VA 5 - IL,IN,IA,TN,WI 2 - MT,WY 26 - AL,AZ,AR,CA,FL,GA,IL,IN,KY,MD,MI,MS,MO,NE,NJ,NM,NY,NC,OK,PA, RI,SC,TN,TX,WA,WI 31 - AL,AZ,CA,CO,CT,DC,FL,GA,IL,IN,IA,KS,KY,LA,MD,MA,MI,MN,MO,NJ, NY,NC,OH,OK,PA,SC,TN,TX,VA,WA,WI 30 - AL,AZ,CA,CO,CT,DC,FL,GA,IL,IN,KY,LA,MD,MA,MI,MN,MO,NV,NJ,NY, NC,OH,OR,PA,SC,TN,TX,UT,VA,WA 31 - AL,AZ,AR,CA,CO,CT,FL,GA,IL,IN,IA,KS,KY,LA,MI,MN,MO,NV,NJ,NY,NC, OH,OK,OR,PA,SC,SD,TN,TX,VA,WI 5 - AZ,FL,KS,MI,TX

INSURANCEJOURNAL.COM

Company

12/31/2017 DPW OOOs omitted

Group Name

State Of Domicile

102 Stillwater Insurance Co. 103 Great Midwest Insurance Co.

$171,759 $164,529

104 American Hallmark Insurance Co. of Texas

$161,757

WT Holdings Group Houston International Insurance Group Hallmark Financial Services Group

105 106 107 108 109 110 111 112 113 114

Utica First Insurance Co. United Ohio Insurance Co. Oak River Insurance Co. Grange Insurance Association Goodville Mutual Casualty Co. Middlesex Insurance Co. Harford Mutual Insurance Co. Concord General Mutual Insurance Co. Brethren Mutual Insurance Co. Central States Indemnity Co. of Omaha

$160,662 $160,505 $159,443 $158,754 $154,477 $147,884 $145,649 $142,408 $140,947 $140,258

N/A NY Ohio Mutual Group OH Berkshire Hathaway Group NE Grange Insurance Group WA Goodville & German Mutual Group PA Sentry Insurance Group WI Harford Group MD Concord Group NH N/A MD Berkshire Hathaway Group NE

115 116 117 118 119 120 121 122

Columbia Mutual Insurance Co. Insurance Co. of North America Executive Risk Indemnity Inc. IMT Insurance Co. Farmers Alliance Mutual Insurance Co. Toyota Motor Insurance Co. Cambridge Mutual Fire Insurance Co. Imperium Insurance Co.

$138,961 $130,524 $128,273 $127,676 $127,266 $120,061 $115,837 $115,673

123 Mutual Benefit Insurance Co. 124 Penn National Security Insurance Co.

$115,400 $115,147

125 126 127 128 129 130

CSAA Affinity Insurance Co. TransGuard Insurance Co. of America Inc. Cumberland Mutual Fire Insurance Co. Mid-Continent Casualty Co. Milbank Insurance Co. Protective Property & Casualty Insurance Co. 131 Pacific Employers Insurance Co. 132 Philadelphia Contributionship Insurance Co.

$112,377 $109,976 $109,669 $105,619 $104,337 $103,898

133 Western Reserve Mutual Casualty Co. 134 Providence Mutual Fire Insurance Co. 135 Physicians Insurance A Mutual Co.

$98,461 $93,914 $91,740

136 137 138 139 140 141 142 143

Lightning Rod Mutual Insurance Co. Hartford Insurance Co. of Illinois Triton Insurance Co. Bay State Insurance Co. Contractors Bonding and Insurance Co. Lititz Mutual Insurance Co. Developers Surety and Indemnity Co. Dentists Insurance Co.

$89,474 $89,399 $77,476 $74,503 $73,762 $73,417 $71,938 $70,609

144 145 146 147 148

Gray Insurance Co. Rockwood Casualty Insurance Co. American Mercury Insurance Co. Selective Insurance Co. of New York Capitol Indemnity Corporation

$69,417 $69,092 $68,196 $67,922 $62,036

$102,806 $100,308

149 All America Insurance Co.

$46,243

150 151 152 153 154 155

$41,312 $39,918 $32,000 $31,195 $29,865 $28,235

General Security National Insurance Co. Motorists Commercial Mutual Insurance Co. Trinity Universal Insurance Co. St. Paul Mercury Insurance Co. Columbia Insurance Co. Explorer Insurance Co.

Columbia Insurance Group Chubb Ltd Group Chubb Ltd Group IMT Mutual Holding Group Alliance Insurance Group N/A Andover Group Houston International Insurance Group Mutual Benefit Group Pennsylvania National Insurance Group CSAA Insurance Group IAT Reinsurance Co. Group Cumberland Group American Financial Group State Auto Mutual Group Protective Life Insurance Group Chubb Ltd Group Philadelphia Contributionship Group Western Reserve Group Providence Group Physicians Insurance, a Mutual Group Western Reserve Group Hartford Fire & Casualty Group Fortress Group Andover Group RLI Insurance Group Lititz Mutual Group AmTrust NGH Group California Dental Association Group Gray Insurance Group Argonaut Group Mercury General Group Selective Insurance Group Alleghany Group Central Mutual Insurance Co. Group Scor Group Motorists Mutual Group Kemper Corp. Group Travelers Group Berkshire Hathaway Group ICW Group

CA TX

Number/States Greater than $1 Million DPW as of 12/31/2017

PA PA

17 - AZ,CA,FL,HI,IN,MO,NE,NV,NM,NY,OH,PA,SC,TN,TX,VA,WA 25 - AL,AZ,CA,CO,FL,GA,IL,IN,KY,LA,MI,MO,MT,NV,NJ,NY,NC,OH,OK,PA, TX,VA,WV,WI,WY 21 - AZ,AR,GA,HI,ID,IL,IN,MT,NV,NM,OH,OK,OR,PA,SC,TN,TX,UT,VA, WA,WY 6 - CT,MA,NJ,NY,OH,PA 6 - CT,ME,NH,OH,RI,VT 7 - AK,CA,FL,KS,MO,NE,NY 6 - CA,CO,ID,OR,WA,WY 8 - DE,IL,IN,KS,OH,OK,PA,VA 17 - AL,CA,CT,FL,GA,IL,IN,MI,MN,MS,NJ,NC,SC,TN,TX,WA,WI 8 - DE,DC,MD,NJ,NC,PA,TN,VA 3 - ME,NH,VT 3 - MD,PA,VA 29 - AZ,AR,CA,CO,GA,ID,IL,IN,IA,KS,KY,LA,ME,MI,MO,MT,NE,NY,NC,OH, OK,OR,PA,SC,TN,TX,UT,VA,WI 12 - AR,GA,IL,IA,KS,MS,MO,NE,OK,SD,TN,TX 3 - CA,MA,NY 20 - CA,CO,DC,FL,GA,HI,IL,MD,MA,MI,MN,MO,NV,NJ,NY,OH,PA,SC,TX,VA 6 - IL,IA,MN,NE,SD,WI 8 - CO,ID,KS,MT,NE,ND,OK,SD 19 - AZ,CA,CO,DE,FL,ID,IL,MD,MA,MN,NV,NJ,NY,OH,OR,PA,TN,VA,WA 8 - CT,IL,ME,MA,NH,NJ,NY,RI 21 - AL,AZ,CA,CO,CT,FL,GA,IL,LA,MA,MS,NV,NJ,NM,NY,NC,OK,PA,TX, VA,WV 2 - MD,PA 9 - AL,DE,MD,NJ,NC,PA,SC,TN,VA

AZ IL NJ OH IA MO

7 - AZ,CT,DE,MD,NJ,PA,VA 16 - CA,CO,FL,GA,IL,MD,MN,MT,NJ,NY,NC,OK,PA,TX,VA,WA 4 - DE,MD,NJ,PA 13 - AR,FL,KS,LA,MO,MT,NC,ND,OK,SC,TX,UT,WY 13 - AZ,CO,GA,IL,IN,KY,MN,ND,OH,SC,SD,TN,UT 19 - AZ,CA,CO,FL,GA,IL,IN,MI,MS,MO,NV,OH,OK,PA,TN,TX,VA,WA,WI

PA PA

2 - CA,NY 4 - DE,MD,NJ,PA

MO PA DE IA KS IA MA TX

OH 2 - IN,OH RI 7 - CT,ME,MA,NH,NJ,NY,RI WA 3 - ID,OR,WA OH IL TX MA IL PA CA CA

2 - IN,OH 4 - CT,IL,NY,PA 13 - CA,FL,GA,IL,IN,KY,NY,NC,OH,PA,TN,TX,WA 3 - MA,NJ,NY 9 - AZ,CA,FL,MT,NV,NM,OR,TX,WA 9 - DE,KS,MD,MO,NC,PA,SC,VA,WV 11 - AZ,CA,CO,FL,HI,NV,NY,OR,TX,VA,WA 4 - CA,HI,IL,PA

LA PA OK NY WI

8 - AL,CA,FL,GA,LA,MS,OK,TX 9 - AL,CO,IL,IN,KY,MD,PA,VA,WV 4 - CA,OK,TX,VA 2 - MA,NY 22 - AL,AZ,CA,CO,FL,GA,IL,MI,MN,MT,NE,NV,NY,OH,OK,OR,PA,TN,TX, UT,WA,WI OH 12 - AZ,CT,GA,IN,MA,MI,NY,NC,OH,SC,TN,VA NY OH TX CT NE CA

7 - AZ,CA,FL,KY,NY,PA,TX 13 - IL,IA,ME,MA,MI,MN,NE,NH,OH,PA,SC,TN,WI 6 - AL,AR,ID,MT,TX,UT 10 - CO,FL,KS,NM,ND,PA,TX,UT,WV,WY 6 - CA,CO,NE,SC,UT,WA 3 - CA,NJ,PA

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

INSURANCEJOURNAL.COM

JULY 2, 2018 INSURANCE JOURNAL | NATIONAL | SR6

News & Markets | NATIONAL

Lloyd’s Index Shows $92B at Risk in North American Cities Each Year By Don Jergler

ities in the U.S. and Canada stand to lose $92.96 billion per year to risks like market crash, cyber attack and flood, an index from Lloyd’s shows. Lloyd’s newly issued City Risk Index, which produces estimates of how much savings are needed to deal with anticipated risks, shows that North American cities lead global rankings for technology and space threats, and are critically exposed to financial loss through extreme climate. The report also shows North American cities could save $2.9 billion each year by improving their levels of resilience. New York City is ranked second in the world in GDP@ Risk, and should expect to lose $14.83 billion to risk each year, topping the world in risks including market crash, flood, INSURANCEJOURNAL.COM

cyber attack and human pandemic. GDP@Risk is an expected loss figure that is a projection based on the likelihood of the loss of economic output from the threat. The index measures the GDP@Risk of 279 cities across the world from 22 threats in five categories: finance; economics and trade; geopolitics and security; health and humanity; natural catastrophe and climate; and technology and space. Those listed in the index are some of the world’s leading cities, generating 41 percent of global GDP. The latest index shows how much it would cost a city annually from rare risk events, like an earthquake, which might only take place once every few years, or from more frequently occurring events like cyber attacks. Cyber is becoming more

frequent and poses ever greater threats, but not too many entities are insured for these events, according to Trevor Maynard, head of innovation at Lloyd’s. Maynard says that only 10 or 20 percent of businesses have cyber coverages. “So we definitely would say that people are not as prepared for cyber as they would be for some other risks.” Market crash is the costliest risk listed in the index for more than two-thirds of North American cities with a combined cost of $19.9 billion. This is because the economies of U.S. cities are heavily reliant on private capital, which means should any disruption take place, they stand to lose. In North America, the leading risks after market crash ($19.90 billion) are cyber attack ($14.73 billion) and flood ($13.17 billion). The index shows that $546.50 billion is globally at risk each year from all 22 threats. The largest global threats are: market crash ($103.33 billion); interstate conflict ($80.00 billion); and tropical windstorm ($62.58 billion). Manmade threats worldwide account for 59 percent of the total GDP@Risk and climate-related risks account for $122.98 billion of lost GDP. Tokyo stands to lose the most GDP through risk. Tokyo’s GDP@Risk is measured at $24.31 billion. New York ($14.83 billion) and Manila ($13.27 billion) follows. Other U.S. cities near the top of this risk index include Los Angeles ($11.56 billion), Chicago ($5.72 billion), Houston ($4.98 billion) and San Francisco ($4.57 billion). In Los Angeles water from

storms as well as lack of water pose a combined threat of $2.43 billion to GDP, while earthquake is a threat to the city to the tune of $2.70 billion annually, according to the index. Chicago’s risk profile resembles New York’s. The three costliest threats to Chicago’s GDP are market crash ($1.22 billion), flood ($0.97 billion) and cyberattack ($0.92 billion). Maynard noted that the index gives expected long-run averages, and that anticipated GDP hits on each city should be viewed in context. “If you look at Los Angeles for example, the GDP at risk from earthquake is $2.7 billion, which actually is not a very large number,” he said. “It probably sounds large, but in the context of the L.A. economy, it isn’t. But actually, an extreme earthquake, if it happened in L.A., could cost around $380 billion, and an average-sized earthquake would be around $117 billion.” Thirty-four cities in North America — 28 in the U.S. and six in Canada — account for 17 percent of the global GDP@ Risk total. The GDP@Risk in those cities amounts to a collective $92.96 billion each year from all 22 threats. Forty-four percent of North America’s exposure comes from natural causes, and 56 percent is from manmade risks. Climate threats account for just over 20 percent.

Resource Box To listen to the full podcast interview with Trevor Maynard, head of innovation at Lloyd’s, visit: https:// www.insurancejournal.tv/ videos/16506/

JULY 2, 2018 INSURANCE JOURNAL | NATIONAL | 27

Idea Exchange

Agency Management

The Changing Nature of the Agent-Carrier Relationship in a Customer-Centric World

By David Pieffer

uto insurance shoppers are placing greater importance on having more services provided to them today versus five years ago, underscoring the fact that shoppers are increasingly demanding more product options and more and different ways to connect with their insurer, according to the J.D. Power 2018 Insurance Shopping Study. The study also found that representation by a local agent has increased in importance the most over the past five years (45 percent) compared to other points, and “reliance on agents” was especially true among first-time shoppers. The J.D. Power 2017 Large Commercial Study also found 34 percent of the risk managers who responded to the survey based their buying decisions on their agent’s recommendations, while 38 percent of the small commercial buyers (J.D. Power 2017 Small Commercial Satisfaction Study) looked to their agent to recommend which carrier to go with. These findings suggest that agents still have a vital role in providing expertise and guidance throughout the sales, onboarding and servicing of both personal and commercial 28 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

insurance policies. The importance of the agent, direct or independent, from a customer perspective, is not only evident during the buying process, but also throughout the life cycle of a customer’s experience with a carrier. What the 2018 J.D. Power studies (both shopping and claims), found was that the customer is more likely to look to their agent for advice, counsel and support when dealing with insurance matters over any other resource, such as a carrier’s call center or website. This need on the part of customers is key to the survival and growth of the agency system in the United States. Regardless of the advancements in technology, there is still a strong need for a personal connection, even if that connection is manifested through a digital pathway between a customer and an insurance professional. Customers want access to policy information and other services 24/7 and they look online for much of this information. However, in terms of making key decisions and getting support for such activities as reporting a claim, customers want to deal with a person who can answer questions, offer empathy and instill a level of confidence that the customer is making

the right decision. Given the development of artificial intelligence (AI), customers may likely be able to have a fully digital interaction with their carrier in the future using chatbot or even more advanced technology to replicate the personal interaction. But for the foreseeable future, customers — even the youngest cohorts — are not willing to give up that personal connection.

Carrier vs. Agent Priorities

Historically, agents and carriers have touted their support for each other, but in reality, both groups generally have different priorities: • They don’t communicate effectively; • Carriers have been pushing for greater access to customers without any real coordination with agents; • Carriers are notorious for disrupting relationships with their agents by making unilateral decisions; and • Agents are more likely to use carriers to block markets or test quotes against incumbents without moving business. If these practices continue, the ability of both carriers and agents to meet their customers’ expectations over the long term is suspect. Carriers and agents working to improve the customer experience without involving each other may have short-term successes. In the long term, however, they will likely open the market for more disruptions from the continued growth of the insurtech sector or even from other innovators such as Amazon, Walmart and possibly banks that have moved much further in the development of their mobile capabilities than most insurance carriers. To elevate the rela-

continued on page 30

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Idea Exchange

Agency Management

continued from page 28

tionship between carriers and agents to a level that customers expect, carriers and agents must find a way to integrate their interactions with customers into a single conversation instead of disjointed transactions. To achieve a single conversation, carriers and agents need to digitize routine matters, eliminate the need for multiple workflows and access points, and there must be a reconnection between agents and carriers that allows agents to truly act on behalf of their carriers.

Good Communication

The first and most critical step for agents and carriers is focused, honest and cooperative communications. As with any good collaborative effort, communication must be two-way, with each party genuinely listening to the other. Findings of the J.D. Power 2018 Independent Agent Study show that greater communications and training have a strong effect on the overall satisfaction level of agents. Increasing the communication and support a carrier provides to its agents shows an improvement in agent satisfaction of more than 200 points (on a

1,000-point scale) among both commercial and personal agents. Agent satisfaction is even higher when the carrier provides ongoing and regular training or support sessions throughout the year. Without regular and clear agency/carrier communications and ongoing carrier support (training and development), the kind of customer experience carriers and agents need to provide is highly suspect. To achieve a more lasting and sustain-

able relationship between carrier and agent, both will need to better align their resources. In other words, agents should align themselves with carriers that target the markets the agent services, offer the broadest products for the agent’s markets, and are willing to have an integrated digital footprint that supports the agency and the customers being serviced. For carriers, their agency forces must be aligned with their targeted markets, be a part of the carrier’s integrated processes and work within a reasonable and sustainable commission structure. They should also support a profit-sharing plan that is based on long-term profitability. The agent’s role is still vital to the insurance process, but that role and the carrier’s ability to reach and sustain higher levels of customer satisfaction will be tested. Agents and carriers must better align their digital strategies and clearly design a division of work that allows the agents to focus more on being an advisor throughout the life cycle of the policy. Carriers must be willing to provide a stable and sustainable marketplace. Finally, agents and carriers must agree on a long-term sustainable compensation system that supports both Share this article growth and profit.

with a colleague. IJMAG.COM/72CM

Pieffer, a 30-year insurance veteran, is the property & casualty insurance practice lead at J.D. Power. 30 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

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Idea Exchange

Tech Talk

Young Agents Show the Way in Digital Marketing By Tom Wetzel

housands of discussions, debates and arguments are taking place in agency offices across the country between principals and ambitious young producers about the role of digital marketing. There are also more than a few stories about millennial producers becoming frustrated by foot-dragging owners who then jump to another agency or start their own. Rather than rehashing the arguments, I wanted to find young agents who found a way forward by frontal assault, stealth, or just by thinking outside-the-box.

“For millennials, a phone call is an interruption,” said Melissa Stallings, a young agent at Stallings Insurance Agency in Douglasville, Ga. “I want to be known as someone that people can trust and not someone who just calls about insurance.” Stallings is active on Facebook, Twitter and Instagram and much of the content focuses on people and the communities the agency serves. At Atlanta-based Snelling Walters Insurance, Wezly Barnard wanted to take a more active approach online than his

agency had done before. “Management, however, has encouraged us to do our own thing,” Barnard said. “We evaluate our individual results every quarter and if they are positive after a year, then the agency may step it up.” Barnard said he has been tracking the number of cold calls, social media sites used, and the number of posts made, as well as more traditional efforts such as chamber meetings attended. Even if a young producer is the heir apparent, prudence can prove effective. “The best approach for us has been to take it in stages,” said Elissa Simone-Howe of the Simone Insurance Agency in Iron Mountain, Mich. “I lay out the benefits of each tool and how they will help the agency long-term.” The first project she tackled was a new agency management system. Now complete, she has moved to improving the agency website. “My father trusts my judgment and I value the legacy he built but he also understands

the need to change for the future.” To better persuade owners to “go digital,” young producers should see challenges from

the owner’s perspective, too. “You need to meet people where they are rather than where you’d like them to be,” said Meagan McDonald of McDonald McGarry Insurance Brokers in Edmonds, Wash. “I grew up with social media and understand the nuances in a way that many older producers do not.” However, in her view some agencies try too hard in their efforts to be digital, without understanding its purpose. “There is an art to it. You have to have a balance and be true to the agency’s legacy.” Sonila Kastrati of the Amaden-Gay Agency in East Hampton, N.Y., also takes a practical approach to advocating for more active digital marketing efforts. “Initially, management was concerned about negative reviews but now they’re seeing benefits in brand awareness and retention,” she said. Sometimes the numbers do

the persuading for agency owners when it comes to embracing digital marketing. “What made a big impression for me was two things,” Bob Frantti of the Tervo Agency in Hancock, Mich. “First, the demographics are staring at us in the face,” he said. Millennials are now the largest generation of the labor force, according to the Pew Research Center. “Just as telling however, is the fact that almost all of our senior citizen clients rely on their smartphones; not just to stay in touch with family and friends but also to conduct business.” Why? “Because it’s so convenient,” he said. Wetzel heads his own insurance marketing firm specializing in webs design, messaging and social media programs for agents through its Social Media Content Roadmap©. Website: www.wetzelandassociates.com. Email: twetzel@wetzelandassociates.com.

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Idea Exchange

Q&A

Ask the Insurance Recruiter

I’ve worked in the insurance industry for 30 years. I’m in a job search and concerned my experience doesn’t stand out on my resume nearly as much as my age. No one has asked me outright, but I get the sense they care far more about when I will retire then whether I’m right for the job. - John from Boston

Dear John, this month I attend my 20-year high school class reunion. In some ways it feels like yesterday. It’s fun to reminisce about the songs and the fashion. In other ways I never want to think about that time again (ugh, homework and my hair). I wonder if the classmates I haven’t seen since I was 18 years old will see me for who I am now or no matter what always think of me as that teenager. So, although slightly different circumstances, we’re pretty much in the same boat. I have some ideas on how to help.

4 Ways to Highlight Experience in Resumes

Ooze Expertise.

No one knows the insurance industry like you. Your resume is a timeline of when your experience collided with major industry events. Cite your knowledge of industry trends, the effects of merger and acquisition (M&A) activity, new product development, ACA compliance and market changes. Paint a picture of overcoming challenges, problem solving, being creative and working collaboratively as only a person with a wealth of experience can do.

I Am More Than A ‘Doer’! Accomplishments Over Duties.

Developed a new product? Satisfied a major claim? Wrote the biggest account in the agency’s history? Use accomplishments as section breaks on your resume. The “Objective” section is a perfect place to insert some anecdotal information. So often these sections and cover letters just sound like “Who I Am.” Instead, you want to say, “Who I Want To Be.” Remember, the best indicator of future success is recent history.

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The Missing Link. Be Social. Get Your Tech On.

Your resume is a living, breathing digital file. No one prints paper copies anymore. Your resume must feel like it’s state-of-the-art. • First, your LinkedIn profile link should be listed next to your name, address, phone and email. • Second, include links to your online bios posted through insurance associations, boards, community organizations, etc. Have you been featured or cited as a source in a business article? Place these links strategically through out the body of your resume. • Third, do you blog, write for insurance publications, teach continuing education classes or host webinars? Make sure all of this information is linked under a separate section just like education and work history.

By Mary Newgard Capstone Search Group

Newgard is partner and senior search consultant for Capstone Search Group, a national recruiting firm dedicated to the insurance industry. For questions or comments, email: asktherecruiter@ csgrecruiting.com.

You’re a Big Deal. People Know You.

Just like the great Anchorman Ron Burgundy, you have many leather-bound books and people know you. Seriously, connections are everything. Digital connections go hand in hand with LinkedIn. Make sure your profile is complete and you’ve built up your online centers of influence. These people are your references. The more diverse reference list to accompany your resume the better. This should include former managers, colleagues, direct reports, carrier and broker reps, clients, vendors and third-party advisers (legal, HR and so forth).

Food for Thought

“Record levels of Boomers are choosing to work past 65. In early 2017 almost a fifth of Americans aged 65 or older either had a job or were actively looking for one. Employers who engage with this ‘silver workforce’ stand to reap the benefits of their skill and experience.”

— Indeed, Targeting Today’s Job Seeker, 2018.

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Idea Exchange

The Competitive Advantage

Agency E&O: In Praise of Those Who Know Their Coverages respect for doing things right, so they make sure to follow procedures or that their team will do so on their behalf.

Coverage Knowledge

By David Pieffer

was conducting an errors and omissions (E&O) audit for an agency that needed improvements. The easiest part of the audit was drawing a bright line between the couple of producers who knew their coverages and the 10 who did not. I find a 1-to-5 ratio to be common in agencies with 15 or more producers. In smaller shops, the ratio often is less. At 1-to-5, those producers with coverage knowledge rarely have E&O claims in my experience. When they do incur a claim, the situation is often unusual. Sometimes the claim really was not preventable. In other cases, fraud on a party other than the agent might be a consideration or it might be driven by a third party suing anyone and everyone. Only rarely do these coverage knowledgeable producers incur claims out of true, preventable mistakes. I am not suggesting either that they always follow procedures. Some do better than normal, and some are worse in this regard. But even those that do worse usually have a system worked out with an account manager. (This is often a point of friction with other producers who do not have the same quality of account manager or a system worked out. But they do not understand that without coverage knowledge, building such human systems is far less likely to happen.) I find that producers who truly know their coverages have 36 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

The ancillary benefits of knowing coverages are fascinating. True producers who know coverages often outsell those producers who do not know their coverages — usually by a lot. One reason is that people who know their coverages normally sell more coverage. When more coverage is sold, insureds are less likely to have an uncovered claim. If they do not have an uncovered claim, they are less likely to sue, regardless of whether the producer followed procedures. Why does knowing coverages well yield more sales? First, this education does not always transfer to sales. I know many industry professionals with CPCU and CIC designations that could not sell a sandwich to a starving millionaire because they cannot ask for a sale. They just cannot sell. Some even hide behind their professional initials to avoid selling. The ability to sell must come first. Coverage knowledge comes second, and absolutely no reason exists to think these abilities are exclusive to one another. Even

if the person has sales ability but is unable to learn coverages, the team approach can work wonders. Obviously, a producer who can sell but does not know coverages is worth less than a producer who can sell and does know coverages, so pay them less. What happens when a client purchases insurance from a producer or a producer’s team who truly knows their coverages? They get it. They understand and appreciate that the producer has actually taken the time to learn about them, learn their exposures and learn what is important to them, their lives and their companies. In other words, they know the producer cares. They begin listening to the producer’s advice, and the relationship builds further. For all of those producers who think clients will not give you the time for a coverage discussion, much less the time to go through a coverage checklist, consider whether you have earned the client’s respect. When people respect you, they likely will give you more time.

Job Requirement

When you get to know a client well, the result is always that their exposures are greater than they knew and more than

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their existing policy covers. The producer can offer a solution, and the client is happy to buy more coverage. The sales process is completely changed, resulting in increased sales and decreased E&O exposures. In my experience, producers who know their coverages can outsell the others in the same agencies by 3-to-1! In the agency I was auditing, the other producers did not know their coverages. A few made the mistake - a mistake common and likely to lead to an early grave - that they only needed to study one policy: the one most commonly taught in coverage classes. The tell-tale sign is always, “Doesn’t the HO/CGL/BOP/Whatever policy cover those exposures?” No such universal policy exists! To which HO/CGL/BOP policy are you referring? Only about 1,000 exist. Good producers know their coverages and read the policies, too. Reading policies is hard work, but it’s work required of a professional agent. Not reading the policies is arguably a characteristic of lazy producers and amateurs. Professionals or their teams read the forms. They may even read other forms to find better coverage. They do not make coverage assumptions. They read coverage forms. A shortcut does not exist, and the pros do not hunt for shortcuts. Reading forms is a job requirement. Reading policies is often a friction point because for many producers, reading forms is not within their skill set. They like sales because it fits their skills, but reading forms is the antithesis. Agency owners may need to accommodate people with these issues or better, producers with these issues need to identify a specific solution that works for them whether it is coaching, partnering with someone else in the agency or another solution, because forms need to be read. The demarcation line between the producers in the agency I was auditing was clear. The pros sold three times more, but somehow found time to read forms and had time to explore coverage needs with clients. The pros had not incurred the E&O claims. The pros represented themselves and their agency well. It is always good to be a professional. Why not aspire to be

a true professional agent? If you are not already doing so, begin by reading the next applicable form on your desk and assessing whether that client has the coverages they need and whether another form might just Enjoy this article? Share be even better.

Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868. E-mail: chris@burand-associates.com.

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JULY 2, 2018 INSURANCE JOURNAL | NATIONAL | 37

Idea Exchange

Disasters

The Perfect Storm: As CAT Season Heats Up, Are You Prepared?

By MaryBeth Fischer

nyone involved with disaster response knows to expect the unexpected, and that mantra has only intensified as 2018’s catastrophe (CAT) season heats up. Unexpected seems to be the theme. Oklahoma — which typically sees about 13 tornados in the month of April alone — didn’t confirm any tornados this year until May. California — which historically experiences a major earthquake once every 150 years — has now gone 151 years without one. Hawaii residents — who have co-existed with Kilauea for years — were forced to flee from increased lava flow, volcanic fissures and resulting earthquakes. Meanwhile, experts predict that the 2018 hurricane season could be just as destructive as last year’s with 14 named storms. Though no one can predict exactly when disaster is going to strike, it is our industry’s responsibility to be as prepared as we can be for the unexpected. After all, it is in these challenging times the industry is called upon to deliver on our promises and assist our customers in getting back on their feet. Disasters always have one thing in common: uncertainty. Properties are destroyed, belongings are lost and 38 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

families are displaced, turning people’s lives upside down and throwing them into a state of chaos. During these life-altering times, people turn to insurers for support, stability and hope. Does your organization have the right staff and strategies in place to deliver that hope? Even though some companies might be able to push through the upcoming CAT season with their current staffs, that likely entails numerous night shifts, extended work schedules and the exchange of hundreds of phone calls and emails, resulting in compromised customer service. Will your team be able to provide quick, efficient customer service to match your insureds’ sense of urgency and respond to massive volcanic activity, a tornado, a hurricane or other natural disasters this year? What about five years from now? How about in 2025?

Reassess Your CAT Strategies

Hiring and training must remain a top priority. Mass retirements and the resulting knowledge gap is today’s talent reality. According to the U.S. Bureau of Labor Statistics, the median age of insurance professionals is 45. Many of today’s claims professionals will likely be retiring in the future. As a result, the near tenured members of the claims staff you are relying on for this year’s

CAT season may not be there next year or at some point in the not-so-distant future. It is also vital that your company leverages the most up-to-date technology for CAT season. Through technological innovation, many of the historical disaster claims and adjustment processes have been drastically improved and streamlined. New mobile technology, such as live aerial views and minute-by-minute updates from satellite images, aligns with modern customer demands. Meanwhile, it also reduces the need to deploy dozens of adjusters to impacted areas for inspections. Traditional claims professionals are now expected to develop and manipulate technology to better meet policyholders’ expectations. With these advancements also comes great opportunity for our industry. The new technology allows insurers to efficiently utilize their resources to make an unthinkable situation less painful for devastated customers. It also means claims professionals will often be interacting with customers in the very moments they are faced with their new overwhelming reality. Insurers have the opportunity to deliver exceptional customer service by retraining claims professionals, especially adjusters, on the human element of the claims process. For example, claims adjusters can be trained as grief counselors to comfort policyholders who may be viewing their damaged properties for the first time through the company’s live updates. Insurers and their staffs must be both adequately trained and resourced to support their policyholders’ needs during these life-altering events.

Revive Cyclical Training

Organizations should also consider reviving the cyclical training programs of the past. Strong cross-departmental training programs have fallen by the wayside since the widespread budget cuts of the last recession. Many insurers have continued to manage with INSURANCEJOURNAL.COM

thin budgets and are met with challenges during disasters. There has been talk about resuming those training programs. In addition to continuing current training courses and certifications for claims professionals, insurance organizations should establish and implement training programs across departments. Rotating new hires through departments gives them a holistic view of the company and the industry. This cross-training can double as a component of disaster preparation by grooming professionals to assist in different functions, such as claims or customer service. Employees who are equipped with appropriate skills, regardless of their original job responsibilities, can leverage occupational flexibility and lessen the burden brought by CAT season.

their organizations to expect the unexpected will be able to navigate CAT seasons Enjoy more effectively and efficiently.

this article? Share this article with a colleague. IJMAG.COM/72PS

Fischer is a property and casualty client advisor with The Jacobson Group, a provider of talent to the insurance industry. Phone: 800-823-8055. Email: mfischer@jacobsononline. com.

Your social service clients

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a difference in people’s lives. We’re here to protect them.

Refine Your Staff

The industry’s growing retirement rate, widening knowledge gap and resulting candidate’s market means many positions held by long-tenured professionals will continue to become vacant. There is undoubtedly a cost to vacancy. In preparing for CAT season, many organizations are developing relationships with staffing firms in order to quickly react during disasters by augmenting internal resources. It is important to re-evaluate current partners and discuss any necessary service improvements now. Consider partnering with a boutique staffing firm for unique access to a database of professionals, who possess the insurance experience and applicable licenses necessary to hit the ground running when disaster strikes. Insurancespecific staffing firms can provide a multitude of temporary professionals who are prepared to make an immediate impact. When the time comes for your aging claims professionals to retire, partnerships with these staffing firms will be more important than ever. One thing is certain: CAT season is going to be chaotic this year and every year, regardless of preparations taken. Ultimately, those who put talent and technological strategies in place and position

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Exhibitor Insurance

Market Detail: CSI Special Event Insurance (www.csicoverage.com) offers general liability for 5-day or 10-day coverage for exhibitors. Hired and non-owned auto coverage available (if required by the venue) for an additional fee. One hundred percent online processing through the website, which is available 24/7. Certificates are emailed upon purchase of coverage. Available limits: Minimum $1 million, maximum $1 million Carrier: Unable to disclose States: Lexington Insurance Co. Contact: Customer service at 800-2041523

Electronic Cigarette & E-Juice Insurance Program

Market Detail: Calco Commercial Insurance (www.calcoinsurance.com) has been specializing in the vapor industry since 2008, actively lobbying state and federal bodies and a co-author of policy language that provides coverage for vaping products. The program provides full CGL including product liability for manufacturers, importers, retailers, and wholesalers of electronic cigarettes, personal vaporizers, nicotine, and e-juice. CALCO’s coverage includes: limits from $250,000 to $30 mil-

lion (no health hazard exclusion); no battery exclusions; full CGL; premise liability (excluding products/completed ops - minimum premium $1,000) (premise only policies are not available in Ala., W.Va., Miss.); property insurance; no theft exclusion; business interruption; ability to customize policy wording; no appointment required for a quote. Available limits: Minimum $250,000, maximum $30 million Carrier: Unable to disclose, non-admitted States: All states Contact: Customer service at 877-225-2699

Auto Dealers

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Closing Quote Finding A Better Course to Navigate Disasters

By Tom Santos

espite the last several hurricane seasons, not nearly enough has been done to improve our country’s resilience against future storms. As a nation, we continue to spend the vast majority of disaster aid on recovery, rather than preparing our communities ahead of time to better weather a storm. Last year alone, Congress spent $132 billion to cover disaster aid requests. While we should of course assist people and communities in need, this approach is not cost-effective, it certainly is not sustainable, and it is often not reliable. Something has got to give, and the 2018 hurricane season is as good a time as ever for us to rethink how the nation deals with natural disasters. We first need to be more proactive with things like improved mitigation and better resiliency. The National Institute of Building Sciences recently released a study that found every $1 spent on mitigation could save $6 in future

disaster relief. At the individual level, mitigation efforts could include preparing a home and property before a storm or purchasing flood insurance. At the community level, it should include better land use planning, stronger building codes, and disaster-resilient infrastructure. As we shift our thinking to focus on preparedness, we will need to better communicate the risks that communities and property owners face. Americans routinely underestimate the likelihood that they’ll experience a natural disaster, and it shows every time one happens. In 2016, flooding caused an estimated $15 billion worth of damage, but just $4 billion of that damage was insured. Protection for all the other hurricane damage wasn’t much better — Munich Re estimates that North America’s 2017 hurricane season caused $215 billion of damage, but only $92 billion was insured. As a nation, we need to change our mindset and do a better job of evaluating our communities’ risk levels in advance, so that we can focus on new and creative ways to limit the damage a disaster can cause. Secondly, more thought needs to be given to the role that private insurers can play. Risk analysis and modeling technologies have vastly improved since the National Flood Insurance Program (NFIP) began. Because of these advancements, private insur-

42 | INSURANCE JOURNAL | NATIONAL JULY 2, 2018

The pervasiveness of mobile devices has changed consumer expectations. ers are better able to manage some of these risks. In many cases, private insurers could provide better, more affordable coverages than the NFIP. This would lead to more choices for consumers, reduce the burden on taxpayers, and allow families to access crucial funding to rebuild their homes much more quickly. There are programs we can look to as examples of how to approach these risks more effectively. After Superstorm Sandy, for example, New Jersey’s voluntary Blue Acres buyback program used $300 million in federal funds to buy flood-prone homes and convert them into open space, which was designed to absorb flood waters and serve as a natural buffer to surrounding neighborhoods. This allowed residents to sell their homes and move elsewhere after seeing their streets flood repeatedly and stop worrying about the cost of rebuilding over and over again.

Another example is Florida, which enacted strict building standards after Hurricane Andrew. Last year, properties that adopted these new standards sustained far less storm damage during Hurricane Irma than homes that had not been updated. These are just two examples of communities that are proactively developing their own unique approach to disaster preparation. If we can continue to be more proactive with our mitigation efforts, find opportunities to spread the risk more efficiently, and be more transparent about general flood risks, then we can limit the harm that storms cause. Instead of continuing to play clean up after a disaster strikes, this year needs to serve as the catalyst for a new era of proactive disaster preparation. Santos is the vice president of federal affairs of the American Insurance Association. Phone: (202) 828-7100; Email: Tsantos@aiadc.org. INSURANCEJOURNAL.COM

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