Insurance Journal West 2019-10-21 by Insurance Journal

APPLIED PROTECTS THE TITANS OF INDUSTRY. ®

Accepting large workers’ compensation risks. Most classes. All states, all areas, including New York City, Boston, and Chicago. Few capacity and concentration restrictions. Simplified financial structure covers all exposures.

EXPECT THE WINNING DEAL ON LARGE WORKERS’ COMPENSATION. Call (877) 234-4450 or visit auw.com to get a quote.

October 21, 2019 • Vol. 97 No. 20

Contents

Idea Exchange

Special Report

News & Markets

SILVER Best Agency to Work For – East: Covenant Insurance Group

Group Warns Congress Legalized Cannabis Is Workplace Risk

20 SILVER Best Agency to Work

12 How Is Crash Risk Related

For – Midwest: Military United Insurance

to Roadway Design? It Depends.

21 SILVER Best Agency to Work

18 Quarter of U.S. Health Care

For – South Central: BKCW

Spending Is Waste

SILVER Best Agency to Work For – Southeast: Century Risk Advisors

A Modern Economy Demands Modern Protection

Ask the Insurance Recruiter: 20 Ways to Reinvigorate Your 2020 Recruiting

38 40 The Competitive Advantage: Tech Talk: Agent Silos

New Simple Insurance Policies

Minding Your Business: M&A Trends Continue

How TRIA Would Handle Another 9/11: I.I.I.

SILVER Best Agency to Work For – West: Morris & Garritano Special Report: Why the Differences Make a Difference in Coverage

Special Report: How Risk Management Is Transforming Risk in Commercial Property

44 46

Reinsurers Take the Technology Lead

Closing Quote: Medical Provider Fraud

Special Report: Insurtechs Discovering the Value of Agents

Spotlight: Female Entrepreneur Forging Path with ‘LeO’ Chatbot

Departments 6 Opening Note 4 | INSURANCE JOURNAL | OCTOBER 21, 2019

10 Declarations

11 Figures

14 People

16 Business Moves

48 My New Markets

INSURANCEJOURNAL.COM

YOUR INSURANCE CARRIER HAS TO REALLY KNOW YOUR CLIENT’S INDUSTRY TO ACTUALLY BE THERE FOR THEM. AND YOU.

That’s what it means to specialize. And you deserve a carrier that gets that. We make it a point to know all there is to know about a wide range of industries from construction and manufacturing to real estate, life science and more. With our deep specialization, The Hartford can help you develop customized product solutions for the complex risks of your mid- to large-size clients – allowing us to be there for both of you in a way that many carriers cannot. The Buck’s Got Your Back.® TheHartford.com/specialization The Hartford® is The Hartford Financial Services Group, Inc. and its property and casualty subsidiaries, including Hartford Fire Insurance Company. Its headquarters is in Hartford, CT. 19-ML-150706 © September 2019 The Hartford

Opening Note Write the Editor: awells@insurancejournal.com

Climate Change: Believers vs. Non-Believers

elieving in climate change has no effect on whether coastal homeowners are protecting their homes from climate change-related hazards, according to a study from the University of Notre Dame. Funded by Notre Dame’s Global Adaptation Initiative, the study analyzed data from a 2017 Coastal Homeowner Survey of 662 respondents in one of the most frequently exposed U.S. coastal communities, New Hanover County, N.C. The survey asked homeowners whether they believe in climate change, in human causation of climate change, or in God having a role in controlling the weather or climate. Coastal homeowners were also questioned about their knowledge of climate-related hazards, their knowledge of warming oceans and their perception of the seriousness of the impact of climate change. “We found that climate change attitudes have little to no statistically significant effect on coastal homeowners’ actions towards home protection, homeowner action or homeowner intentions to act in the future,” said Tracy Kijewski-Correa, the Leo E. and Patti Ruth Linbeck Collegiate chair and associate professor and co-author of the study. “This is despite the fact that with climate change, U.S. coastlines have experienced increased frequency and intensity of tropical storms and sea level rise, which has further heightened their vulnerability to waves, storm surge and high-tide flooding.” According to the study published in Climatic Change, 81.5% of survey respondents believed climate change is “probably happening,” with varying degrees of confidence. The Notre Dame research team also measured for partisanship and ideology with the intention to control for questions about climate change that can tap into identity and prior political beliefs. However, after controlling for partisanship, the findings were unaffected. Despite differences over climate change, their behavior appears to be relatively similar. “Neither has taken nor intends to take action to improve the structural vulnerabilities of their homes,” said Debra Javeline, associate professor of political science at Notre Dame and lead author of the study. Javeline said homeowners’ knowledge about climate change also held no significance, suggesting that “providing more information and understanding may not be the main driver of convincing homeowners to reduce the vulnerabilities of their coastal homes.” The research team found that although coastal homeowners may perceive a worsening of climate change-related hazards, these attitudes are largely unrelated to a homeowner’s expectations of actual home damage. “Although increasing education and awareness of climate change is important, our findings suggest that encouraging homeowners to reduce the vulnerability of their coastal home may be more effective if expressed in regards to structural mitigation and its economic benefits, rather than in context of climate change,” said Javeline. Editor-in-Chief

‘We found that climate change attitudes have little to no statistically significant effect on coastal homeowners’ actions towards home protection, homeowner action or homeowner intentions to act in the future.’

Andrea Wells

6 | INSURANCE JOURNAL | OCTOBER 21, 2019

Publisher Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Chief Financial Officer Mark Wooster | mwooster@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

Chief Content Officer Andrew Simpson | asimpson@insurancejournal.com Editor-in-Chief Andrea Wells | awells@insurancejournal.com East Editor Elizabeth Blosfield | eblosfield@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 & Contributors Contributors: Jay Bregman, George Freimarck, Samuel King, James Lynch Columnists: Chris Burand, Mary Newgard, Catherine Oak, Tom Wetzel

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez rvaldez@insurancejournal.com South Central Sales Mindy Trammell | mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA, CT) Howard Simkin | hsimkin@insurancejournal.com Midwest Sales Lisa Whalen | (800) 897-9965 x180 East Sales (NY, PA and CT only) Dave Molchan | (800) 897-9965 x145 Sales & Marketing Coordinator Ashley Berg | aberg@insurancejournal.com Advertising Coordinator Erin Burns | eburns@insurancejournal.com Insurance Markets Manager Kristine Honey | khoney@insurancejournal.com Senior Strategist Pam Simpson | psimpson@insurancejournal.com Social Media Manager Ly Short | Lshort@insurancejournal.com Marketing Administrator Gayle Wells | gwells@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

V.P. of Design Guy Boccia | gboccia@insurancejournal.com V.P. of Technology Chris Thompson | cthompson@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Ryan Kleshinski | rkleshinski@wellsmedia.com New Media Producer Bobbie Dodge | bdodge@insurancejournal.com

ACADEMY OF INSURANCE

Director Patrick Wraight | pwraight@ijacademy.com Online Training Coordinator Nathan Granitz | ngranitz@ijacademy.com

SUBSCRIPTIONS:

Call (855) 814-9547

or visit ijmag.com/subscribe

Outside the US, call (847) 400-5951 Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media Group, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2019 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Dept, PO Box 708, Northbrook, IL 60065-9967 ARTICLE REPRINTS: Contact (800) 897-9965 x125 or visit insurancejournal.com/reprints

For those keeping score, communities won. As much as agents and brokers love golf, they love giving back more. The 2019 Chubb Charity Challenge combined both passions as teams rallied together to compete for their favorite local causes. Congratulations to Lloyd Sadd Insurance Broker and IMA Select, the winning teams who played on behalf of Little Warriors and Hillcrest Ministries of MidAmericaâ&#x20AC;&#x201D;along with all the teams who helped raise nearly $1 million this incredible season. Get the whole story at chubb.com/charitychallenge.

chubb.com/charitychallenge

Chubb is the marketing name used to refer to subsidiaries of Chubb Limited providing insurance and related services. For a list of these subsidiaries, please visit our website at www.chubb.com.

News & Markets Group Warns Congress Legalized Cannabis Is Workplace Risk

group of occupational medicine doctors is warning that legalization of marijuana has “huge” public and workplace health and safety implications that Congress should consider when dealing with the issue. The American College of Occupational and Environmental Medicine (ACOEM) said the current “patchwork of laws to address marijuana use and workplace safety is detrimental to employees, employers and the general public” in a statement, Legalization of Marijuana – Implications for Workplace Safety, which it sent to all members of Congress this month. The group’s member physicians deal with occupational health, safety and environmental issues. They told Congress they support giving employers flexibility to deal with marijuana use by workers and “strongly” support legislation to allow employers to prohibit employees in safety-sensitive positions from working while under the influence of marijuana. “Employers have a legal responsibility to 8 | INSURANCE JOURNAL | OCTOBER 21, 2019

protect employees from workplace illness or injury under the Occupational Safety and Health Administration’s general duty clause. Employers also have an ethical responsibility to prevent impaired workers from exposing themselves, their co-workers, and/or the general public to risk of harm,” the statement says. ACOEM is urging legislators to carefully consider the impact of any federal marijuana legislation on workplace safety. “While there is much not known about marijuana, what is known is that marijuana can cause impairment which will interfere with safe and acceptable performance in the workplace,” said ACOEM President Steven Frangos, MD, of Houston. “Furthermore, this is particularly concerning for those individuals working in safety-sensitive positions where impairment can affect the health and safety of other workers, customers, the general public, or others.” To date, 33 states and the District of Columbia have legalized the medical and/ or recreational use of marijuana. The group

says that there is no consensus among the states on what are “safety-sensitive” positions or when employers may conduct drug testing or institute a zero-tolerance drug policy for those positions. If Congress removes marijuana from the federal Controlled Substances Act, employers must be allowed to “obtain objective measurement of body fluid levels of marijuana,” the statement adds. There have been bills filed in Congress that would legalize and tax marijuana at the national level, and provide opportunities for people convicted of federal pot crimes to clear their records. The U.S. House last month advanced legislation called the SAFE Act designed to let banks do business with cannabis companies in states that permit marijuana sales, a step that some supporters see as helping to pave the way to nationwide legalization. Federal health officials recently issued a national warning against marijuana use by teenagers and pregnant women. INSURANCEJOURNAL.COM

Let's write more habitational business, together. From residential and mixed-use apartment buildings to condominium associations, habitational risks make up a $2.479 billion industry.1 Let Liberty Mutual Insurance help you take advantage of this opportunity with our broad, customizable coverages and risk control resources designed for the complex exposures commonly found in the industry. Come find out why we are the #1 preferred business insurance provider2 and have been highest ranked by independent agents for commercial line insurers two years in a row3.

Talk to your territory manager or visit libertymutualgroup.com/business to learn more.

Business Ownerâ&#x20AC;&#x2122;s Policy

Commercial Auto

General Liability

Property

1 Marketstance 2 Based on 2018 survey of business insurance buyers on preference of national carriers sold via independent agents. 3 Liberty Mutual received the highest score for commercial line insurers in the J.D. Power 2018-2019 U.S. Independent Insurance. ÂŠ2019 Liberty Mutual Insurance. Insurance underwritten by Liberty Mutual Insurance Co., Boston, MA, or its affiliates or subsidiaries.

Workers Compensation

Figures

$136 Million The total amount in dividends workers’ compensation insurance carrier, Louisiana Workers Compensation Corporation (LWCC), is issuing to policyholders during October. As a mutual insurer, LWCC shares profits with policyholders when it achieves strong financial results. With the current distribution, LWCC will have returned a total of $187 million to policyholders this year.

$75,000 The amount the Global Insurance Accelerator will provide as a seed investment to insurtechs accepted into the program in 2020. GIA, which hosted its first cohort in 2015, has been providing $40,000 in seed money in return for 5% equity stake. GIA said it is raising the amount to stay competitive with other accelerator programs.

Declarations Michigan No-Fault Law

“The Michigan Legislature’s passing of this new, rushed law is a stain on the legal and moral conscience of this great state.” — George Sinas, general counsel for the Coalition Protecting Auto No-Fault, commented on a lawsuit challenging Michigan’s new law that will let drivers forego unlimited medical benefits that have been blamed for the state’s historically high auto premiums. In the suit, crash victims and a brain-injury rehabilitation facility contend that pending limits on reimbursement rates for nursing and other care violate their constitutional rights. The law goes into effect in July 2020.

10 | INSURANCE JOURNAL | OCTOBER 21, 2019

Total Irresponsibility

“No one has carried the wounds more than families who have lost their loved ones — loved ones to a limousine that should never, ever have been allowed on the road. Total irresponsibility.” — U.S. Rep. Paul Tonko regarding federal legislation he and fellow Democratic Rep. Antonio Delgado are sponsoring after 20 people were killed in an upstate New York stretch limousine crash in October of last year. Rep. Tonko said the legislation would address “gaping loopholes” in limousine regulations.

Auto Insurance Scam

“This could be an attempt to get you to reveal personal information for identity theft … It’s always good to be cautious of anyone who calls when you haven’t asked for information.” — Chris Davis, head of the fraud unit at the Texas Department of Insurance, warning of an auto insurance fraud scam being perpetrated by a group calling itself the Consumer Insurance Association that is preying on consumers through phone calls, asking for personal information and promising lower auto insurance premiums. The group is not licensed to sell insurance in Texas.

INSURANCEJOURNAL.COM

$300,000 The United States Court of Appeals for the Fourth Circuit ruled that Amazon.com Inc. is not responsible under Maryland law for products liability claims after Trung Cao of Montgomery County, Md., purchased a headlamp on Amazon’s website through a third-party seller and gave it to friends as a gift. The headlamp’s batteries allegedly malfunctioned, igniting the friends’ house and causing more than $300,000 in damages.

$259,594 The amount Kenneth X. Huang, 41, was ordered to pay in restitution over a reported fraud scheme involving insurance in California. Huang was sentenced to two years in federal prison and three years of supervised release after a joint investigation by the California Department of Insurance, Employment Development Department and U.S. Department of State, Diplomatic Security Service reportedly exposed a complex unemployment insurance fraud scheme involving Huang.

Quiet Cannabis Banking

“They’re serving this business, effectively, anonymously.” — Amanda Averch, a spokeswoman for the Colorado Bankers Association, said as many as 35 banks and credit unions offer services to the cannabis industry, which has made $6.5 billion in sales in Colorado since 2014.

INSURANCEJOURNAL.COM

A Prescription for Disaster

“It’s like — let me sit down and write a prescription for disaster. You’re writing a prescription for abuse and neglect.” — Catherine Hawes, Regents Professor Emeritus at the Texas A&M Health Science Center and a nationally recognized expert on long-term care, commented on how for-profit companies that dominate the elder care industry are incentivized to keep their costs low, which translates to minimal staffing in facilities. An investigation into hundreds of senior assisted living and large, personal care homes in Georgia showed more than 600 allegations of neglect and 90 cases of abuse by caregivers during the past four years.

OCTOBER 21, 2019 INSURANCE JOURNAL | 11

News & Markets How Is Crash Risk Related to Roadway Design? It Depends.

ow dangerous is travel in the United States? It depends on how the question is framed. If it’s risk per kilometer (about 6/10ths of a mile), the U.S. has 6.71 deaths per billion vehicle kilometers of travel compared to the United Kingdom, which has just 3.56 deaths per billion vehicle kilometers. This makes vehicular travel in the U.S. about 88.6 percent more dangerous than travel in the U.K. If it’s risk per year of life, the U.S. has 10.25 deaths per 100,000 people whereas the U.K. has just 2.86 – a risk level of 257 percent, which is much higher than risk-per-kilometer. Traffic injury in the U.S. is higher both because there’s more risk on a per-kilometer basis, and also because there are more vehicles miles per capita. This year alone, about 276 million vehicles are operating on roads throughout the U.S. The more a person travels, the more one is exposed to the potential risk of a traffic-related injury or death. To separate out risk-per-mile and total risk can get tricky. Despite recent research on the dangers of traffic injury and death, there is a lack of clarity on the role of the built environment — roadway designs and adjoining development — and its risk effects. Although existing research can identify clusters of crashes called “hot spots,” it fails to attribute these risks to specific built environment designs and modes of travel. In a study published in the journal Accident Analysis and Prevention, researchers from Florida Atlantic University and the University of Pennsylvania examined the relationship 12 | INSURANCE JOURNAL | OCTOBER 21, 2019

between the built environment, exposure, and crash risk. They wanted to distinguish the variations in risk associated with different configurations of the built environment, based on the underlying premise that certain environments are more risky. Louis A. Merlin, Ph.D., lead author and an assistant professor in FAU’s School of Urban and Regional Planning within the College for Design and Social Inquiry, and collaborators, discovered that most studies of crash risk use ad-hoc and a theoretical models of the relationship between measures of the built environment, traffic collisions, and injuries — an issue that almost certainly contributes to the wide range in reported findings. Of the papers reviewed, they found only a handful that presented clear theoretical relationships between measures of urban form and traffic collisions. “Because some environments are riskier than others, they produce more crashes and injuries per unit of travel,” said Merlin. “However, dissecting and interpreting the risk/crash data is challenging. Before we can know how risky a given built environment is, we have to know how many people are traveling there, and in many cases, for pedestrians and cyclists, this data is not available.” Without a clear understanding of the differing safety effects of the built environment on risk and exposure, variations in crash rates associated with different characteristics of the built environment may be because certain features are more or less safe or may simply reflect changes in the amount and type of travel that

people do. “It becomes difficult to disentangle whether certain environmental features are in fact ‘riskier’ than others or whether the safety results are simply attributable to reductions in exposure, such as the amount of people traveling in a given environment, as a result of environments that discourage travel,” said Eric Dumbaugh, Ph.D., co-author and an associate professor in FAU’s School of Urban and Regional Planning. “If the latter, this leads to the potentially self-defeating conclusion that the only meaningful way to achieve safety targets is to eliminate travel altogether.” In their examination of the literature, Merlin, Dumbaugh and Erick Guerra, co-author, an associate professor and assistant chair in the Weitzman School of Design at the University of Pennsylvania, have addressed these deficiencies. They have identified specific built environment variables as more related to exposure, or more related to risk, or of uncertain backgrounds. They also identified built environment variables that merit further investigation in terms of their relationship to exposure and risk, such as commercial development and intersection density. “We recommend that when pedestrian or bicycle risk is of concern, that pedestrian or bicycle exposure be captured either through mode-specific models of exposure, or via smart device big-data sources that directly measure this type of exposure,” said Merlin. “If the concern is how the built environment impacts speed, then we should directly measure speed to clarify these relationships.” INSURANCEJOURNAL.COM

People National

Reid French has stepped

down as CEO of the insurance agency technology firm Applied Systems, and Cloud Technology Executive Taylor Rhodes has joined Applied as the new CEO. French, who served as CEO for eight years, will continue to advise Applied as a member of the board of directors. He joined Applied Systems in 2011 from Intergraph Corp., a geospatial and computer-aided design software company. Rhodes joins Applied from SMS Assist, a cloud-based software platform for multi-site property management, where he has been CEO since May 2017. Prior to SMS, Rhodes was CEO and president at Rackspace, a managed cloud company, since 2014. He also previously served as a leader in enterprise, financial and corporate strategy roles at Electronic Data Systems Corp. The executive changes come about eight months after Google bought a minority stake in Applied Systems.

East

Jimcor Agency Inc., a

Montvale, N.J.-based independent managing general agent and insurance wholesaler, has hired Joshua Burke in its Hopkinton, Mass., location as it seeks to expand its footprint in New England. Prior to joining Jimcor Agencies, Burke was an underwriter at XS Brokers Insurance Agency Inc., where he specialized in building retail relationships and helping clients write hardto-place commercial property, commercial general liability and personal lines insurance products. In addition to the wholesale side of the business,

Burke worked in the retail and carrier insurance segments over the span of 20 years.

Sullivan Insurance Group has hired Peter Russell as

a principal. Russell has Peter Russell worked in the insurance industry for more than 30 years and is responsible for the management of client insurance and risk management programs, as well as new business development. He worked for two national insurance carriers and two international insurance brokers prior to joining Sullivan Group. He has experience working with construction, real estate, environmental, manufacturing, staffing and healthcare accounts. Sullivan Insurance Group is a full-service insurance and risk management firm providing property and casualty, employee benefits and personal insurance for individuals and businesses throughout the U.S. The company was founded in 1957 and is headquartered in Worcester, Mass., with affiliate offices in Needham, Marlborough, and Northborough, Mass.

AXA XL, a division of AXA, has named Raymond Chiusano

to lead its North America Property Insurance team’s Northeast region, based in New York. Chiusano is assuming the role held by Joseph Moylan, who announced his planned 2020 retirement. In the interim, the pair will work together to transition the management of AXA XL’s Northeast regional book of property business.

14 | INSURANCE JOURNAL | OCTOBER 21, 2019

Prior to this recent promotion, Chiusano served as Mid-Atlantic regional underwriting leader, responsible for growth and production of property insurance business throughout the Mid-Atlantic states. Preceding that role, he served as chief property underwriter in AXA XL’s Bermuda Insurance operations.

Southeast

Insurance Office of America has added operational leader Robert J. Peters to its Longwood, Fla., headquarters. Peters joins IOA’s growing team as senior vice president (SVP) of insurance operations, a newly created enterprise role focused on driving operational standardization and efficiency across all locations. Peters has experience with process design/redesign, capacity planning, performance optimization and improving profitability. Peters has more than 25 years of experience in the insurance industry and has held such positions as SVP of enterprise operations, SVP of policy processing and chief operations officer. Birmingham, Ala.-based

Cobbs Allen is continuing to

expand its insurance brokerage team with the addition of David Payne. Payne will join the leadership team building a national specialty platform focused on providing complex risk products for corporate and private equity clients. He will focus on building out Cobbs Allen’s specialty products for clients and prospects on a national basis. Payne most recently served as chief revenue officer at JLT US, where he led client and prospect initiatives for a U.S.

broker. He also previously served as the leader of Aon’s U.S. risk sales platform. He has experience in mergers and acquisitions, special situations, director and officer liability and financial institutions. The new venture will combine structured solutions capabilities with insurance brokerage services to offer clients more alternatives using risk-taking capacity from both the insurance and private capital markets. The new company will be private and majority-controlled by employees.

McGriff, Seibels & Williams Inc.

has promoted

David Sellars and Dusty Cahill to be

David Sellars

co-practice leaders of its Financial Services Division (FSD). Dusty Cahill Sellars joined McGriff in 2011 as a senior vice president in McGriff’s Houston office. He has more than 25 years of experience underwriting, marketing and producing business in this space. Cahill joined the Birmingham, Ala., office as a member of McGriff’s Energy and Marine Division in 2002, and he transferred to FSD in 2004. He has held various positions with the company, most recently as senior vice president. FSD provides directors and officers liability, fiduciary, cyber, crime, employment practices liability and transactional insurance services to INSURANCEJOURNAL.COM

corporate and private equity clients. FSD will report directly to Insurance Holdings’ Retail Division President and CEO Rick Ulmer.

South Central

The Texas Department of Insurance has created a new

division to focus exclusively on the complex issues facing health insurance and selected Richard Lunsford as the deputy commissioner of the new Life and Health Division. Previously, policy decisions Richard Lunsford related to life and health insurance were part of the agency’s Regulatory Policy Division. That division has been split into two areas, one for life and health issues and the other for property and casualty insurance. Mark Worman, a 23-year agency veteran, will continue to lead the Property and Casualty Division. Both divisions are charged with monitoring insurance products sold in Texas to ensure coverage is available and affordable. They also keep consumers and the industry informed about market and regulatory trends that could affect them. Lunsford has 23 years of experience in insurance, financial planning, and banking. He has held various positions with USAA, State Farm and Morgan Stanley.

Kyle Bolls

has been named interim executive director of the

Surplus Lines Stamping

Kyle Bolls

INSURANCEJOURNAL.COM

Office of Texas (SLTX) while

the group’s board searches for a successor to Executive Director Norma Essary, who will leave the organization on Oct. 17. The board voted on Sept. 17 to relieve Essary of her duties; she was put on paid administrative leave until Oct. 17. Bolls currently serves as chief financial officer of SLTX.

Frank Castro, a producer at Giddings, Texas-based independent insurance agency The

Nitsche Group, has

Frank Castro

been elected to the Austin Contractors & Engineers Association’s (ACEA) board of directors as secretary/ treasurer for the 2019-2020 fiscal year. The ACEA is a group of like-minded contractors, engineers and suppliers that works to support, encourage, educate and give a voice to the construction and engineering communities in Central Texas. Castro joined The Nitsche Group in 2013.

Midwest

Nebraska-based Omaha National, a provider of workers’ compensation insurance and payroll services to small and midsize businesses, promoted Mary Senff to vice president of company development. In this role, she is responsible for the company employee development program and other strategic initiatives. Senff is one of Omaha National’s six founding executives. She previously worked as the learning and development manager at a national workers’ compensation company.

Managing general agency and surplus lines broker

West

promoted

a partner,

Liam Davis

Daniel H. Rylaarsdam,

J.M. Wilson

to assistant personal lines Liam Davis underwriter in its Portage, Mich., office. Davis is responsible for assisting underwriters on a wide variety of property and casualty risks, as well as quoting new and renewal business and servicing accounts for independent insurance agents in Michigan. Davis previously was a personal lines intern for J.M. Wilson. Southfield, Mich.-based commercial insurance underwriter and insurance Traci McGuire administration services provider, AmeriTrust Group Inc., has promoted Traci McGuire to chief claims officer. She is based in the company’s Westerville, Ohio, office. McGuire previously served as senior vice president of Claims. McGuire joined AmeriTrust subsidiary, Century Surety, in 2012 as a claims attorney handling professional liability claims. She was elevated to assistant vice president, managing claims attorney; vice president of claims; and vice president of casualty litigation through her career at AmeriTrust. Prior to joining the company, she was a litigation partner in a Columbus, Ohio-based law firm for 13 years. Her areas of practice at the law firm were business litigation and medical malpractice defense.

Blank Rome LLP has added Mary Craig Calkins as

of counsel, Mary Craig Calkins and Sarah L. Edri as an associate along with additional professional staff to the firm’s insurance recovery group. Calkins, Rylaarsdam and Edri are based in the Los Angeles office. The team joins from Kilpatrick Townsend & Stockton LLP, where Calkins led the firm’s West Coast insurance practice. Calkins has experience in other areas of insurance recovery, including entertainment and intellectual property claims, securities, cyber liabilities, e-commerce and technology claims, labor and employment claims, construction defects, first-party property and business interruption losses, FinTech and broker liability claims.

Capital Insurance Group has named Scott Elliott agency

Scott Elliott

development manager for central and eastern Washington. He is based out of the Spokane, Wash., office. He is responsible for strengthening agency relationships in the region to grow CIG’s presence in Eastern Washington for agriculture, commercial and personal lines. He has more than 15 years of experience in underwriting and property claims. He was most recently executive sales underwriter for The Hanover Insurance Group.

OCTOBER 21, 2019 INSURANCE JOURNAL | 15

Business Moves

East

The Hilb Group, Damiano Agency, Handy-Apple Valley

The Hilb Group LLC has acquired Rhode Island-based Damiano Agency. The transaction became effective July 1, 2019. For more than 30 years, DA has been delivering property and casualty insurance for businesses and individuals in the Rhode Island area. Paul Damiano, agency leader, and his associates will join THG’s existing Providence, R.I., location and bring added property and casualty expertise to THG’s New England operations. In a separate transaction, THG has acquired Massachusetts-based HandyApple Valley LLC. The transaction became effective July 1, 2019. Located in Worcester, Mass., HAV provides personal and commercial insurance. As a part of the transaction, HAV will join THG’s New England operations in its existing Worcester, Mass., location. THG is a middle-market insurance agency headquartered in Richmond, Va., and is a portfolio company of Boston-based private equity firm, Abry Partners. THG seeks to grow through targeted acquisitions in the middle-market insurance brokerage space. The company now has more than 80 offices in 20 states.

Risk Strategies, Reiff & Associates

Risk Strategies, a privately held, national insurance brokerage and risk management firm, has acquired Reiff & Associates, a full-service brokerage firm focused on 16 | INSURANCE JOURNAL | OCTOBER 21, 2019

risk and insurance for companies in the entertainment industry. Founded in 1983 and based in New York, Reiff & Associates provides customized risk management and insurance for theater, television, film and media production, staging and rigging, live music and special events. Initially focused on advising independent films and television producers, Reiff & Associates has expanded to serve larger producers, as well as firms involved with music, concert and entertainment support businesses. Its executive staff has more than 50 years of collective experience in entertainment, media and arts insurance. The addition of Reiff & Associates will strengthen Risk Strategies’ expertise in the entertainment space, while adding expertise in other areas such as music, staging and rigging and special events.

The Doctors Company, Hospitals Insurance Company, FOJP Service Corp.

The Doctors Company has completed the purchase of Hospitals Insurance Company (HIC), a New York-admitted and licensed insurance company, and FOJP Service Corp., a New York service organization that provides third-party comprehensive insurance and risk management advisory services to HIC-insured hospitals. The purchase price is $650 million, subject to closing adjustments. Proceeds from the transaction will be returned to the not-for-profit hospitals that owned and founded HIC and FOJP more than 30 years ago — The Mount Sinai Hospital and Beth Israel Medical

Center, Montefiore Health System and Maimonides Medical Center. The close of this transaction is also the inception of Healthcare Risk Advisors (HRA), a new business unit within the TDC Group, which will succeed FOJP and focus on third-party comprehensive insurance and risk management advisory services, including management of the self-insured programs of large healthcare organizations in New York and beyond. HIC will continue to exist as an admitted New York–domiciled insurer providing coverage for hospitals, physicians affiliated with HIC’s insured hospitals, and longterm care facilities and social services agencies. HIC and FOJP employees will become part of HRA and continue to provide the same services to HIC, member hospitals, long-term care facilities and social services agencies as prior to the transaction. HRA and HIC will be led by Noeleen Doelger as chief operating and financial officer, and Robert A. Kauffman as president. Walter Harris, who served as president and CEO of HIC and FOJP prior to the transaction, will assume a consulting role with the TDC Group and report to Richard E. Anderson, chairman and CEO of The Doctors Company.

Midwest

Arthur J. Gallagher & Co., LSG Insurance Partners

Arthur J. Gallagher & Co. is acquiring Bloomfield Hills, Mich.-based LSG Insurance Partners. Founded in 1968, LSG Insurance is an independent insurance, risk management and consulting services agency. LSG offers a range of employee benefits, commercial property/casualty, private client, and merger and acquisition services and coverages to clients throughout the Midwest and across the United States. Jay Schreibman, Todd Preston and their associates will continue to operate from their Bloomfield Hills and Milwaukee branch locations under the direction of Tom Lannen, head of Gallagher’s Great Lakes region employee benefits consulting and brokerage operations, and Cindy INSURANCEJOURNAL.COM

LaMantia, head of Gallagher’s Great Lakes region retail property/casualty brokerage operations. The acquisition is subject to customary closing conditions and is expected to close in the fourth quarter of 2019. Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm, is headquartered in Rolling Meadows, Ill.

Holmes Murphy, Global Captive Management

Waukee, Iowa-based Holmes Murphy, an employee-owned and controlled insurance brokerage, has expanded its footprint into the international space by acquiring Global Captive Management (GCM). GCM is no stranger to Holmes Murphy, specifically the Innovative Captive Strategies (ICS) subsidiary. GCM manages several of ICS’s captive programs, and the two companies have a history that dates back two decades. In that time, the two leadership teams have built a phenomenal relationship with a like-minded business approach — an aggressive growth strategy and a complementing culture. GCM, founded in 1982 by Peter MacKay, is considered one of the largest independent captive management companies in the world and is licensed in three locations: Cayman Islands, South Carolina and New Jersey. Through the acquisition, GCM will continue to operate with its current name, structure and employees. Peter MacKay will continue leading the team and supervise day-to-day operations. Dan Keough and Tom Stewart will join GCM’s leaders to oversee governance and management responsibilities.

South Central

Relation Insurance Services, Premier Consulting Partners LLC

Relation Insurance Services has acquired the Tulsa, Okla.-based insurance brokerage Premier Consulting Partners LLC. Founded in 2014 by CEO Russell Brown, Premier offers a full suite of property/ casualty insurance, employee benefits, human resources consulting and wealth INSURANCEJOURNAL.COM

management products and services to commercial and personal clients. Premier has approximately 40 employees based in the Tulsa area. Under Brown’s leadership, Premier will spearhead Relation’s expansion into the central U.S. region, leveraging Premier’s platform and experienced team to support that effort. The acquisition of Premier is Relation’s first acquisition in Oklahoma and its fourth this year. Relation Insurance Services offers property and casualty, risk management, employee benefits, and TPA-consulting services through its family of brands across the United States. Relation is a privately held corporation owned by Aquiline Capital Partners, a private equity firm based in New York and London investing in businesses globally across financial services and technology.

AssuredPartners, Healthcare Consultants

Lake Mary, Fla.-based AssuredPartners Inc. has acquired the employee benefits-focused firm, Healthcare Consultants Inc., located in Houston. The team of 18 will remain under the operational leadership of David Neider. The agency currently reports $3 million in annualized revenues. Led by Jim Henderson and Tom Riley, AssuredPartners Inc. acquires and invests in insurance brokerage businesses (property and casualty, employee benefits, surety and MGUs) across the United States and in London.

Southeast

Hub International, Doug Johnson Insurance Hub International Ltd. has acquired the

assets of Doug Johnson Insurance LLC. Headquartered in Gainesville, Fla., Doug Johnson is an independent insurance agency providing personal, commercial and employee benefits products to clients. Doug Johnson, CEO and president of Doug Johnson Insurance, is a Gainesville native and former quarterback for the University of Florida and seven-year NFL player. He and the Doug Johnson

Insurance team will be joining Hub Florida. Chris Gardner, CEO of Hub Florida, said the addition the Doug Johnson Insurance team is part of Hub’s ongoing commitment to the Gainesville region and its desire to continue to grow in Florida. Headquartered in Chicago, Hub International Limited is a full-service global insurance broker providing property and casualty, life and health, employee benefits, investment and risk management products and services. The company is committed to growing organically and through acquisitions to expand its geographic footprint and strengthen industry and product expertise.

Arthur J. Gallagher & Co., Garett-Stotz Co. Arthur J. Gallagher & Co. has acquired

Louisville, Ky.-based Garrett-Stotz Co. Founded in 1931, Garrett-Stotz is a full-service commercial and personal lines property/casualty and benefits agency. Its areas of specialization include construction/surety, real estate and auto dealers. Bill Kantlehner III, Tom Mitchell, Don Mucci and their associates will continue to operate from their Louisville location under the direction of Bumpy Triche, head of Gallagher's Mid-South Region retail property/casualty brokerage operations, and Jerry Roberts, head of Gallagher's Heartland Region employee benefit consulting and brokerage operations.

West

Hub, LBE Insurance Services

Hub International Ltd. has acquired the assets of Chatsworth, Calif.-based LBA Insurance Services Inc. Lior Avishay, president of LBA, and his colleagues will be joining Hub in Los Angeles. LBA is a full-service agency providing employee benefits, retirement and consulting services.

AssuredPartners, Tutton Insurance Services

AssuredPartners Inc. has acquired Tutton Insurance Services Inc. in Santa Ana, Calif. The team of 57 will continue to be led by owner Bill Tutton. OCTOBER 21, 2019 INSURANCE JOURNAL | 17

News & Markets Quarter of U.S. Health Care Spending Is Waste

pproximately 25% of spending in the U.S. health care system can be characterized as waste. That’s between $760 billion and $935 billion annually. A study published in the Journal of the American Medical Association (JAMA) by researchers from health insurance provider Humana Inc. and the University of Pittsburgh School of Medicine links the waste to six areas of the health care system identified by the Institute of Medicine: failure of care delivery; failure of care coordination; over-treatment or low-value care; pricing failure; fraud and abuse; and administrative complexity. For their analysis, the authors identified government-based reports, articles and peer-reviewed publications from 2012 to 2019 that focused on estimates of costs or savings related to these six areas of waste. There were 71 estimates from 54 publications and those estimates were combined into ranges or totaled. The U.S. spends more on health care than any other country, with costs approaching $3.6 trillion, or 18 percent of the gross domestic product (GDP). The authors highlight the sources of inefficiencies in the U.S. health care system, cite opportunities to address those inefficiencies, and underscore several key ways to make health care more affordable. For each domain, available estimates of waste-related costs and data from interventions shown to reduce waste-related costs were recorded, converted to annual estimates in 2019 dollars for national populations where necessary, and combined into ranges or summed as appropriate. Computations yielded estimated ranges of total annual cost of waste and estimated annual savings from interventions. “This research is so important because our industry is wasting money that could be used to improve the care experience 18 | INSURANCE JOURNAL | OCTOBER 21, 2019

Waste domain Failure of care delivery Failure of care coordination Overtreatment or low-value care

Estimated range of total annual cost of waste

Estimated annual savings from interventions

$102.4 – $165.7 billion

$44.4 – $93.3 billion

$27.2 – $78.2 billion

$29.6 – $38.2 billion

$75.7 – $101.2 billion

$12.8 – $28.6 billion

Pricing failure Fraud and abuse

$230.7 – $240.5 billion

$81.4 – $91.2 billion

$58.5 – $83.9 billion

$22.8 – $30.8 billion

Administrative complexity $265.6 billion

*No studies were identified that focused on interventions targeting administrative complexity. The savings do not include interventions for the area identified as the largest waste area, administrative complexity. so people can lead healthier lives,” said Bruce D. Broussard, Humana’s president and chief executive officer. “Each of the domains studied may require a different kind of action, and the drive toward data interoperability and value-based care payment models can reduce this wasteful spending. But if we collaborate as health plans and providers, in conjunction with the government, we can deliver more effective care and improve health.” Key findings from this study include: • The greatest source of waste, at over a quarter trillion dollars annually, is administrative complexity. Some of this waste is due to a fragmented health care system. More seamless data interoperability, as is currently being driven by Centers for Medicare & Medicaid Services, will produce new savings. The movement to value-based care — which focuses on alignment of incentives and increased collaboration between payor and provider — could meaningfully reduce this source of waste as many of the administrative tools used by payers to reduce waste (such as prior authorization) can be discontinued or delegated to the clinicians. • Pricing inefficiency, in particular drug pricing, represents the second greatest source of waste. These inefficiencies have arisen in a highly regulated market-based system, and suggest that policies that

systematically promote competition and price transparency should enable savings. • Approximately $300B in waste results from failure of care delivery, failure of care coordination, and over-treatment. However, if proven, effective clinical strategies to improve care available today were scaled nationally, approximately 50 percent of that waste could be avoided. Much of the research on waste and improvement that was reviewed has been conducted in Medicare populations. While estimates from cohorts of Medicare enrollees were translated to the broader national Medicare population, data derived from analyses of waste and waste reduction interventions in traditional Medicare or Medicare Advantage may not have been fully generalizable to the entire Medicare population. Importantly, there was no attempt in these analyses to generalize Medicare costs or savings to other insurance populations, rendering the findings conservative, the authors note. The study is: Shrank WH, Rogstad TL, Parekh N. Waste in the US Health Care System: Estimated Costs and Potential for Savings. JAMA. Published online Oct. 07, 2019. Shrank and Rogstad reported receiving funding from Humana and Parekh reported employment wit UPMC Health Plan. INSURANCEJOURNAL.COM

Quake, Rattle & Roll We’ve Got You Covered

Our Commercial Difference in Conditions Earthquake

• Deductibles from 5% - 25%

Policy provides protection for a wide variety of

• Minimum premiums as low as $2,500

commercial properties, including apartments, condo

• Available in the western states including Alaska and Hawaii (admitted in California)

associations, retail stores, offices, warehouses, light manufacturing and many more. Ask your wholesale broker for a Golden Bear quote today. For more information call 209-948-8191 or visit www.goldenbear.com.

• Rated A- (Excellent) by AM Best; financial size category VII • Options available to include flood and earthquake sprinkler leakage coverage

When You Rock, We Roll • Earthquake • Earthquake Sprinkler Leakage • Flood

News & Markets California Export List Hearing for Surplus Lines Slated for November

arametric earthquake coverage and terrorism coverage are among the potential items on the 2019 Export List hearing being held next month by the California Department of Insurance. Adding a risk or coverage to the export list requires evidence there isn’t an adequate or reasonable market for that risk or coverage in the admitted market, or that the type of coverage is for new, innovative products for which a reasonable or adequate market among admitted insurers has not had time to develop. The hearing is scheduled for

pollution liability, and professional liability) • Scaffold operation/ business/contractor/rental & sales first party and liability • Terrorism/sabotage committed for political, religious, or ideological purposes 10 a.m. on Nov. 19 at the CDI’s San Francisco hearing room on the 22nd Floor, 45 Fremont St., in San Francisco. The official CDI notice indicates a possibility of a request to add the following products, or variations thereof, to the list: • Parametric earthquake • Pollution package policies (General liability, contractors

The notice also indicates there may be requests to delete or modify the following products currently listed on the Export List: • Bridge plan • High limits disability • Deletion of “With Limits > $10M” from commercial DIC/ stand-alone earthquake The CDI notice also directs

that all written testimony, comments or documents must be sent to the CDI in triplicate (original and two copies) and received by Libio Latimer, Attorney III, California Department of Insurance, 45 Fremont St., 24th Floor, San Francisco, CA 94105 by no later than 5 p.m. on Nov. 19. In addition to written submissions, questions regarding the CDI notice and opportunities to testify can also be directed to Latimer at (415) 538-4420. Cliston Brown with the Surplus Line Association of California is also fielding questions. He is at (415) 434-4900, ext. 1139.

California Workers’ Comp Bureau Releases Cost Monitoring Update on Reforms

Excavation Company Fined $31K for Fatal Colorado Trench Collapse

he Workers’ Compensation Insurance Rating Bureau of California in mid-October issued a prospective estimate of the cost impact of Senate Bill 863, the sweeping workers’ comp reform bill signed into law in 2012. SB 863 increased benefits effective Jan. 1, 2013, and Jan. 1, 2014, and provided for a number of structural changes to the California workers’ compensation benefit delivery system. Key findings of the most recent SB 863 cost monitoring update include: • WCIRB estimates that SB 863 has saved $2.3 billion to the California workers’ comp system annually, or 12% of total loss and loss adjustment expense costs. • These savings have accumu-

he Occupational Safety and Health Administration has fined an excavation company for the deaths of two Colorado workers who were trapped for hours in a collapsed trench. The Fort Collins Coloradoan reported that Firestone-based Backhoe Excavating was fined $31,446 for five citations. The largest fine was more than $13,000 for failing to provide an adequate protective system for the workers, 26-yearold Cristopher Ramirez, of Boulder, and 41-year-old Jorge Valadez, of Denver. The company also received two citations totaling more than $10,000 for not following

lated to a total systemwide savings of over $10 billion since SB 863’s implementation, which have largely driven a series of advisory pure premium rate decreases totaling more than 40% and have resulted in the lowest average charged premium rates in the marketplace in more than 40 years. • The indirect SB 863 savings related to indemnity and medical costs are more than twice the increases to permanent disability benefits and are significantly greater than originally projected.

W2 | INSURANCE JOURNAL | OCTOBER 21, 2019

specific excavation requirements. The workers were installing sewer pipe in a 15-foot-deep trench in Windsor on April 16 when it gave way. They were dead when emergency crews reached them. Crews had used a PVC pipe to communicate with one of the men during the rescue effort. Copyright 2019 Associated Press. All rights reserved.

INSURANCEJOURNAL.COM

Specialties Builders Risk/COC Restaurants Inland Marine Distributors Contact Your Monarch Underwriter

Submissions@ monarchexcess.com

Matt Merkle VP of Operations / Sr. Commercial Underwriter

MonarchExcess.com

Burbank 818-249-0100 / Simi Valley 805-577-6800 / San Diego 619-521-2170 / Rancho Mirage 760-779-5555 San Marcos 760-891-2811 / Fresno 559-226-0200 / Arizona 877-406-8026 / Hawaii 818-425-9847 / Lic. #0L09546

NATIONAL | Special Report | Best Agency to Work For

East

Covenant Insurance Group York, Pa.

Going the Extra Mile By Elizabeth Blosfield

“

he motto “Covenant Cares” is not just on the letterhead at Covenant Insurance Group Inc., but it’s a way of operating that is truly caring, according to one employee at the York, Pa.-headquartered independent insurance agency. The agency, which specializes in auto insurance, home insurance, business owners insurance, workers’ compensation insurance, ministry insurance and employee benefits, was nominated by its employees and won Insurance Journal’s Best Agency to Work For Silver award for the East region. The agency was chosen as the East region silver winner based on employee responses to an anonymous survey. “‘Covenant Cares’ applies to every client,” wrote one employee in the survey. “Our agents regularly go the extra mile to serve our clients.” Established in 1984 by

agency founder, Norma Blair, Covenant Insurance Group states on its website that the agency’s goal is to go above and beyond to help its clients manage the risks involved in their lives and businesses. The agency serves more than 12,000 policyholders and represents more than 30 carriers. “Not all insurance agents are created equal,” Covenant’s website states. “At Covenant Insurance Group, Inc., we go out of our way to treat our clients like people, and we use our industry experience and diversified knowledge base to protect what you value most in business and in life.” As a family oriented employer, Covenant strives to put customers first, one employee wrote in the survey. “We believe that if you service the customer and put their interests first, company success will follow,” the employee stated. “Everyone understands that customer service is the

beginning, the middle and the end,” another employee added. Covenant Insurance Group President Robert Stone states on the company website that he believes there is nothing better than working with an individual or business who allows the agency to take the time to understand its risks and assist it in creating a customized insurance and risk management program specific to its needs. Stone is a third-generation insurance agent who was licensed in 1988 and has more than 30 years of experience working in the insurance industry. “We are successful because we do what is right for the clients we are privileged to serve 100% of the time!” he states in his biography on Covenant’s website. Indeed, John Henning, also a founder of Covenant Insurance Group with a more

The Covenant Insurance Group team aims to live up to its motto "Covenant Cares" by going the "extra mile." INSURANCEJOURNAL.COM

than 30-year career in the insurance industry, was drawn to working in insurance specifically because of his interest in people. Beyond working with clients, however, Covenant Insurance Group works to serve the people within the agency, according to employee survey responses. One employee wrote that Covenant not only provides excellent insurance products, but cares personally for each employee and promotes team spirit and cooperation. “It’s like working with family,” stated another employee. One survey response pointed to examples where employees were struggling with health issues or financial issues, and the owners were compassionate and stepped up to help not just through kind words, but by doing something tangible. “I myself have a child with special needs,” the employee wrote. “The owner never questions when I have to run to take care of medical issues. This means the world to me.” Another employee stated in the survey that overall, working at Covenant Insurance is a joy because everyone is always there to help when needed. “I love the people I work with,” one employee said. “It really is a great place to work.”

OCTOBER 21, 2019 INSURANCE JOURNAL | 19

NATIONAL | Special Report | Best Agency to Work For

Midwest

Military United Insurance Columbia, Mo.

In Service to the Nation’s Finest

Executive Director Tom Schwarz, who said the erving current and former firm is growing at a military personnel and rapid pace. their families is what the MUI “employees take great employees of Military United pride in what we do each day Insurance (MUI) in Columbia, to serve veterans and make Mo., do, and they love it. their insurance experience as Employee after employee easy, informed and productive responding to Insurance as it can be,” Schwarz said. Journal’s 2019 Best Agencies “Our team is close knit, and we to Work For survey expressed genuinely care for each other, pride and satisfaction in their our customers and our partners work helping service members (lead sources, carriers, etc.).” with their insurance needs. As one employee said, MUI They noted, too, that not only “has created an amazing team is the work meaningful, it’s environment to work in. The fun. MUI respondents also leadership and agents truly commended the agency’s care about helping veterans emphasis on customer service, and helping them to find a the coaching and training great insurance solution. They opportunities that are providare constantly working to ed, and the environment that improve systems, relationships encourages learning and agent with companies, and the development. compensation to help ensure Military United Insurance’s everyone is happy in their selection as IJ’s 2019 Silver role.” Best Agency to Work For in the In addition to taking care Midwest region is the result of veterans’ insurance needs, of the overwhelming praise MUI takes care of its employees and appreciation for their “better than any company I have ever been around. From weekly free lunches, free snack machines and free fruit, to free gym memberships and numerous fun company outings throughout the year, MUI is second to none in taking care of its employees,” said a respondent. Schwarz said the MUI model “is very different from a traditional agency. Our volume and pace require team The employees at MUI are passionate about serving the military community. members to work fast

By Stephanie K. Jones

workplace articulated by the agency’s employees. “Military United Insurance is a veteran-centric organization. We are passionate about assisting the military community by providing affordable home, auto and life insurance. We recognize the challenges that military families deal with on an everyday basis and are committed to enhancing their lives with our great customer service and insurance options,” wrote one survey respondent. Wrote another: “I am proud to work here because I feel that I make a difference to my customers because I can take the time to properly educate my customers on their coverage, which many say they have never had an agent do before. This relationship-building helps my customers trust me, Military United and the product that I am selling them.” The agency has 50 employees and revenues of between $1 million and $10 million annually, according to MUI

20 | INSURANCE JOURNAL | OCTOBER 21, 2019

but not sacrifice quality. We have a great balance of working extremely hard but enjoying ourselves and celebrating successes.” The people who work at MUI “care immensely for each other, our community and the incredible customers we serve,” one survey respondent wrote. “We’re proud of our incredible growth in the last year and our ability to maintain (and grow) a positive, productive, and enthusiastic culture. We’re really excited for continued improvement in our ability to serve our nation’s finest.” Another expressed appreciation for the agency’s leadership, stating they “have an ‘open door’ at any time if you want to discuss any ideas or allegiances, and you will be listened to by all levels of management. We would not be as successful as we are today without their guidance.” According to Schwarz, creating a workplace where people want to come every day and strive to do their best comes down to caring. “Care about people, relationships and culture as much as you do about results. We don’t hide the fact that we’re results-oriented — delivering results is one of our core values, but it’s not all we’re about. Genuinely invest in people and the results tend to take care of themselves,” he said. INSURANCEJOURNAL.COM

NATIONAL | Special Report | Best Agency to Work For

South Central

BKCW Insurance Killeen, Texas

A Family First Agency By Stephanie K. Jones

he people who work at the Texas-based independent insurance agency BKCW are not employees — they are team members and they are family. That team-oriented, family first culture is just one of the many aspects of the agency that its team members lauded in responding to Insurance Journal’s Best Agencies to Work For survey, and one of the many reasons why they elevated BKCW to IJ’s 2019 Silver Best Agency to Work For in the South Central region. With three locations in Texas — Austin, Copperas Cove and Killeen — BKCW is a third-generation, family owned agency with 45 team members and $10 million in annual revenue. According to BKCW Vice President Meredith Spears, the agency strives “for a culture of teamwork in all aspects of our business. Whether it is continuing education, celebrating successes or serving our community, we have a team that supports one another. We encourage our members to grow professionally and personally, and they value having the resources available to help them accomplish their goals.” The family first theme permeated the appreciative comments submitted by team members responding to IJ’s survey. Said one: “Our first and most important non-negotiable at this agency is ‘family first.’ We always need to get our work INSURANCEJOURNAL.COM

done but if needed, we can always wanting to also have a flexible schedule so make sure employees are thriving and we can be there for our friends doing work they and family no matter what it is. enjoy. Any time I … It’s not just a sense of your have ever needed outside family being first, but anything, I know your BKCW family as well. We bers are so proud to work for if I let them know, that within are always there for each other BKCW. We wouldn’t be where reason, the team and the and willing to lend a hand, we are today without their owners will make it happen. I a shoulder to cry on or an occasional beer with a belly full feel listened to and appreciated support. We love what we do because of our amazing staff. here, which at the end of the of laughs when needed.” They have supported us since Another team member wrote day is really what anyone day one, and it is a pleasure to wants if you think about it. that the agency’s “leadership serve them.” Plus, the coworkers, culture, values and appreciates their Ultimately, “your team events and flexible work members and customers. members are your greatest schedule are beyond amazing.” They provide a great working asset. Treat your team Spears gave all the credit to culture, we are a family-first members the way you want the firm's team members for organization. We give back your clients to be treated,” making BKCW a best place to to our community, develop Spears said. “Your team should work. “They are hands down our members and take care of be involved in your planning the best team any employer or our customers. They provide process. No one is going to buy employee could ask for. They flex-time, work-life balance, into what you do unless they are why we all wake up excited work from home, training, understand why you do it. to come to work each day.” continuing education, plus Your team should understand She added that the agency’s great compensation and time your goals and be 100% behind leadership is “honored and off.” your purpose.” humbled that our team mem Still another said the agency’s culture is one where shared knowledge among members and leadership is a given. “It is a very open environment, and I like that we have leadership that gives meaningful performance feedback and recognition to their members often.” One team member wrote: “I have never felt more valued as an individual — not only valued as an employee but valued The team at South Central Silver award winner, BKCW. as a human. They’re OCTOBER 21, 2019 INSURANCE JOURNAL | 21

NATIONAL | Special Report | Best Agency to Work For

Southeast

Century Risk Advisors Boca Raton, Fla.

Investing in Its People By Amy O’Connor

entury Risk Advisors is a relatively young agency, founded in just 2013 in Boca Raton, Fla. But it boasts an impressive track record in the insurance industry as the second agency formed by Chairman Ron Reshefsky, who sold the first agency he started in 1983 to USI in 1997, and includes several team members who worked with him there. Ron’s son, Gary Reshefsky, is now heading the new Century Risk Advisors team and “has been very successful in recreating our culture over the last six years,” Ron Reshefsky said. “As we don’t have private equity investors, our emphasis is on serving our clients and employees first,” he said. Employees of the agency cited that employee and client emphasis in their Insurance Journal Best Agency to Work For nominations. Employees of

the 2019 Silver winner said they feel appreciated and valued, and as such work hard to help their clients. “CRA is a wonderful place to work,” wrote one employee in the nomination. “Management consistently looks for ways to improve the workplace experience. They are very generous with salaries, benefits and community involvement.” “CRA provides an environment that promotes professional growth through collaborative discussions, oneon-one training and access to various resources. The culture promotes a healthy work-home balance, which is incredibly important for our team members. Everyone genuinely cares about the well-being of their co-workers and it shows in the work product. When people enjoy coming to work, it makes all the difference,” said another respondent. Gary Reshefksy, president

Gary Reshefsky & Ron Reshefsky 22 | INSURANCE JOURNAL | OCTOBER 21, 2019

of Century Risk Advisors, said the agency sets itself apart from other agencies because it invests “heavily in risk management services,” which it provides at no additional cost to clients. “The resources and culture translate to a high-touch, client-focused service organization that provides a work environment that is invigorating and allows our amazing team to amplify their talent so we can reach shared goals,” he said. Employees agreed, saying their knowledge and customer service sets the agency apart, adding they don’t just write insurance policies. “We get to know our clients and advise in all areas of risk management.” “Our in-house risk management team allows us to be very impactful to our clients. Any agency can place a policy, but do they go the extra mile to make that policy work for the insured in their time of need?” said another survey respondent. Employees also appreciate the support the agency shows to various organizations throughout the local community. They said they feel more connected to the clients they serve day in and day out by giving back. CRA has also invested in a healthy work environment, one survey respondent said, offering stand-up conversion desks, walking competitions, a “three-minute timeout” initiative, and a “don’t eat lunch at

your desk” initiative. One employee said the company shows it cares on a personal level as well, and has been working with the employee to obtain their CISR designation. “Our company respects all employees from the bottom up. We have monthly meetings where we get together to share what’s going on in each other’s worlds,” one respondent said. “It’s definitely a family oriented agency, and it’s nice that we even do things together outside the office. These things may seem minimal, but they weigh heavy on why this is one of the best agencies to work for,” said another respondent. Gary Reshefsky said it’s gratifying to know the company is an agency of choice for team members, and he is proud of the nomination. His advice to other agency owners striving to make their agency a best place to work is to invest in your agency and its team. “I appreciate being part of a team that gets really excited about doing a great job for our clients. I enjoy working with insurers that stand behind their promise to make our clients whole after a loss,” he said. “I thoroughly enjoy talking about the strength of our team and the quality services we offer, which is hard to find in our marketplace.” INSURANCEJOURNAL.COM

NATIONAL | Special Report | Best Agency to Work For

West

Morris & Garritano San Luis Obispo, Calif.

Getting a Leg up Is Commonplace The culture at M&G is one that here were roughly 25 acknowledges people promoted at customers come Morris & Garritano first, the (M&G) last year. That means the employee said. odds weren’t too long for being “Do the right thing, go the one of the firm’s 125 employees extra mile, love what you do, who got a leg up. And last year always be improving and build was no anomaly. collaborative relationships is “That’s regular for us,” said the heart of our mission and Kerry Morris, chief operating core values and makes us who officer. we are,” the employee wrote. A good chance for advance Other employees liked that ment was among the many management hears and heeds reasons employees at the San their ideas and opinions. Luis Obispo, Calif.-based firm “Everyone is treated as an nominated it for Insurance equal from day one in the Journal’s Best Agency to Work agency,” one employee wrote. For award. Morris & Garritano “Our opinions are solicited was awarded Silver in the West. in regard to changes in the The agency, which reports agency, our departments and just over $20 million in annual our team so that there is 100% revenue, has clients ranging buy-in for new procedures or from corporations stretched changes to existing ones.” across the nation to small Another employee at first businesses with complex didn’t start working well at exposures. M&G. But a slow start didn’t Morris said that keeping seem to make a big difference workers happy is a key part of to supportive managers. the management philosophy, “During my first year of and in return managers ask employment I was struggling with my role while I developed my attention to detail,” the employee wrote. “I was placed on a performance improvement plan, which is usually what a company does when they let someone go. I had several of my managers/supervisors go out of their way to M&G staff: Employees and management at San Luis Obispo, Calif.-based make sure I succeeded, Morris & Garritano. Chances for advancement was among the many reasons and I did just that.” employees nominated the firm for Insurance Journal’s Best Agency to Work For The employee worked award. Morris & Garritano was awarded Silver – West. with a trainer to

By Don Jergler

INSURANCEJOURNAL.COM

that employees embrace five core values: Do the right thing; love what you do; always be improving; go the extra mile; and build collaborative relationships. The idea, Morris said, is to provide a good work environment and growth opportunities, so employees can in turn provide the best experience for clients. “We genuinely care, and we genuinely emphasize culture and a positive work environment,” she said. “We want to see employees grow personally and professionally.” Employees echoed those sentiments. Listing reasons the firm is great to work for, one employee wrote, “First, the positive culture that senior management has instilled in the agency permeates throughout and allows everyone to be their own person while working hard and getting the job done. Secondly, the professionalism at which the agency conducts our business.”

eliminate errors and now is in a successful new sales role with the agency. “I am so thankful that the company truly wants each employee to succeed, and management is more than willing to make adjustments for different learning styles,” the employee said. Morris said she’s most proud of two employee initiatives, which place an emphasis on training and development, and on achieving a work-life balance. “We adopted a really flexible work schedule this last year,” she said. “At any given time, we have 40 percent of our employees working remotely.” The flexible policy, of course, went over well. “We just had our annual employee appreciation party and they paid for 18 of us (remote employees) to come visit for a week,” the employee wrote. “Not only are we allowed to work remote (out of state), M&G has many employees working part time from the office and part time from their home. Additionally, if we have doctor’s appointments, meetings with our kids’ teachers, family events, you name it, we have the flexibility to work our eight hours as we see fit. We are not even required to notify our immediate supervisor if we are coming in an hour late or leaving at 4 p.m. How awesome is that?”

OCTOBER 21, 2019 INSURANCE JOURNAL | 23

Special Report: Commercial Property

Why the Differences Make a Difference in Coverage By Patrick Wraight

e recently received a question from a reader who had a customer with several single-family dwellings as rentals, all written on carrier-specific DP 00 03 (DP-3) policies. The question: “What are the pros and cons about leaving the dwellings on their separate DP-3’s or moving them to a Commercial Property Policy CP 00 10, with Special Causes of Loss (CP 10 30) form attached?”

The coverage issues aside, consider that the customer had multiple dwellings. Having those dwellings on a DP-3 requires a separate policy for each building. As long as nothing goes wrong, or no claims issues crop up, this can be sustained. As long as a single carrier is happy to write all of the dwellings, there are few issues. It’s also possible that with multiple policies, something gets missed on one policy. An endorsement to expand cover-

24 | INSURANCE JOURNAL | OCTOBER 21, 2019

age may be added to one policy with the intent to add it to all, but that never happens. On the other hand, the commercial property policy would allow all of the dwellings to be listed on one policy. It’s always simpler for the customer to keep track of one policy, rather than multiple policies. There are some coverage differences. In the end, the policies could be considered comparable, however that doesn’t make them the same. Let us review a few of the

differences and see what they may mean.

Insuring Agreement

The insuring agreement for Coverage A on the DP 00 03 (Dwelling Property 3 – Special Form) reads (in part) as follows.

We cover: The dwelling on the Described Location shown in the Declarations, used principally for dwelling purposes, including structures attached to the dwelling;

Compare that with Covered INSURANCEJOURNAL.COM

rented to others or held for rental by you unfit for its normal use, we cover the fair rental value of that part of the Described Location rented to others or held for rental by you less any expenses that do not continue while that part of the Described Location rented or held for rental is not fit to live in.

The policy also provides a limit of insurance for this coverage.

Rental Value And Additional Living Expense You may use up to 20% of the Coverage A limit of liability for loss of both fair rental value as described in Coverage D and additional living expenses as described in Coverage E. This coverage is additional insurance.

Property: Building on the CP 00 10 (Building and Personal Property Coverage Form).

Building, meaning the building or structure described in the Declarations, including: 1. Completed additions; 2. Fixtures, including outdoor fixtures; 3. Permanently installed: a. Machinery; and b. Equipment; 4. Personal Property owned by you that is used to maintain or service the building or structure or its premises, including:… You see the differences. The different ways that the covered

INSURANCEJOURNAL.COM

buildings are described may require updates to the valuation of the building in order to maintain proper coverage. This may not be a big deal, but then again it may. We have to pay attention to the differences.

Fair Rental Value

Consider also this coverage that is included on the DP-3 policy. Coverage D – Fair Rental Value 1. If a loss to property

described in Coverage A, B or C by a Peril Insured Against under this policy makes that part of the Described Location

This makes the fair rental value coverage a function of the coverage for the dwelling, which is another reason to make sure that the dwellings are properly covered. This coverage is not included at all on the CP 00 10. It’s not that it cannot be covered. You already know that the insured could get coverage for Business Income (with or without Extra Expense) to make sure that they are covered in the event of a covered loss to the buildings. The upside of having that separate policy is that the insured can buy limits that ensure that they receive their business income in the event of a loss while the dwelling policy is limited to 20% of Coverage A.

Covered Causes of Loss

Another point of consideration must be the Covered Causes of Loss (or Perils

Insured Against on the DP-3). The DP-3 reads in part as follows.

Coverage A – Dwelling And Coverage B – Other Structures 1. We insure against risk of direct physical loss to property described in Coverages A and B. Coverage C – Personal Property We insure for direct physical loss to the property described in Coverage C caused by a peril listed below unless the loss is excluded in the General Exclusions. When the CP 10 30 (Causes of Loss – Special Form) is attached to the Commercial Property Policy, the wording is a little different.

Covered Causes of Loss When Special is shown in the Declarations, Covered Causes of Loss means direct physical loss unless the loss is excluded or limited in this policy. The Commercial Property Policy allows this form to apply whenever it is selected, including business personal property. The DP-3 policy provides only those causes of loss as listed in the policy to apply to the personal property. This could be changed by endorsement, but it is one more thing that the customer and agent have to make sure is correct. There are other places where the policies differ. And of course there are things that make different carriers more or less appealing (including price, deductibles, endorsements, and coverage extensions). Wraight is the director of Insurance Journal’s Academy of Insurance. Email: pwraight@ijacademy.com. Website: www.IJAcademy.com

OCTOBER 21, 2019 INSURANCE JOURNAL | 25

Special Report: Commercial Property

26 | INSURANCE JOURNAL | OCTOBER 21, 2019

INSURANCEJOURNAL.COM

By Andrea Wells

ommercial property underwriters are adjusting to a market defined by rising catastrophe losses and dwindling profits. From increasing rates and higher deductibles to fewer classes of business and stricter underwriting, even the best in class properties are feeling the heat. Overall, commercial property rates have risen several percentage points even for buyers not facing catastrophe risks, according to Willis Towers Watson. For those with significant cat exposures or adverse losses, the rate hikes are in the double digits in the aggregate for the first time in several years. Commercial property insurance renewals are generating rate increases between 5% to 10% for the best accounts, while some property programs have seen increases of upwards of 50% or more in 2019, according to Woodruff Sawyer, an Insurance Journal Top 100 Agency. Casey Soares, senior vice president, property specialist at Woodruff Sawyer, says that while there’s plenty of capacity available in the market, carriers are scrutinizing every piece of business and re-underwriting commercial properties, in particular. The heightened attention is part of an effort to turn the market around following the surge of single risk losses during the past two years, she said. The 2017 Atlantic hurricane season was one of the costliest seasons on record with combined insured losses of more than $200 billion from Hurricanes Harvey, Irma and INSURANCEJOURNAL.COM

Maria. Then in 2018, California experienced its most destructive wildfire season ever with insurance claims surpassing $12 billion. “These events are what spurred this market turn,” Soares said. “That’s causing carriers to look at each account and make sure they’re making smart decisions and actuarially sound rates and coverage.” It’s been an “across-the-board dedication” to transform the market. While the adjustment has been good for the insurance industry, it’s a challenge for commercial property owners who are facing insurance costs based on a “true reflection of risk,” she says, noting that’s a difficult adjustment for any insured. Agents say habitational is the most challenging commercial property risk today. “Anything frame construction, especially frame builder’s risk,” Soares said. “Habitational is truly a hard market where there is a lack of capacity.” Accounts with a high loss potential such as those in manufacturing, with a hazardous or combustible risk profile, can also be tough in today’s market, she says. Despite the re-evaluations going on, even in the toughest classes of business, there’s some carrier willing to write the property coverage. Barry Whitton, managing director for Burns & Wilcox Brokerage, contends market capacity is not an issue, although more stringent requirements on that capacity are. “I think there’s been an uptick of companies underwriting more, restricting their capacity usage more,” he said. “There is less of a willingness

Technology Tools

nternet-of-Things (IoT) enabled technologies such as water leak and fire/heat detecting sensors are also useful and an area that has yet to reach its full potential, according Jack Volinski, senior vice president at Hartford Steam Boiler’s HSB Connected Technologies, responsible for IoT Solutions. The commercial property market is an “under-penetrated market” when it comes to the use of these loss prevention tools, he says. HSB Connected Technologies helps to mitigate risk problems before they occur by using technology tools utilizing artificial intelligence and IoT. Volinski says that while the oil and gas industry has been using “sensors” for decades to mitigate risk, the lower cost, tech tools available today are now much more accessible to smaller businesses, he said. “We see a large market potential for sensors around water risks (and leaks),” Volinski added. Third-party data, such as weather alerts, make for a much more robust risk mitigation tool, also. Like other new technologies coming to market, the cost is rapidly declining. “We will continue to see in the sensor area and IOT area, the cost of the devices continue to decrease while the functionality or capabilities of what they can do will increase,” he said. “They will also continue to become more sophisticated, so we’ll get better and better at delivering outcomes.” HSB plans to continue to push the innovation envelope on sensors and other IoT devices that will be used to again transform risk. “We’re combining access to technology with our understanding and knowledge of where the risk areas are within a facility or a business and then we’re looking to combine those to bring a better customer experience.”

to use that capacity for a cheap price.” Even the standard commercial property market is experiencing rising rates, albeit at a slower pace, Soares said.

Be Prepared

This has been a tough year for property, and 2020 is not likely to get much better, says Alex Silva, vice president, commercial lines, RIC Insurance General Agency, a division of Worldwide Facilities. For Silva, who sees some of the most challenging commercial properties in

California, rates are up as high as 50% to 100%. Every day he sees carriers writing property accounts with more restrictions and some pulling out of certain geographies all together. “I’m constantly getting non-renewals on properties that may be seen as now too close to brush, or too close to water.” Underwriting is much tighter, too. Older properties, even those that have been fully upgraded, are considered undesirable, he says. Tenant occupancy is sometimes an issue, as well.

continued on page 28

OCTOBER 21, 2019 INSURANCE JOURNAL | 27

Special Report: Commercial Property continued from page 27 Properties that have been great risks, with no claims history but are too close to the Malibu region are getting nonrenewed because of location, he added. For the higher risk properties, like those in Malibu, there just isn’t much property owners can do that would make their building a favorable risk right now to carriers, Silva added. But agents can play a huge role when it comes to education, he said. “Just providing information to their insureds on why these changes are happening in the insurance market, helps,” he said. “The insured may not like the reason, but at least they know why it’s happening.” And if they aren’t happy, then let them shop the coverage, Silva says. “Shopping will just validate what you are already telling them.”

better control over their property programs, which is a good place to encourage this because most risks are controllable, according to Soares.

‘I think there’s been an uptick of companies underwriting more, restricting their capacity usage more.’ “With property we can really help clients put together long-term plans and see where it makes sense to make investments in their overall risk,” she said. Of course, she advises her clients to not only earmark additional money for the rising cost of premium, but to also con-

Controlling Interest

The good news: the market is pushing insureds to take

28 | INSURANCE JOURNAL | OCTOBER 21, 2019

sider making investments toward risk improvements and funding higher deductibles for the long term. “I think that’s the only way people are going to get through this hard market … if they feel like they have some control over it and clients feel like it’s not just happening to them, then they can take an active role and put together thoughtful plans over the long term,” Soares said. Today’s hardening commercial property market puts more emphasis on the loss prevention and the risk management services an agent provides to clients, says Alan Goodrich, commercial insurance advisor/shareholder, with HMK Insurance, an Alera

Group company. HMK Insurance added its own risk management department two years ago. Most insurance carriers will offer some type of risk management and loss prevention services to policyholders, but Goodrich says it’s more reactionary. “If you ask for pre-inspection of a property for prospective clients, for example,” he said. Goodrich says clients’ response to having access to in-house risk management resources has been “phenomenal.” Middle market accounts, or those doing $10 million to $40 million in sales, don’t typically have in-house risk management and must rely on insurers and their and agents for the help. “They love having that additional resource from a safety and loss control standpoint,” he said. Goodrich hasn’t witnessed the dramatic commercial property rate hikes seen

INSURANCEJOURNAL.COM

in other more cat-exposed regions; he is seeing low single digit increases. “Here in Pennsylvania, we are seeing very modest rate increases,” he said. “But industry-wide and in different pockets of the country based on vulnerability to natural catastrophes and other types of perils, double digit increases are not uncommon.” Being an advisor is likely the most important role agents can play today, Woodruff Sawyer’s Soares says. “Honestly, I think that’s our only role. We have to be that trusted advisor and participate in giving risk management advice.” Woodruff Sawyer has in-house engineers as part of its client team to help agents and their clients put together risk improvement plans. “Then we look at different coverage options and price where the client retains risk, and where they allocate dollars,” she said. Catastrophe risk management is one area where clients look for the most help, she said. Simply giving insureds the information isn’t enough, Soares said. Agents must be able to advise insureds about actual loss scenarios and be able to discuss how those losses could affect them, including evaluating catastrophe models that produce property loss scenarios. “You get these numbers and say, ‘Oh, you’re one in two 50-year event is X. Would you like to buy some earthquake coverage?’” That’s where clients really rely on their agent or broker partners to explain. “For example, if a client is seeing that their catastrophe charge, whether it’s in their property policy or if they buy a standalone earthquake policy, INSURANCEJOURNAL.COM

Risk Defense Starts at the Top

huck Miccolis, managing director of commercial lines at the Insurance Institute for Business & Home Safety (IBHS), says start with the roof to make the most impact on commercial properties. “The roof system has the greatest exposure and is the first line of defense to significant losses, whether it’s wind, wildfire, winter weather … the roof is going to be your first line of defense,” Miccolis says. “Holistically speaking, for a building to greatly reduce its risk, we start with the roof in our Fortified commercial program, which is a wind focused, resiliency standard.” Insurance companies want documentation on what’s been done to mitigate losses. “So if the roof is more resilient and it’s well documented and it’s also documented that the design and the installation is done correctly, then insurance companies can look at that risk and understand that risk (better) than if they did not have that information or did

if that pricing is doubling, they’re obviously going to want to take a harder look at what is the value that that coverage is bringing them. Is it worth it? Should I keep buying the same amount? What’s my true exposure? What’s this going to look like after an event?” she said. That “number” handed back from the catastrophe software modeling firm isn’t always helpful without an agent’s interpretation, she says. Catastrophe modeling

not have documentation on how that roof is constructed,” according to Miccolis. “We start with Fortified roof; that’s our first level,” he said. “So if an existing building wants to increase their resiliency, then install a more resilient type of roof.” Properties everywhere should consider resiliency. “It’s not just along the coast in hurricane prone areas; this is also throughout the whole country,” he said. “High winds just don’t happen on the coast anymore.” The quality of the roof installation is almost as critical as the roof design. “Our research has shown that a lot has to do with products being installed properly,” he said. “When they’re not, you can have the best design in the world, but if they’re not installed properly, then they’re not going to perform properly.” Disaster planning is another important aspect of resiliency. “Businesses should have plans for the risks that they face in their area,” he said. “Emergency response planning and business continuity plan-

ning is very important for large and small businesses.” Without a plan, businesses run the risk of not returning to full strength post-disaster. They also run the risk of greater losses, Miccolis says. “So if they protect their physical assets and understand what the risk is, the wind or flooding or winter weather, that’s key,” he said. “Pre-planning should take place instead of trying to respond after the fact because that also affects business interruption.” According to the National Institute of Building Sciences report, Natural Hazard Mitigation Saves: 2017 Interim Report, published in 2018, investing in hazard mitigation measures that exceed select building code requirements can save $4 for every $1 spent. The report looked at scenarios that focus on designing new buildings to exceed provisions of the 2015 International Codes (I-Codes), the model building codes developed by the International Code Council (ICC).

companies such as Risk Management Solutions (RMS) and AIR Worldwide build software that simulates hundreds of thousands of events with varying probabilities across a portfolio. The output (Probable Maximum Loss figures or PMLs) has become a key component for pricing catastrophe-exposed insureds. Today, clients need the context provided by an agent or broker more than ever, telling them, “Let’s talk about

your individual business, how it’s going to be affected, where disruptions will happen … because the computer output just doesn’t give you much value in a vacuum,” Soares said. Soares advises her property clients that in today’s market, properly managing loss control and mitigating property exposures can make the most difference in total cost. “It’s where they can have the most impact,” she said.

OCTOBER 21, 2019 INSURANCE JOURNAL | 29

Special Report: Insurtech Insurtechs Discovering the

Value of Agents By Amy O’Connor

nsurtechs have been making headlines for several years with how they are changing the insurance business and the threat they pose to traditional insurance distribution. But as these fledgling insurance technology firms find their footing, they are realizing the value agents can bring to their business model, and vice versa. Agents and insurtechs are also looking at new classes of business thanks to what is becoming a mutually beneficial relationship. “There has been a pivotal change in the last 24 months where the realization has come through — the insurance agent is the relationship manager and part of the transaction,” said Daniel Feigenbaum, CEO of London Underwriters, a wholesale broker based in Florida. “When [insurtechs] work with them, there is a much higher success rate. By working with wholesale partners like us, they can create more efficient and targeted products that really fit a need in the marketplace.” Feigenbaum says London Underwriters has found a real value for its agent partners in working with insurtechs, so much so that it started a division specifically focused on helping insurtechs distribute their products. It now has four insurtech partners that include Next Insurance, Hiscox Now, Attune and Lavalier, and is in talks with two other partners to bring on additional lines of business. “We are helping insurtechs become more successful and also keeping agents thriving,” he said. That’s quite a different message than the dire predictions for the independent agent that came with the insurtech revolution. 30 | INSURANCE JOURNAL | OCTOBER 21, 2019

Insurtechs have realized that “partnering with the agent distribution channel is advantageous for all partners,” Feigenbaum said. For Next Insurance, whose CEO at one time predicted a future without insurance agents because of the advent of insurtech, the experience of partnering with agents has been eye-opening and valuable, according to its COO Sofya Pogreb. It formally launched its Next for Agents marketing portal in September after beta testing it since April. It already has more than 3,000 agents using the platform and has partnered with a few wholesalers, including London Underwriters.

‘There has been a pivotal change in the last 24 months where the realization has come through – the insurance agent is the relationship manager and part of the transaction.’ “The quality of feedback we are getting from the agents has been tremendously helpful because clearly the agents are more expert users than an average small business,” she said. “They’re reading our forms and language and making suggestions and asking great questions. We are also hearing from them that working with us is easier and faster than any of their other existing options, which of course we appreciate.” Next decided to open up an agency channel after another wholesaler approached it about wanting to offer the insurtech’s proprietary products in the construction space to its agent partners, and since then, Pogreb said it has found

that “agents appreciate the ease of instant quoting and binding and of online self-service.” “I would say it’s early days and there’s a lot of room to grow in the partnership, but so far we are excited,” she said. Pogreb says it has been an “interesting evolution” that they didn’t anticipate when the company started, and while Next still expects more insurance business to go direct in the long-run, agents will remain an important part of many insurance transactions. “Revolutions are never black and white, right? You don’t get there overnight. I think over time I expect to see a pronounced trend towards more volume going through direct channels; this is not a revolutionary trend,” she said. “We’ve seen it at personal lines, we’ve seen INSURANCEJOURNAL.COM

it in mortgage lending — first consumer and then small business. We’ve seen it in banking … We know that this will continue to happen. But how quickly is anybody’s guess, and I think that there will be a second segment of customers that see value and prefer the agent channel.” Pogreb said that as Next continues to grow, it will be looking for additional value-added opportunities and new ways to offer its products to various constituents. Working with agents is one way it can grow and build its brand, she said. “We appreciate the interest that the agencies are showing our product and we are committed to being a good partner,” Pogreb said.

Insurtech Changing Risks

Insurtechs like Next are also providing access to admitted coverage for risks that predominantly have been placed in the excess and surplus lines market. INSURANCEJOURNAL.COM

Next’s direct platform launched back in 2017 with a construction focus, but it has since expanded to offering admitted general liability coverage to about 1,100 classes of business. Next offers coverage on State National Insurance Co. paper, but Pogreb said the company hopes to launch as its own carrier later this year. Next is currently licensed in 19 states with the majority of its volume coming from its MGA relationship with State National. In early October, Next announced it had brought in $250 million in financing from reinsurer Munich Re. It said that Series C cash infusion will be used to scale up its small business insurance products and accelerate efforts to expand its customer base. Pogreb said it is seeing success in hardto-place classes like artisan construction, offering immediate responses to applications. “These are risks that admitted carriers will often not have an appetite for and we strive to price every risk and try for minimal declinations,” she said. “We quote the great majority of our applications and I think, as such, we are going head to head with the E&S [market] as well. And we offer the additional benefit of getting an admitted policy with an A-rated carrier, which is important for many businesses.” Pogreb said Next has been able to “unpack” niches that have been considered difficult and have traditionally gone to the E&S market while also giving the customer a “simpler, better experience.” “When you ask a small business owner about purchasing insurance, there’s very few people who love that process today,” she said. “As we’ve been building our insurance capability, I continue to be amazed by how much room for improvement there is in how risk is assessed and modeled in the small commercial space.” Pogreb says Next has experienced losses in the two years it has been in business, but because it is not offering cat-exposed products or property coverage, those have been manageable. “Construction liability is a space that many shy away from and we think that with sophisticated data gathering and riskbased pricing, it’s very doable,” she said.

For London Underwriters, partnering with Next allows it to give its agents “additional tools” for hard-to-place risks, Feigenbaum said. “Next is addressing the needs that have gone to the E&S world historically — like general liability for contractors — and is going after some of the business that was traditional E&S and can handle those on an admitted basis,” Feigenbaum said. “They have seen those markets migrating to the E&S space and are finding opportunities in the admitted market.”

‘Next is addressing the needs that have gone to the E&S world historically and is going after some of the business that was traditional E&S and can handle those on an admitted basis.’ Most of the agents working with London Underwriters work in both the admitted and E&S space, Feigenbaum said, so they benefit from the company bringing on additional partners. “It is known that many carriers out there have restrictive appointment guidelines so for us to bring on a company like Next gives them quick and immediate access to more products and services and they don’t have to go through an appointment process,” he said. About 70% of London Underwriters’ book of business has traditionally been E&S and it is a Lloyd’s coverholder, Feigenbaum said, but it is expanding its admitted market offerings and has seen a “pivotal change” over the last few months. He expects a dramatic increase in its admitted business in 2020. London Underwriters is currently working with Next on a workers’ compensation program with a limited launch in five states. If that goes well, the geographic footprint will be expanded. “We want to attract the right business in the right buckets, and we have found an efficient way in partnering with insurtechs to handle placements for admitted business,” he said. OCTOBER 21, 2019 INSURANCE JOURNAL | 31

Spotlight: Insurtech Female Entrepreneur Forging Path in Insurtech Space with AI-Powered Chatbot ‘LeO’ By Amy O’Connor

ike many people, entrepreneur and former Israeli tech journalist turned insurtech founder Liri Halperin never expected she would end up in the insurance business. But an insurance buying experience almost four years ago made her realize an insurtech opportunity that has since become a successful startup. “I just needed to buy renters insurance for my apartment, and I was amazed to see how inefficient my agent was. I don’t blame him because I knew that he had to do things manually, and he didn’t have the right tools to provide the best customer experience that I needed,” she said. It was that transaction that made Halperin think, “Okay, something needs to change in this industry,” and the company that became LeO was born. The artificial intelligence (AI)-powered service provides customer support to LeO’s insurance clients through chatbots. It also collects and analyzes customer data to help the insurance industry improve its service and increase its return on investment, according to the company. “In LeO we always say that we are not saving time. We give time. We give time to the carriers and the agencies to really invest more in their relationships and to grow from there,” Halperin said. Halperin discussed how she turned $2 million from private investors and a grant from the Israel Innovation Authority into a growing insurtech currently working with dozens of insurance agencies and three major global insurance companies. The company is in the process of launching chatbots for major players here in the United States.

Insurance Journal (IJ): Did you have any experience in the insurance space before you started LeO? Halperin: No. I am an entrepreneur and LeO is my third startup. My previous startup is still operating in the U.S. and is more of an eCommerce platform. Before that, I

32 | INSURANCE JOURNAL | OCTOBER 21, 2019

had one of the leading websites in Israel for consumers. Before that, I was actually a journalist. So yeah, I didn’t know a lot about insurance, and that’s why it was so important for me to build a team combined with people that are experts in insurance and also with people that are AI experts that can build a platform.

IJ: How is your AI-product different than others in the market? Halperin: There are chatbots out there,

but most of them are not focusing on insurance. We understood that in order to be the best in that field and to speak the language and to understand the processes, we needed to focus only on insurance, and that’s what we did from day-one. We built the system from scratch, so we have full flexibility to build the processes in a way

that we don’t need to send the customers to finish the process outside of the chatbot. You can enroll payments, you can fill out forms, you can do everything from the chatbot … We also have people that know insurance so we can be aligned with the regulation of the geographical industry that we work with — if it’s in Israel, in Europe, or in the States … Also, the insurance industry still uses a lot of legacy systems … we know how to integrate with those, and we know those systems.

IJ: What have been some of the challenges of starting an insurtech like LeO? Halperin: When we really started like

three years ago, insurtech was only in the beginning ... Not a lot of people knew what insurtech is ... So, you needed to find the people that you can really speak with in the carriers, in an agency and in the brokerages. It wasn’t so clear. It was like wild west for a startup to start in that industry. Today, you can see the change and you can see that those carriers and agencies, they are looking for innovation. They know that they have to adopt the innovation in order to create a competitive advantage. It’s started to be much easier to start a conversation with them.

IJ: Did you face any specific challenges with being taken seriously or convincing people that you knew what you were talking about as a woman in such a male-dominated field? Halperin: I didn’t really feel that and I don’t feel that now, but you can see that when you go to conferences and you sit in meetings, you have only a few women there or maybe you will be the only woman out there. And it’s okay, because you knew that you started in an industry that still, like you said, most of the people there are men. There was a really interesting study from McKinsey that showed … only 18% [of women] are in C-level roles in the insurance industry, which is really sad to see. I sat on a panel at InsurTech Connect in Vegas next to Amy Zupon, the CEO of

INSURANCEJOURNAL.COM

Vertafore, and it was really encouraging to see a [female] CEO of such a company. It’s so important to have role models like her, so more women will see that it’s an option to be a CEO of these huge companies and to open startups … I encourage more women to do that.

‘We understood that in order to be the best in that field and to speak the language and to understand the processes, we needed to focus only on insurance, and that’s what we did from day-one.’ Halperin said she doesn’t encounter many women in the insurtech space but has made advocating for women in executive roles a personal crusade. When she started LeO in 2017, she also founded Parliament 51, a social impact venture that aims to achieve equal opportunities for women in the workplace. In March, she spoke at the United Nations “Private Sector Wisdom to Crack Gender Equality,” forum as part of the UN’s International Women’s Day event.

but it was from all over the world. Those kind of initiatives promote women to go and promote their startups and, as I said, to be a role model for other women entrepreneurs.

IJ: What is your goal for LeO over the next 24 months? Halperin: We have had great growth and

Liri Halperin the U.N. invited us to speak about it.

IJ: Is the insurtech space more diverse than the rest of the insurance industry? Halperin: I can tell you that in my

community, I see women that are CEOs and co-founders of insurtech startups. There was also a competition at InsurTech Connect where more than 100 women applied to get into this competition …

we are definitely looking to invest in that … Our vision is that two years from now, LeO will be the best employee in the agency and for the carriers, and it will be an employee that will take care of the customer service and the sales processes, the customer-facing processes while freeing the other members of the team and the other representatives to focus more on growth and relationships with their clients. We believe that really, that’s what insurance is all about, right? Investing in relationships and making your customers feel assured they are covered and you’re giving them the best advice.

IJ: What does Parliament 51 do, and how did you get involved in the U.N. event? Halperin: We wrote a statement of principle

[for Parliament 51] that speaks about payment equality and mentoring and programs that a company needs to have in order to promote women for executive roles. There were a lot of companies that signed the statement of principle, like Google, Facebook, Dell, WeWork, Salesforce and many others. Other than that, we provide a lot of practical tools and tips to the management team: How to promote women, how to retain women, how to recruit women, how not to lose them when they go on maternity leave, and how to encourage them to take more executive roles. You can see men and women coming from the management teams and women want to learn how to do that, but they don’t have the tools. We have all these workshops and seminars that we do … and INSURANCEJOURNAL.COM

Say Goodbye to Manual Policy Checking Woes. Say Hi to ExdionPOD Introducing ExdionPOD, Automated policy checking platform AI & SaaS based solution Easy to understand checklist of 31 questions Advanced Fuzzy Logic that indicates the match between policies Seamless EPIC integration High customization, can be used by small to large agencies Can handle high/low volume workloads as required Reduces E&O exposure up to 100% High Return on Investment

To Connect with the future +1- 469-277-8184

EXDION003.indd 1

info@exdion.com

10/11/19 7:36 AM

OCTOBER 21, 2019 INSURANCE JOURNAL | 33

Idea Exchange: Small Business

A Modern Economy Demands Modern Protection: Advancing Liability Coverage into the Digital Age is Imperative — and Long Overdue

iability insurance as we know it no longer suits a large fraction of today’s and tomorrow’s small-business By Jay Bregman owners. Brokers and insurers are at a crossroads on how to serve small businesses’ changing needs in the on-demand economy. The industry’s one-size-fits-all approach to liability coverage has largely ignored the generational change at hand, the rise of the gig economy and evolving demands of modern workers. This model not only leaves brokers burdened by time-consuming paperwork and faced with a series of complicated hoops to jump through in order to qualify customers — above all, it renders them unable to deliver tailored coverage to adequately fit client goals and enable their own professional growth. The modern consumer (and broker) expects an instant, on-demand product. Not days. Not hours. Not minutes. Seconds. 34 | INSURANCE JOURNAL | OCTOBER 21, 2019

Generational Change Is Here Next year, over 60 percent of small

businesses in the U.S. will be owned by Millennials and Gen Xers. More digital natives entering the space means higher demand for technology offerings that allow small-business owners to manage and purchase insurance digitally and instantly. It also means more small businesses being born out of new technology, like on-demand platforms, which have created a modern economy around episodic, short-term, flexible work. Most importantly, businesses run by these new generations have become used to preferring ultra-convenient instant digital solutions — often at a higher cost to legacy solutions. Delivering such a service is not possible without a fundamental simplification of the underlying insurance contract.

Flexibility is Required

Liability coverage that is only available in annual policies are too expensive and cumbersome for independent workers, who don’t have the outlay, need or will

to purchase coverage for a full year. This model fails to offer the convenience and customization necessary to fit the diverse and dynamic nature of their work. Similarly, the short-term lead time on jobs and last-minute cancellations mean that without new ways of doing businesses, independent agents as well as small-business owners could continue to lose out on business because of a lack of flexibility.

No Small Business Left Behind The insurance industry as a whole is

continuously unsuccessful when it comes to cracking one key group of uninsureds: very small businesses. The small-business insurance market has seen major growth in recent years; that trend will only continue. A modernized approach is necessary to serve small business owners in the 21st century. Insurers who fail to take a hard look at the outdated liability models and expand their offerings will fall further and further behind the curve in an industry on the cusp of radical change. Focusing on enhanced offerings to serve small busiINSURANCEJOURNAL.COM

nesses not only helps today’s workers get the protection they need, but also allows independent agents to set their own small business up for long-term success. The winners will be new, innovative, simplified products; not simply a web veneer on a traditional underwriting process.

Small Business in an On-demand World

From an insurance perspective, this new group of small-business owners comes with a unique set of needs. Independent workers take on higher levels of personal risk with limited, if any, access to benefits typically afforded to full-time employees. Liability insurance is crucial for these individuals; yet often freelancers and gig workers forgo coverage. In many cases, they either underestimate their risk, can’t afford a policy or simply are unaware they need it in the first place. The result: missing out on jobs that require proof of insurance, which in turn inhibits business growth. The liability landscape has been long overdue for a true revolution, and that’s what we’ve sought to do by pioneering a new model for episodic coverage. Here’s what we’ve learned so far about improving the customer experience and meeting the evolving needs of small-business owners in this modern economy: • Personalizing the experience: Consumerization has reached virtually every industry, and insurance is no exception. Small-business owners today want to feel like their needs are being heard and addressed with a personalized insurance policy that is flexible and custom-tailored to their specific work arrangements.

insurer or broker should be straightforward and easy-to-understand, helping them navigate the complex liability landscape and make informed decisions without becoming overwhelmed. • Providing protection at a fair price: While having the lowest price on the market is typically not the most important factor among customers, offering a fair price for a quality policy remains imperative, allowing insurers to reach individuals who might otherwise have opted out of liability insurance due to the cost barrier. • Offering live support when needed: While a quick and easy digital experience will win customers, insurers should not neglect the importance of providing live support as a complement to self-service. Even in the digital age, customers look for a personal, human touch.

Outlook

The bottom line: traditional liability policy structures have left the industry ill-equipped to handle the changing nature of work and have left brokers stuck with one hand tied behind their backs. As technology advances and customer needs shift, insurance must adapt with the times — and fast. Championing digital solutions to meet 21st-century demands can only go so far; we also need new, simplified insurance contracts that meet

the needs of small-business owners across the many new forms they take. The $100 billion small-business insurance market is wildly inefficient. Forty percent of sole proprietors don’t buy liability insurance. The market is ripe for those willing to break the antiquated liability insurance mold and incorporate new products. The one-two punch of generational change and the gig economy means new winners will be made in the next few years. We’re proud to work with brokers to expand their portfolio and make episodic coverage available to small businesses, just as we are proud to join with insurers to create and push these new products through the regulatory process. It’s time for the insurance industry to catch up to what others have seen coming for years: the modern worker and business owner is unlike any other, and we’ll only benefit by offering products and experiences that protect and empower them. Bregman is co-founder and CEO of Thimble, an on-demand, by-the-job insurance app aimed at the ever-growing economy of independent, freelance and gig workers. Available across more than 100 professions in nearly 50 states, Thimble provides affordable, flexible liability policies to fit the dynamic nature of modern small businesses.

• Delivering convenience through bestin-class technology: Digital-age workers

crave speed and efficiency. They don’t want to spend hours selecting an insurance policy. Leveraging best-in-class technology to offer a convenient, streamlined path to purchasing insurance at the touch of a button is paramount to cultivating a positive customer experience. • Making insurance approachable and accessible: Insurance is notorious for being confusing, and small-business owners have enough on their mind as it is. The information they receive from an INSURANCEJOURNAL.COM

OCTOBER 21, 2019 INSURANCE JOURNAL | 35

Research & Trends Center Powered by Insurance Journal

Search dozens of topics and trends like cyber risk, technology, energy, financial management, marketing, sales, and many more. Access hundreds of high-quality whitepapers, webinars, reports, articles, and other resources. The majority are absolutely free.

Featured eBook Download â&#x20AC;&#x153;Backed by Data, Fueled by Insightsâ&#x20AC;?

insurancejournal.com/research 36 | INSURANCE JOURNAL | OCTOBER 21, 2019

INSURANCEJOURNAL.COM

Idea Exchange: Ask the Insurance Recruiter 20 Ways to Reinvigorate Your 2020 Recruiting

hat grade do you give your agency’s 2019 hiring? If you think there’s room for improvement, my advice is not to expect that using the same old tricks. 2020 ushers in a great opportunity to test new, creative and edgy recruiting tactics. Projections show agencies will hire just as many client managers and producers with a sharp increase in management, analytics and technology openings. Recruiting is best summed up in three categories: Identify, attract and retain talent. Here are 20 ideas I encourage you to try for 2020 recruiting.

1. Campus Recruiting.

Attend a college fair to strengthen your organic pipeline.

Phone a Friend. Clients and social

networks are invaluable for attracting experienced, non-insurance sales talent.

Don’t Post the Job. Job boards are effective for sub $65,000 jobs, but better resources abound for pricier hires.

4. Double Employee Referral $.

For a tough-to-place job, double the employee referral bonus on that opening.

5. Make the Executive Cold Call.

Hiring managers soon realize it’s not so easy to pawn recruiting off on HR. They will be more invested in the hiring process.

6. Change the ZIP Code.

Give ‘remote’ a chance to fill a senior account manager job. You won’t be sorry. It will make the next service hire even easier.

7. Write a Blog.

Advertise an opening in an article about your recent hiring success stories. Ask for referrals at the end.

8. Create a Video for LinkedIn.

Pictures and videos generate the fastest ‘impressions.’ Those get shared and reshared all displaying your career opportunities.

INSURANCEJOURNAL.COM

Attend a Career Fair. You may be the only insurance employer, but if you’re looking for IT, HR, accounting and admin staff, there’s no better place to find them.

10. Recruit the Replacement.

You just hired a new account manager. Who took his/her old job? Knowing that person = a promising future hire.

11. Compile an E-Marketing Brochure. How you sell to clients is how you sell to employees. Tout soft benefits, career advancement, volunteerism and company history. Send this to candidates before the first interview.

12. Find a Recruiter You Can Trust.

Staffing firms are generalists. Recruiters are specialized. Identify difficult hiring projects and find insurance-specific recruiters with expertise on those positions.

13. People Love SWAG.

If hotels dole out pens after a one-night stay, you can easily put together a care package for the new hire’s first day

14.

Ask Vendors for Resumes. You may be surprised how easily resumes are shared. All you need to ask is, “Do you have an applicant like this in your database? Can I have their info?”

15.

Write an Offer on a Napkin. The point is do not fall in love with the interview process. Don’t create steps for the sake of it. Make an offer after one meeting. Producers love it.

16. Signing Bonus.

Relo assistance is not a dirty word. Nor is signing bonus or an employment contract. Want to lock

great talent down quickly and for the long haul ... provide an unexpected commitment.

17. Post Job

By Mary Newgard Narratives Not Job Descriptions. The three-page resume is

dead and so is a lengthy job advertisement. People read articles, not novels. Be concise and interesting; make every job (even if it’s the same title) appear unique.

18. Mock Presentations.

Producers who can’t work a room have high failure rates. Forget about business plans. Set up a mock presentation on a different topic — Lebron or MJ: Who is the greatest ever?

19. Invest in Applicant Tracking

Software. How many times is

the right candidate sitting in front of your nose? HRIS, ATS and CRM software improves tracking, documents origination and matches skill codes for future positions.

20. Talk to Everyone.

Are you guilty of negotiating away recruiting? Is it easy to prioritize other business projects? You don’t need to spend 35 hours of your week on recruiting. The easy fix with great results is to talk to every possible candidate. You gain market insight, find opportunity hires and build relationships with people that make it much easier to approach them about future roles.

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

OCTOBER 21, 2019 INSURANCE JOURNAL | 37

Idea Exchange: Tech Talk Agent Silos: It’s Not Just a Problem for Carriers By Tom Wetzel

mong carriers, the silo model in which departments operate independently and do not easily collaborate on common goals is well-documented. Among agents, however, no matter the size, silos can create problems and unintended consequences. “I’m not big on silos, except on the farm,” says Brian Bartosh, president of Top O’ Michigan Insurance Solutions of Alpena, Mich. “People will build barriers around themselves even within an agency, in personal lines, commercial and benefits,” he says. “More of our clients, especially millennials, want a more personal relationship with a single point of contact, so we work hard to accommodate that,” he says. Bartosh says it has been his experience that millennials want the personal touch

more so than members of the baby boomer generation. Silos within an agency generally fall into three broad categories — data, service and communications. A data silo exists when data is only accessible to one group or team in the agency, or is housed in a system that cannot be shared with other systems. Examples can include the agency management system, marketing, enrollment, commission tracking software, a CRM and carrier websites. Most agencies use data from multiple platforms, so it’s critical to have it accessible to all agency teams. Many agencies maintain service silos, including personal lines, commercial lines and even claims. Even if staff meet together on a regular basis, they can present an inconsistent experience for the client. “Silos can be efficient, but they can also frustrate clients,” says Jay Byrnes, president of the Byrnes Agency of Norwich, Conn. “We have tried to reduce their effect, however, by giving clients multiple ways to stay in touch with us and we with them, through our portal, social media and texting.” Communications silo exists when clients and prospects are forced into using a channel chosen by the agency, not one they prefer. “A critical component of

customer experience is giving both clients and prospects the option to choose what channel they want to use and what time they want to contact us,” Byrnes says. “Not providing them that option creates an unintended silo.” Bartosh adds that choosing the right social media sites can create a silo. Millennials, for example, have moved away from Facebook and Twitter, so the agency added SnapChat and Instagram to its repertoire. Agencies are siloed by function, including owner, producers, account managers, marketing and IT, according to Deborah Smallwood, founder & CEO of Strategy Meets Action. “All of them should share, however, the goal of providing the best possible customer experience,” she says. “To bring them together, they should look at their own departments through the customer experience lens. If they do that, that changes the conversations they have with each other and with clients.” Smallwood adds that agencies should cross-train staff. “The extent to which every staffer understands the function of each department helps develop a more coordinated approach to customer experience,” she says. Wetzel is CEO of Thomas H. Wetzel & Associates, an insurance marketing firm. Website: www.wetzelandassociates.com. Email: twetzel@ wetzelandassociates.com

‘A critical component of customer experience is giving both clients and prospects the option to choose what channel they want to use and what time they want to contact us.’

TechTalk Sponsor

Idea Exchange: The Competitive Advantage New

Simple Insurance Policies

That Take Care of All Your Needs

nsurance policies are difficult to read and understand. Another name for an insurance policy is a “legal contract.” An By Chris Burand insurance policy is a specific kind of legal contract. Without training and experience, aren’t most legal contracts difficult to understand? This is not an excuse for unnecessary complexity, but context. One important reason insurance policies are so complex is because silence is deadly. Most people read legal contracts, including insurance contracts, by simply reading what is in front of them, and this is where experience and fairness apply. Quite often, the most critical part of a contract is what the contract does not say. Whether it is an insurance policy contract, a purchase agreement or especially some nondisclosure agreements, it is the missing parts, the silent parts, that are the most dangerous. Such silence is so deadly because most humans do not like to read contracts, especially insurance policies. A fantastic marketing gimmick is to advertise one’s super simple, awesome, easy-to-read, no-fine-print contracts because that is what people want to hear. I saw an insurtech firm advertise something to the effect that, “You wanted an easy-to-read policy and we are finally providing it because we’re not stuck in the past.” 40 | INSURANCE JOURNAL | OCTOBER 21, 2019

The problem with super-simple contracts is that being short and simple, the contracts will have many, many voids. The contracts will be silent on many important points, and yet most people will not know these missing points are deadly. A meticulously fair contract writer will understand this issue and will do their best, within confines, to address these silences because they know readers will not have the experience to know what the contract should, but does not, include. The people most at risk of being taken advantage of are those who have limited experience reading a particular kind of contract, have limited education, or have reading and concentration issues. Also at risk are those who just don’t like reading contracts, and those who wishfully believe that everything will always work out just fine, along with other wishful thinkers who believe a handshake should take the place of legal minutia. Many people in many industries, including the insurance industry, have targeted these people by writing simple contracts. Their mantra is, “Give the consumer what they want,” or “Don’t talk down to them that the contract needs to be complex. Treat them like adults.” These folks understand their market extremely well, and honestly, their product works just fine most of the time because most of the time, no one really needs insurance except for verification purposes. People do not often need insurance

otherwise because most of the time, no one has a loss. Insurance is meant to be a severity solution, not a frequency solution. This plays into these nefarious peoples’ marketing plans quite well. The buyer does not want to buy insurance in the first place, and they definitely dislike reading the policy. They do not know what they should be looking for, and they know they will rarely need the policy for an actual claim because actual claims are rare (unless one lives in a hail zone). The seller says, “Here is something simple and cheap” knowing major gaps exist and that by the time anyone figures this out, when the buyer has their one claim every 10 years, it will be too late. When coverage is denied, the consumer will not have any idea the company purposely wrote the contract with many gaps. The buyer will think this is how all policies are written, with the express purpose of ripping off consumers. Silence is deadly for the consumer, but it is also damaging to the more reputable insurance companies and agencies. The solution is easy to say and difficult to achieve, but education is key. Education begins with the insurance company and the insurance agency. Underwriters need to understand their own coverages and other companies’ coverages, so they learn the differences and see the gaps whether in their own forms or their competitors’ forms. At the carrier level, this has to happen if the company is going to be part of the solution. Next, a carrier must decide how to disseminate this knowledge, assuming the carrier is one of the more ethical ones writing more standard complex contracts (relative to the simple, three-page versions). They have the opportunity to educate their agents, the public or both. In today’s advertising world, that is full of savings versus competitors (those commercials are an entirely different kind of deception because of the way the statistics are being used and, I’d argue, abused), space exists for INSURANCEJOURNAL.COM

advertising quality of coverages. Opportunity absolutely exists for better educating agents, and if the companies do not do this, agents that want to represent quality have to become far better educated. I teach coverage classes all the time and often when we begin a program, CSRs and producers do not know nearly enough about different companies’ coverage comparisons or even how coverage options within a single carrier’s forms work. They immediately give clients price options but not coverage options, because they do not know coverages well enough to give coverage options. Agents can also advertise quality, concern for policy gaps and a willingness to read policies for insureds, including

explaining the silences. A portion of the public truly wants this service. They do not want to read the policies themselves, but they want a trusted agent to read the policies for them and point out issues and options. An agency can advertise this service. Yes, this increases the agent’s standard of care, but if the agent is doing their job well and fulfilling their advertising promises, their E&O exposure will decrease even if their standard of care is higher. And, they will sell more coverage. Entities, especially nefarious parties, purposely appeal to people seeking simple answers to complex situations by writing simple policies with big silences that are deadly to everyone who cares about the public and the industry’s reputation. There

is a great quote by Einstein, “Everything should be made as simple as possible, but not simpler.” A short and sweet insurance policy is too simple unless it states, “All risks for all situations and never any exclusions.” Instead, make insurance policies as simple as possible by learning your coverages thoroughly and working with your clients so they understand what they need and how you can help them. And read Chris Boggs’ article on this subject from March 2019, titled “Analysis: Warren Buffett Champions an Inferior Product in THREE Policy.” Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-4853868. Email: chris@burand-associates.com.

The problem with super simple contracts is that being short and simple, the contracts will have many, many voids. The contract will be silent on many important points and yet most people will not know these missing points are deadly.

INSURANCEJOURNAL.COM

OCTOBER 21, 2019 INSURANCE JOURNAL | 41

Idea Exchange: Minding Your Business

Merger & Acquisition (M&A) Trends Continue

here is no end in sight. How can our insurance industry keep the incredible pace of high-valued acquisitions By Catherine Oak happening? It feels like the tide needs to change, but yet the M&A national and regional brokerage firms and private equity money keeps flowing. Telemarketers are not giving up their daily badgering by phone, mail and email. Independent insurance agents, especially those $10 million and less in revenues cannot compete with this acquisition pricing. They might be able to stretch and pay a retiree two times for their agency over five years, but besides going to the bank for a large down payment, usually 25 percent to 40 percent with most independents, they need to see the firm cash flow some of the purchase price, including the earn-out payments. In order to do so, there needs to be an earnings before interest, taxes and amortization (EBITA) of the seller of no less than 25 percent ,and hopefully even 30 percent or more. 42 | INSURANCE JOURNAL | OCTOBER 21, 2019

If there is a 30 percent profit margin, the independents can pay six to seven times EBITA, and that equates to 1.80 to 2.10 times revenues. We never figure out pricing as a multiple of EBITA, we simply talk that way after EBITA calculations are made and valuation methods are applied, in order for our insurance owner/producer clients to understand what the pricing is, in their terms.

Many agencies today with EBITA earnouts, don’t make these additional bonuses at all for those reasons, or if some accounts are lost. Some buyers completely leave the sellers alone, some merely assist the seller and others completely change the complexities of the sellers. Sometimes the sellers don’t have to change their name ever.

Today’s Environment

Depending on the tolerance level of clients and whether they are agreeable or not, the latter is the first option of leaving you alone is usually the most sought after. However, some of these buyers have been known to completely change the operation, compensation of personnel and producers, perks, contracts, insurances and related benefits, automation, staffing, and market relations. One buyer today takes on all of your administrative duties, accounting (you lose your people), insurance benefits and retirement plans for a fixed expense charge, anywhere from 5 percent to 10 percent. Those buyers that assist the seller sometimes allow the seller to have the higher

What we are seeing if a firm is profitable by at least 25 percent to 30 percent-plus, is revenue multiples in the 2.75 to 3.5 times range, usually offering some stock and an earn-out that can give them additional bonuses over two to three years. These earn-outs are usually a multiple of EBITDA and sometimes include the buyer’s stock. What we like even better and try to negotiate for is a revenue based earn-out. This is because we feel that if they are not on a revenue earn-out and the sellers cannot add people to grow the firm, because their EBITDA needs to grow. Often on an EBITA earn-out they cannot control the expenses assigned to them after the deal is closed.

What Buyers Do

INSURANCEJOURNAL.COM

commission rates and better contingents from the buyer, and that is added to the earn-out. Beware: Some might do this but don’t tell you that it is only for new business, not the whole book, which is a big difference. Key nationals are all needing to grow, to keep their shareholders happy and to keep up with increasing costs, especially for staff. They also usually like to provide value-added services, free of charge to set themselves apart from the independents. Multiples of EBITDA (if earn-outs are earned and the right EBITDA is in place) can range in the eight to 11 times EBITDA/ pro forma profit ballpark. The very highest of multiples often appear in their letters of intent, to attract sellers, before due diligence has begun. If buyers are approached without a consultant representative, and encouraged not to use theirs, so avoid a second or third offer being made. After due diligence, the original offer in the letter of intent can often be a very different price and story. Once again, because most sellers are insurance salespersons and if the seller does not have their consultant to assist them, it is difficult to earn back the first promised numbers. Sellers don’t know how to do this and mistakes often are made in the way agency information INSURANCEJOURNAL.COM

is submitted. Often the buyers have hired third parties to do the due diligence work.

Buyer Stock Value

There is also often a big difference in value if stock is also offered. Some buyers determine their stock prices, without much clarity given to the seller as to where those values came from. Publicly traded national brokers without private equity money backing them is rare and only if so, one can look to the stock exchange for trading values for their stock. If stock is offered (and it almost always is), it is best if it is optional as to the amount the seller has to take in the down payment or earn-out. It is also important if the stock can be sold back in a reasonable time, such as at retirement or at the end of the seller’s earn-out. Sometimes sellers have to hold the stock for a long time. Some nationals require stock no matter what, and it’s rarely less than 10 percent to 25 percent of the down payment. Sometimes it has to be taken on the earnout.

Tie in the Perpetuation Candidates

Some sellers want to tie in those perpetuation candidates they had hoped could buy them out. But these perpetuation

candidates can’t compete with these prices, so the owner might give some of the stock down payment to those candidates to help tie them in for the future earn-out accomplishment and perpetuation of the book of business. Then, the seller can retire and ease off into the sunset, without concern for those candidates leaving or how perpetuation of the book will happen.

Summary

Take this advice — don’t do it alone, get some help from an advisor, and know that all regional and national buyers know what they are doing, and most independent insurance agency owners don’t. If an owner decides to sell, it is only done once. We believe the seller should get at least two offers and get to know the buyers, as they are all unique. Post-sale is also handled very differently over the years to come. If you aren’t interested and want to internally perpetuate, get assistance on what the options are and how to best do it. A valuation is always needed with family members on internal sales. Oak is the founder of Oak & Associates. Phone: 707935-6565. Email: catoak@gmail.com OCTOBER 21, 2019 INSURANCE JOURNAL | 43

Idea Exchange: Commercial Property How TRIA Would Handle Another 9/11: I.I.I.

he Insurance Information Institute’s new white paper, “A World Without TRIA: Incalculable Risk,” shows how By James Lynch the market for terrorism insurance has evolved since the 2001 terrorist attacks — from the early days in which there was effectively no market (insurers avoided covering terrorism wherever they could) to today, where the market is stronger but by all accounts unable to shoulder the entire burden without government backstop. The 9/11 attacks generated by far the most insured losses of any terrorism event. We wanted to see how the government program the Terrorism Risk Insurance Act (TRIA) created in its wake would handle financially a repeat of that awful day. If that happened, the government’s net payout would be less than zero, as it would recover more from mandatory surcharges to insurance policies than it would reimburse insurers for a portion of their losses. Meanwhile, the net payout by insurance companies would be nearly $20 billion. Repeating the exercise in the future, the insurer contribution would steadily grow, assuming the law was renewed with the same terms under which it is set to expire at the end of next year. The share borne by policyholders through the surcharge increases more dramatically. These estimates come from a mathematical model created by the Reinsurance

44 | INSURANCE JOURNAL | OCTOBER 21, 2019

Association of America (RAA) to increase understanding of how the law operates. The RAA created the model around the time of the first reauthorization of TRIA in 2005. It is widely regarded as a credible look at how the federal program would react to various scenarios. It has been shown to organizations as diverse as the Federal Insurance Office, the National Association of Insurance Commissioners, the Government Accountability Office, ratings agencies and business groups with a stake in the program, like the U.S.

Chamber of Commerce. “Our intention is to be inclusive so that all of the interested groups vested in the program understand the statute,” said RAA President Frank Nutter. At the request of the Triple-I, the RAA created four scenarios, each replicating the insurance losses stemming from 9/11. The years modeled were 2019, 2020, 2029 and 2030. Losses were adjusted using the Consumer Price Index. Insurer premium — an important input — was adjusted by a 4% compound rate of growth, which is close to what the Congressional Budget Office projects as the growth in nominal Gross Domestic Product over the next decade. The original program has been modified each time Congress has reauthorized it: 2005, 2007 and 2015. The program has a number of parts, and the RAA model shows that each reauthorization has increased the burden on insurance companies and decreased the burden on the government. The Triple-I estimates that adjusted for inflation, 9/11 this year would generate insurance losses of $45.7 billion. According to the RAA model, the government would contribute $6.6 billion. It would front another $19.3 billion but recover $27.0 billion from a mandatory surcharge that would be placed on the insurance purchased in all lines of business that the program covers. Netting all that out means the government would pay less than zero. Insurers would be responsible for $19.7 billion, or 43% of the total insured loss. INSURANCEJOURNAL.COM

By 2030, 9/11 would be a $58 billion event. The government would contribute nothing. It would front $29.6 billion but recover $41.5 billion from policyholders due to the recoupment and surcharge. Insurers would be responsible for $28.4 billion, or 49% of the total insured loss. The main drivers of the changes: • Beginning in 2020, the law makes the size of the industry marketplace retention a function of insurers’ aggregate premiums, so the marketplace retention grows as the industry’s premium does. • Also in 2020 the government’s co-payment shrinks to 80 cents per dollar insurers pay above their deductible, down from 81 cents in 2019. • The amount of losses subject to policy holder surcharges grows to $29.6 billion from $19.3 billion, shrinking the federal support. The work “is a reminder under the

current statute, policyholder and company retentions go up over time,” said RAA President Nutter. “In 2020 this becomes effective in a way that changes retentions of the private sector. It also shows a vanishing federal share.” The RAA model can show the impact of any proposed changes to the program. It also has the ability to show how the federal program would handle specific major events, including 25-ton truck bombs, chemical or biological events, industrial sabotage and port bombs, using information from two major catastrophe modeling firms, RMS and AIR. It also can tailor results to individual cities; car bombs in New York and Baltimore, for example, will generate different levels of loss. The modeling firms’ data show “just how big some of the [nuclear, biological, chemical and radiological] events are,” said Scott Williamson, the RAA vice president who developed the model. “The workers

‘The 9/11 attacks generated by far the most insured losses of any terrorism event. We wanted to see how the government program the Terrorism Risk Insurance Act (TRIA) created in its wake would handle financially a repeat of that awful day.’ compensation exposure is really very large.” Lynch, FCAS, MAAA, is chief actuary and vice president of research and information services at the Insurance Information Institute, a trade association for the insurance industry. He joined the I.I.I. in 2014. Previously he provided consulting services to I.I.I., co-authoring white papers and developing original research. He has written and spoken on a wide variety of insurance issues.

Get full admission to all upcoming live webinars, plus unlimited access to our entire catalog of 200+ course recordings for only $99/mo. ijacademy.com

IJACAD16650.indd 1

INSURANCEJOURNAL.COM

8/29/16 5:38 PM

OCTOBER 21, 2019 INSURANCE JOURNAL | 45

Idea Exchange: Technology

Reinsurers Take the Technology Lead

hen it comes to innovation and utilization of emerging technologies in the insurance industry, reinsurance By George Freimarck companies once led the way as early adopters of technology. But recently, the primary insurance sector has embraced all things insurtech, digital transformation and even blockchain. Reinsurers, meanwhile, have endured a prolonged soft market and increasing catastrophe losses. Nevertheless, to cope with a market-wide surplus of capacity and to boost profitability while adding value to clients and investors alike, reinsurers are once again focusing investments on technology and innovation. Unlike prior eras, when best-of-breed solutions dueled with single-system architectures for market dominance and process followed form, the insurance industry today is moving toward more data-centric technology and tools enablement. Reminiscent of the early 1990s — when reinsurers were the early adopters of catastrophe models, and thus change agents in the industry — brokers and insurance companies alike are feeling the pressure

from reinsurer partners to furnish better data or suffer the consequences of adverse pricing in a hard market.

Proactive Approach

Reinsurers are no longer waiting for insurers or partners to embrace emerging technologies before taking notice. From a historical risk mitigation perspective, waiting for others to vet emerging tech protected reinsurers from unwanted exposures. That also acted as a level set to the reinsurance space by ensuring no single company or competitor would dominate via a particular technology. Typically featuring a more agile business model, reinsurers may be able to leapfrog prevailing automation trends by proactively exploring even newer insurtech. In the burgeoning tech renaissance among reinsurers, some observers see a reaction to the simplification of front-end processes. In a new report, “Business and Technology Trends: Reinsurance,” Novarica notes that reinsurers are shoring-up core systems and investing in analytics, which will help set the stage for internal innovation initiatives or partnering with insurtech startups. The report emphasizes insurers’ need to simplify products and develop new sales and distribution channels to attract potential Millennial policyholders. Simplification of insurance products, however, forces complexity down the line for the insurer-reinsurer relationship and “requires the reinsurance stage to handle more risk calculation.” So, in addition to modernization of core systems — which has been and remains critical for insurers across all lines of business — investment in analytics, business process management (BPM), and regulatory compliance solutions (auditing, compliance and control) are taking the next highest level of priority in the typical insurer’s short-term budget. With those “staples” handled by insurer stakeholders and other partners, reinsurers are free to proactively explore technologies that may have a longer shelf life and return on investment (ROI) over time, including artificial intelligence (AI), robotic process automation (RPA) and blockchain. INSURANCEJOURNAL.COM

The Move to Innovation

Suddenly, reinsurers are pre-emptively participating in industry research initiatives and partnering with insurtech startups to move the needle from legacy technologies toward a higher level of efficiency, customer experience and data mastery, to name just a few payoffs. Munich Re, for example, has helped launch tech labs in Silicon Valley, Calif., and Israel. Swiss Re, VIG Re and Hannover Re are just a few of the reinsurers behind the Blockchain Insurance Industry Initiative (B3i). ChainThat, a provider of blockchain solutions for the insurance and reinsurance industry, has partnered with the Bermuda Monetary Authority’s (BMA) Innovation Hub to launch the Bermuda Insurance Exchange, the industry’s first Distributed Ledger Technology (DLT)driven risk and capital exchange. Nassau Re just launched an insurtech accelerator, Imagine, for life- and reinsurance-focused startups in Hartford, Conn.

which lasted little more than a year but managed to spark renewed interest in comparison shopping for insurance and other financial services products. Perhaps the modern equivalent of the Holy Grail, for insurers and reinsurers alike, is reliable and consistent data. Increasingly, reinsurance organizations are asking not so much for technology platforms, but for a repository of immutable data that can be retrieved and deployed as required — across models and internal applications, for reporting priorities, and always set (i.e. cleansed/enhanced) to the organization’s standard.

Data Drives Productivity

While the reinsurance market has generally proven to be resilient in the face of growing catastrophe losses in a yearover-year scenario, the role reinsurers will play in helping promote innovation has yet to be fully realized. At present, there seems A&M Nationwide PRINT FINAL.pdf to be adequate capital, but reinsurers are 1

still susceptible to softening pricing and the threat of mergers and acquisitions (M&A). In this environment, profitability and differentiation are difficult to achieve. Technology, while often viewed as a silver bullet that can solve all the world’s problems, cannot be looked at as a panacea by insurers and reinsurers. Rather, as a productive next step, the focus must shift to data accessibility and quality. By sponsoring or promoting partnerships that deliver advances in data handling, especially as it relates to better identification and utilization of granular data, reinsurers gain the ability to call upon and leverage a “single-source-of-truth” data repository. Such beneficial insurtech can drive productivity for primary insurers, brokers, MGAs and reinsurers managing diverse catastrophe models, actuarial tools and underwriting standards. Freimarck is managing director, Europe at Xceed1:14 PM ance. Email: contact@xceedance.com.

9/25/19

Perhaps the modern equivalent of the Holy Grail, for insurers and reinsurers alike, is reliable and consistent data. While it is clear and reasonable that reinsurers not need to mirror primary insurer processes, such as monitoring each and every policy or following individual claims, there is a natural vested interest in better risk assessment and mitigation, protection of personally-identifiable information (PII) and internal data assets, and reduction of claims or loss adjustment expenses (LAE). Rather, reinsurers interested in getting closer to the original insurance premium dollar via managing general agencies (MGAs) are now looking to emerging technologies to create additional synergies with primary insurance partners. It’s an open question if investments by reinsurers can push the industry in directions perceived as beneficial — like Google’s recent Compare experiment, ANDERS16808.indd 1

INSURANCEJOURNAL.COM

9/30/19 10:10 AM

OCTOBER 21, 2019 INSURANCE JOURNAL | 47

My New Markets Cyber - Small to Mid-Sized Businesses

Market Detail: Plum Insurance’s (www.

pluminsuranceservices.com) has a new in-house underwriting Cyber Risk Program for small- to medium businesses (SME’s). This market segment comprises the majority of businesses in the U.S. and remains the most vulnerable to cyberattacks. Yet, according to recent studies, more than 50 percent of these businesses do not have cyber risk insurance and will face the full impact of a cyberattack and its financial, regulatory and reputational consequences. They may be one cyberattack away from going out of business. Available coverage (primary only) includes: data breach response costs; network security, privacy & data breach liability; regulatory liability; cyber business interruption; data restoration costs; cyber extortion; multi-media liability; PCI fines & assessments; computer hardware cover (bricking); system failure business interruption; contingent system failure business interruption; reputational harm; social engineering; cyber contingent business interruption. Also available: Complimentary access to e-RiskHub cyber risk management portal powered by NetDiligence, including creach coach, incident roadmap, cyber tools, learning center, security training, phishing training, risk manager tools, news center and more. Target classes include: manufacturing; construction; retail; nonprofits; education; small government; professional services (lawyers, real estate; insurance; transportation; hospitality and more. Submission criteria needed: cyber risk insurance application; minimum three years in business; no new ventures; U.S. operations only; maximum annual gross revenue considered $250 million; no technology or technology related risks. Plum’s SME in-house underwriting authority cyber program is available exclusively through duly licensed and appointed surplus lines wholesale brokers. Coverage and limit availability under the SME cyber risk in-house underwriting authority program may vary by account and state. Some coverages and limits above are available to selected accounts only via endorsement. 48 | INSURANCE JOURNAL | OCTOBER 21, 2019

Minimum $100,000, maximum $10 million Carrier: Unable to disclose, nonadmitted States: All states Contact: Rocio Orta at 818-254-9474 or email: rocio@gotoplum.com

Ghost Policies for Workers' Comp a.k.a. ‘If Any’ Policies

Market Detail: Omega Insurance Solutions’ (www.omega4agents.com) Ghost Policy Program is available to quote online. “If Any” policies are available for contractors who are sole proprietors without employees or owner-only corps or LLCs that have no employees and active officer exemptions, and no plans to hire employees. (No roofers, loggers, towing or demo contractors) HOAs are welcome for an If Any WC policy. An “If Any” policy will cover an unexpected uninsured sub-contractor. This is a legitimate WC policy; no payroll reporting required. IAgents issue certs as usual. Fast quotes and binds are annual pay only. Available limits: Maximum $1 million Carrier: Cimarron Insurance Co. States: Ala., Ariz., Ark., D.C., Ind., Iowa, Ky., La., Md., Miss., Mo., Mt., Neb., Nev., N.M., Okla., Ore., S.C., S.D., Tenn., Utah, and Wash. Contact: Keith Steverson at 866-997-0711 or email: keith@omega4agents.com

National Mobile Home Park Insurance Program

Market Detail: California Southwestern Insurance Agency (www.csia-inc.com)

has more than 45 years of experience in underwriting and insuring mobile home parks and can develop a custom insurance package to meet the needs of almost any mobile home community owner. The Mobile Home Park Program is designed to address the risks and exposures of mobile home park owners and operators. Program highlights include: debris removal — refer to endorsement for specific limits; supplementary payments — including plaintiffs’ attorneys fees; business income coverage for mobile home parks. Available limits: As needed Carrier: Liberty Mutual

October 21, 2019 Nationwide Affinity Insurance Company of America One West Nationwide Blvd Columbus, OH 43215-2220 The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casuality Insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

INSURANCEJOURNAL.COM

States: All states except Fla. and Hawaii Contact: Bill Joseph at 800-352-0393 or

Market Detail: Burns & Wilcox (www. burnsandwilcox.com) offers multiple coverage options for high-net worth risks, including: high-value home coverage; high-value automobile coverage;

secondary home coverage; seasonal and tenant-occupied home; umbrella; personal articles floaters; and yacht coverage. Available limits: As needed Carrier: Unable to disclose, admitted and nonadmitted available States: All states Contact: Burns & Wilcox Marketing at 248932-9000. Email: quote@burns-wilcox. com

October 21, 2019

Nationwide Mutual Insurance Company One West Nationwide Blvd Columbus, OH 43215-2220

Nationwide Insurance Company of America One West Nationwide Blvd Columbus, OH 43215-2220

Nationwide General Insurance Company One West Nationwide Blvd Columbus, OH 43215-2220

The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casuality Insurance in the Commonwealth of Massachusetts.

Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 02118-6200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

October 21, 2019

Nationwide Assurance Company One West Nationwide Blvd Columbus, OH 43215-2220

Sagamore Insurance Company 111 Congressional Blvd Carmel, IN 46032

The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casuality Insurance in the Commonwealth of Massachusetts.

The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts.

email: bjoseph@csia-ins.com

Affluent Personal Insurance

INSURANCEJOURNAL.COM

This section brought to you by Insurance Journal's sister website:

www.mynewmarkets.com

Need a Market? Find It. FAST

Advertisers Index Anderson & Murison www.andersonmurison.com 47 Applied Underwriters www.auw.com 2, 3, 52 Chubb www.chubb.com 7 Exdion www.exdiopod.com 33 EZLynx www.ezlynx.com 13 Golden Bear Insurance www.goldenbear.com W1 Insurance Technologies Corp. www.getitc.com 39 Liberty Mutual www.libertymutualgroup.com/business 9 Louisiana Commerce & Trade Assoc. www.lctacomp.com S1 M.J. Hall & Company www.mjhallandcompany.com W3 Monarch E&S Insurance Services www.monarchexcess.com W4 Texas Mutual - Safety Group www.texasmutual.com SC2 The Hartford Insurance Group www.thehartford.com 5

OCTOBER 21, 2019 INSURANCE JOURNAL | 49

Closing Quote Medical Provider Fraud: The Most Common Schemes to Watch For

By Samuel V. King

‘In the workers’ compensation industry, combatting fraud can seem like a game of WhackA-Mole.’

hile most insurance claims are legitimate, studies indicate that 10% or more of all property/ casualty insurance claims are fraudulent. In the workers’ compensation industry, combatting fraud can seem like a game of Whack-A-Mole. When certain schemes and scenarios are addressed, another pops up elsewhere, costing insurers and employers more than $7 billion per year, according the National Insurance Crime Bureau. Fraudsters have become more sophisticated and brazen in recent years. One example is with medical provider fraud, which occurs when a doctor, hospital or other caregiver attempts to profit off the workers’ compensation system. According to the State of California’s Department of Industrial Relations, medical provider fraud can include schemes and scenarios like: • Fraudulent Billing and Billing Codes. The medical provider bills for visits or services that never occurred, billing both the workers’ comp payor and the employee’s health insurance for the same services, double-billing, billing separately for claims that are normally covered by a single fee, or using an incorrect billing code in order to charge more.

• Unnecessary Treatments.

50 | INSURANCE JOURNAL | OCTOBER 21, 2019

The medical provider performs unnecessary treatments, examinations or procedures in order to profit from them. • Illegal Kickbacks. Working with other providers and receiving undisclosed payments or other benefits for making a referral. • Soliciting. Working with runners, cappers or steerers to solicit or obtain injured workers for the medical provider.

• Pharmaceuticals and Medical Equipment.

Pharmacies providing generic drugs and billing for brandname prescriptions, billing for medical equipment that was never dispensed, or selling used medical equipment as new in order to upcharge. While single-providers can commit fraud, medical provider fraud often comes from organized crime rings that result in multimillion-dollar schemes. In February, for example, a group of marketers, doctors, lawyers and medical service providers pleaded guilty – with some sentenced to prison – to a $200 million scheme that targeted seasonal, migrant workers in California. For years, the San Diego-based fraud ring cheated the state’s workers’ comp system and private insurance by subjecting patients to “unnecessary, and sometimes painful, medical procedures.” Another recent example of medical provider fraud occurred at the beginning of 2018, when a former hospital owner was sentenced after being caught orchestrating a 15-year-long scheme

that involved doctors and other medical professionals, resulting in $40 million in illegal kickbacks for spinal surgery referrals. The scheme, which included the sale of medical devices implanted in patients during the surgeries, led to more than $500 million in fraudulent bills that were paid by the California workers’ compensation system. Upon sifting through the patterns, it’s easy to see plots such as these are not isolated and have set a precedence for others looking to defraud the workers’ compensation insurance system. Thanks to years of data, new technologies and anti-fraud programs, carriers can now shed light on — and help prevent — these organized schemes. In this ongoing game of Whack-A-Mole, it’s important to keep a keen eye out for red flags to protect the insured and continue to provide the quality services that injured workers need. All fraud is unethical, illegal and costly to all, and any suspicions of potentially fraudulent activity should be reported immediately to the appropriate authorities. By being able to recognize some of the most common indicators of medical provider fraud, stakeholders including agents, carriers and policyholders can help reduce the likelihood of it happening. King is vice president of fraud investigations for EMPLOYERS, a workers' comp carrier. Phone: 888-682-6671. Email: saking@employers.com INSURANCEJOURNAL.COM

We connect thousands of insurance agents with the perfect market providers every day. Like these (and hundreds more):

Find your new markets now at MyNewMarkets.com Seriously, check it out right now. Or at the very least, go bookmark it so itâ&#x20AC;&#x2122;s there for you when you need it.

Expect big things in workers’ compensation. Most classes approved, nationwide. It pays to get a quote from Applied.® For information call (877) 234-4450 or visit auw.com/us. Follow us at bigdoghq.com.