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November 1, 2021 • Vol. 99 No. 21
Contents News & Markets
8
Special Report
Idea Exchange
20
38 Is It Covered?:
Global Commercial Insurance Rates Rise 15% in Q3 as Moderation Continues
BRONZE Best Agency to Work For – East: Otterstedt Insurance Agency
Insurer Metromile to Add More Independent Agents to Distribution Platform
Work For – Midwest: UIS Insurance & Investments
21 BRONZE Best Agency to
12 Pay-Per-Mile Digital
22 BRONZE Best Agency
13 Mobility Sector Will
to Work For – South Central: Iscential Inc.
23
Need New Insurance Products to Continue to Grow: Marsh
BRONZE Best Agency to Work For – Southeast: The Huneycutt Group
14 Business Owners’ Risk
24 BRONZE Best Agency to
Management Acumen Falls Short in Modern Era: Broker
The Match Game
40 Silver Linings:
Uncovering Opportunities in the Shifting Landscape Emerging from COVID-19
48
The Wedge: How to Hold Producers Accountable for Activity & Results
50 Closing Quote:
Top Reasons Insurers Decline Cyber Insurance
Work For – West: Morris & Garritano
15 Analysts Say U.S. Labor
27
Closer Look: Top 50 Commercial Lines Leaders
Shortage Could Last a While
26
28
Recoop Disaster Policy Vows Quick Cash to Homeowners, Renters
Special Report: Surfing for the Next Agency E&O Claims Wave
34 Spotlight: Business
Interruption, Recovery Costs Drive Financial Losses From Cyber Attacks: Report
36 Spotlight: U.S. Trucking Sector Struggles with Rising Rates, Driver Shortage
42 2021 Premium Finance Directory
Departments
6 Opening Note
4 | INSURANCE JOURNAL | NOVEMBER 1, 2021
10 Figures
11 Declarations
16 Business Moves
18 People
47 My New Markets
INSURANCEJOURNAL.COM
Opening Note Write the Editor: awells@insurancejournal.com
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
Bad Conduct
T
he U.S. insurance industry’s top compliance shortcomings relate to claims handling noncompliance, including timeliness, required disclosures, payments and grievance and appeal processes—as well as underwriting, rating and insurance producer and sales issues. That’s according to a review by Wolters Kluwer Compliance Solutions of U.S. insurers’ market conduct actions. The annual review uses public data from 2020 and examines U.S. property and casualty, life, and health insurers’ market conduct actions, including exams and other enforcement actions. Now in its 17th year, the Top 10 market conduct actions review offers a compliance checklist of operational areas for insurers. “While technology has helped to streamline and automate some processes, our annual Top 10 market conduct action findings continue to show the ongoing challenges that insurers face in managing their regulatory requirements,” said Steven Meirink, executive vice president and general manager for the Compliance Solutions business. “However, a robust compliance program management approach that includes a strong risk and controls framework can be key to helping improve insurer success rates in market conduct compliance.” The following are listings of the top compliance issues determined in market conduct actions across the U.S. by state insurance regulators. These issues are primarily found in insurers’ claims, underwriting, and sales processes. • Failure to acknowledge, pay, investigate or deny claims within specified timeframes • Failure to issue correct payments and/or compliant denial notices • Using unapproved/unfiled rates and rules or misapplying rating factors • Failure to process total loss claims properly • Failure to cancel, non-renew, or decline policies in accordance with requirements • Failure to adhere to producer appointment, termination, records, reporting and/or licensing requirements • Failure to provide required compliant notices and disclosures in claims processing • Improper/incomplete documentation of claim files • Improper/incomplete documentation of underwriting files • Failure to provide required compliant notices and disclosures in underwriting processes
‘Claims handling noncompliance, underwriting, rating and insurance producer and sales issues are top market conduct issues for insurers.’
While the Top 10 lists provide insight into insurers’ ongoing compliance risk challenges, Wolters Kluwer says other findings regularly surface as well. Routine determinations by examiners include the failure to consistently identify the legal name of the insurer, as well as failures to adhere to certain state-specific mandates that range from the annual claims training requirement in California to the approval process required to use a different fraud warning statement in New York. Wolters Kluwer helps financial institutions manage regulatory and risk obligations.
Andrea Wells Editor-in-Chief 6 | INSURANCE JOURNAL | NOVEMBER 1, 2021
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 William Rabb | wrabb@insurancejournal.com South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor L.S. Howard | lhoward@insurancejournal.com Columnists & Contributors Contributors: Stephanie Jones, Pete Sfoglia Columnists: Tony Caldwell, Randy Schwantz, Bill Wilson
SALES / MARKETING
Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez | rvaldez@insurancejournal.com Kelly DeLaMora | kdelamora@wellsmedia.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 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 Sales & Marketing Strategist Laura Roy | lroy@wellsmedia.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 Web Josh Whitlow | jwhitlow@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 Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com
ACADEMY OF INSURANCE
Director Patrick Wraight | pwraight@ijacademy.com Online Training Coordinator George Jack | gjack@ijacademy.com
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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 100, 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 2021 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
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News & Markets Global Commercial Insurance Rates Rise 15% in Q3 as Moderation Continues: Marsh
G
lobal commercial insurance prices increased 15% in the third quarter of 2021, which was the same rate of increase recorded in the previous quarter, according to the Global Insurance Market Index released by insurance broker Marsh. While this is the 16th consecutive quarter of increases, the rate of increase continues to moderate in many lines of business and in most geographies, said Marsh, noting that this trend may suggest that pricing increases peaked in the fourth quarter of 2020, at 22%. Pricing increases across most regions moderated due to a slower rate of increase in property insurance and directors and officers liability (D&O). The one exception was the U.S. where rates increased by 14% (up from 12% the
8 | INSURANCE JOURNAL | NOVEMBER 1, 2021
previous quarter), driven by substantial increases in cyber insurance rates and a moderate increase in property and casualty rates. In the U.S. cyber prices increased 96% in the US (up from 56% in Q2), and 73% in the UK (up from 35% in Q2), driven by the frequency and severity of ransomware claims. The UK, with a composite pricing increase of 27% (down from 28% in Q2 2021) and the Pacific region, with a 17% increase (down from 23% in Q2 2021), continued to drive the composite rate. The rate of increase in Asia was 6% (steady from the previous quarter), 2% in LAC (down from 4%), and 10% in Continental Europe (down from 13%). Among other findings, the survey found: • Global property insurance pricing was
up 9% on average, down from a 12% increase in the first quarter 2021. • Casualty pricing was up 6% on average, which was the same as the previous two quarters. • Pricing in financial and professional lines again had the highest rate of increase across the major insurance product categories, at 32%, compared to 34% in the previous quarter. “While the risk and insurance landscape remains challenging around the world, we expect rates to continue to moderate in most lines. However, the pressure on rates in cyber insurance is likely to continue. Developing solutions for our clients in this segment remains a top priority,” said Lucy Clarke, president, Marsh Specialty and Marsh Global Placement. INSURANCEJOURNAL.COM
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Intact Insurance Specialty Solutions is the marketing brand for the insurance company subsidiaries of Intact Insurance Group USA LLC. Coverages may be underwritten by one of the following insurance companies: Atlantic Specialty Insurance Company, a New York insurer; Homeland Insurance Company of New York, a New York insurer; Homeland Insurance Company of Delaware, a Delaware insurer; OBI America Insurance Company, a Pennsylvania insurer; OBI National Insurance Company, a Pennsylvania insurer; or The Guarantee Company of North America USA, a Michigan insurer. Each of these insurers maintains its principal place of business at 605 Highway 169 N, Plymouth, MN 55441, except The Guarantee Company of North America USA, which is located at One Towne Square, Southfield, MI 48076.
Figures
$1.8
Million
The University of New Hampshire has been awarded this amount in a grant to study how and why coastal hazards like excessive flooding are causing roads to crack and crumble. The information will be valuable to state and town officials to assess the impact of sea level rise on the longevity of coastal roadways and help implement practical alternatives for communities to protect the infrastructure.
$83,675
68 That’s the multiplier for Florida’s Citizens Property Insurance Co.’s planned increase in building inspections over the next four years. The state-created, residual insurance company, faced with a flood of new policyholders that threaten to overwhelm its reserves, announced it would increase the number of inspections, from about 5,200 a year to a whopping 357,000 per year by 2025. The cost? An estimated $43 million.
10 | INSURANCE JOURNAL | NOVEMBER 1, 2021
The amount a Bloomingdale, Illinois, nursing facility was fined by OSHA for failing to protect employees and temporary staff from possible coronavirus hazards a year after an employee died of the disease. The federal agency said West Suburban Nursing Rehabilitation required employees to wear N95 filtering face piece respirators while entering the quarantine area and providing care to suspected coronavirus positive residents but failed to ensure proper use of respirators and fit test all employees to ensure an effective seal. In June 2020, an employee died after exposure to coronavirus.
$1.3 Million A Houston-area physician was convicted in October for illegally prescribing more than 1.3 million opioid doses, the U.S. Justice Department reported. According to court documents, Parvez Qureshi, 56, of Houston, Texas, a medical doctor, unlawfully prescribed controlled substances from 2014 through February 2016 for patients at Spring Shadows Medical Clinic of Houston, a clinic owned by Rubeena Ayesha, an advanced practice nurse practitioner. Ayesha, 52, of Houston, previously pleaded guilty and is awaiting sentencing. Qureshi is to be sentenced in January 2022. INSURANCEJOURNAL.COM
Declarations
Risky Riding
Splash Pad Safety
The Red Sea
“When taken together, these data suggest that the dangers of equestrian activities have been severely under-appreciated. … When controlled for hours of activity, horseback riding resulted in a higher proportion of hospital admission than other higher risk activities like skiing.” — A study published in the online journal Trauma Surgery & Acute Care Open found that risk of an injury is higher for horse riding than for other potentially risky sporting activities. Researchers found the hospital admission risk from horseback riding is higher than for football, auto and motorcycle racing, and skiing. Protective horse-riding gear such as helmets can save lives, but the equipment is not always worn, researchers noted.
“A little more chlorine, and this child would be here today.” — Said Stephen Stewart, an attorney for the parents of 3-year-old Bakari Williams, who died Sept. 11 after contracting a rare brain-eating amoeba that was found at a city splash pad he’d visited in Arlington, Texas. Bakari Williams’ parents are suing the city; Bakari died after being hospitalized with primary amebic meningoencephalitis, typically fatal infection caused by the naegleria fowleri amoeba.
“It is an absolute sea of red ink across the industry. This is not one or two companies that are having problems in the marketplace. This is virtually every single company experiencing negative net income – and a direct hit to surplus.” — Barry Gilway, CEO of Citizens Property Insurance Co., Florida’s state-backed property insurer of last resort. He was speaking to an Oct. 19 meeting of the state Senate Banking and Insurance Committee, explaining why so many insurers are pulling out of Florida, cancelling policies and raising premiums – all of which has sent thousands more homeowners into the arms of Citizens.
Flawed Security
A Lasting Problem
Tahoe Risks
“Right clicking does not count as criminal hacking.” — Peter Swire, a cyber law expert and professor at the Georgia Institute of Technology, said regarding Missouri Gov. Mike Parson’s condemnation of a St. Louis Post-Dispatch report for exposing a flaw in a state database that allowed public access to thousands of teachers’ Social Security numbers. The Post-Dispatch estimated that more than 100,000 Social Security numbers were vulnerable, based on pay records and other data. Alerted to the problem, the Department of Elementary and Secondary Education removed the pages from its website and called the reporter who discovered the vulnerability a “hacker.” INSURANCEJOURNAL.COM
“They keep on coming. They keep on coming in the door.” — Dr. Michael Crane, director of the World Trade Center health clinic at Mount Sinai, said regarding the patients still reporting dust-related illnesses two decades after the collapse of the World Trade Center buildings in New York City. To date, the U.S. has spent $11.7 billion on care and compensation for those exposed to the toxic dust and fires that burned at ground zero for weeks after the attacks. More than 40,000 people have gotten payments from a government fund for people with illnesses potentially linked to the attacks, the Associated Press reported.
“Relying so heavily on just one industry for residents’ livelihoods and tax base for schools, health care and public service is a risky proposition. And the risks are mounting due to economic downturns, worsening wildfires, and changing weather patterns.” — A new report shows the COVID-19 pandemic helped expose the growing vulnerability of Lake Tahoe’s increasingly tourism-dependent economy as housing costs balloon, year-round residency declines and more workers commute from afar or seek jobs elsewhere.
NOVEMBER 1, 2021 INSURANCE JOURNAL | 11
News & Markets Pay-Per-Mile Digital Insurer Metromile to Add More Independent Agents to Distribution Platform By Andrew G. Simpson
P
ay-per-mile digital auto insurer Metromile is pursuing what it is calling a “significant” expansion of its use of independent agents to sell its insurance, and it has hired a Travelers Insurance executive to lead the effort. San Francisco-based Metromile, which began an independent agent pilot program in the second quarter, says the platform already hosts more than 880 independent agents with more expected to be added in the coming weeks. “Independent agents account for more than 30% of all auto insurance sales, and we believe there is significant opportunity to work with them to reach more low-mileage drivers now and in years to come as we expand nationwide,” Troy Dye, Metromile’s senior vice president, said. Metromile is available in the eight states of Arizona, California, Illinois, New Jersey, Oregon, Pennsylvania, Virginia and Washington. The company had planned to enter additional states this year but now says that won’t happen until 2022, beginning with Indiana, Colorado, Missouri, Iowa and Texas. The company’s expanded use of agents works, in part, through an integration with comparative raters such as the EZLynx Rating Engine. “With the operational testing phase
12 | INSURANCE JOURNAL | NOVEMBER 1, 2021
successful, we are beginning to scale sales production in the second half of 2021 by integrating with comparative raters and fine-tuning our incentive structures with our agency partners,” the company said in its second quarter letter to shareholders. “We expect to add to our agent base significantly over the coming quarters, and we will support agents by building the needed integrations and infrastructure.” Scot Rankin, a 30-year insurance veteran, has joined Metromile as its first-ever Independent Agency Relationship Manager. Rankin, who has been tasked with expanding the agent program, was most recently a sales executive at Travelers and has also held previous leadership roles at QBE North America and MAPFRE, according to his LinkedIn page. “I’ve specialized in working with independent agents for more than 30 years, so I can attest to their position as a trusted resource for many consumers shopping for insurance. Independent Agents will play a valuable role in educating drivers on the benefits of data-driven insurance, the value of pay-per-mile, and the savings and experience unique to Metromile,” Rankin said. Metromile is embracing a traditional part of property/casualty insurance sales and distribution that it and some other digital startups initially rejected as old-fashioned and out-of-date. Root is another digital insurer that has done a U-turn in its approach to independent agents. The company disclosed in its 2021 second quarter shareholder letter that it was scaling its internal sales agent program and piloting a program to provide its digital auto and other coverage through independent licensed agents. “Root sees an opportunity to further its mission by building its
presence in a channel in which one-third of all consumers purchase insurance,” Root spokesperson Tom Kuhn told Carrier Management in August. Rankin said Root is building additional integrations and infrastructure to support independent agents and significantly scale the channel. Currently, the program offers agents a quote in under two minutes, a dedicated in-house support team, what is billed as an easy-to-use agent portal, and “fast and easy claims” filing for agents’ clients.
‘As many U.S. workers settle into new routines — and benefit from their employers’ rollout of remote, flexible and hybrid work models — we believe that pay-permile continues to be a natural fit for their auto insurance needs.’ Insurance agency and technology consultant Jason Walker told Insurance Journal last month he believes that agencies have been overlooked by insurtechs but he now feels that the market is evolving from a “doom-and-gloom” view of agencies to positively appreciating agencies and the fact that they control so many customers. “Agents are being called by these insurtechs all day long,” he said. Metromile is facing the reality, in its own words, that it is operating “in a market where the pre-to-post-COVID-19 journey remains mid-flight.” For the second quarter, Metromile reported an accident loss ratio of 74.2, up from 65.1 in the first quarter. It ended the quarter with policies in force of 95,314 — down slightly from 95,958 the first quarter. Its second quarter results also showed: • Direct earned premium in the second quarter of 2021 was $27.8 million, a 22.9% INSURANCEJOURNAL.COM
increase from the prior-year period. • Average annual premium per policy was $1,181 as of June 30, 2021. • Premium run-rate, defined as ending policies in force multiplied by average annual premium per policy, was $113.0 million as of June 30, 2021. The company said its business is being affected in the short-term by cancellations related to government-mandated COVID-19 payment extensions; lifestyle changes, including out-of-state moves, vehicle sales and high-mileage driving; product messaging that became less effective during the pandemic; and regulatory delays that impacted timely approvals of pricing changes. The company said that while it expects the second quarter trends to create “downward pressure” on near-term channel performance and net policies in force growth, these concerns do not meaningfully impact its view of the long-term opportunity ahead for its business. “Despite the increase in miles driven, the majority of drivers in the U.S. remain low-mileage drivers by industry standards. As many U.S. workers settle into new routines — and benefit from their employers’ rollout of remote, flexible and hybrid work models — we believe that pay-per-mile continues to be a natural fit for their auto insurance needs,” the firm said. It said tests of its new “post-COVID-19” messaging geared to low mileage drivers and savings have been successful and it expects channel performance to rebound in the third quarter of 2021. “The market is shifting, but we believe we have the proper fundamentals in place. We are investing in the right growth levers to meet this evolving opportunity,” the company told shareholders. Metromile became a public company in February in a merger with a special purpose acquisition company (SPAC). Some of Metromile’s products are underwritten by insurers in the National General Insurance Group while others are underwritten by Metromile Insurance Co. INSURANCEJOURNAL.COM
Mobility Sector Will Need New Insurance Products to Continue to Grow: Marsh
F
or the sharing economy and mobility sectors to continue to grow, they will need new forms of insurance, including programs to support gig-workers at scale, advises a report from insurance broker Marsh. According to the report, the COVID-19 pandemic is “reshaping mobility patterns and the sharing economy” around the world. From the surge in last-mile delivery to the first driverless delivery service to the gaining popularity of e-scooters, mobility habits will continue to evolve quickly over the next 18 months, Marsh says. The report, Mobility in a post-pandemic world: From evolution to revolution, analyzes the global trends shaping the way societies will move, share and trust over the next 12-18 months. The report warns that if insurance, which plays a key role in the trust, doesn’t evolve alongside these changes, progress could be hindered. “It is remarkable how the pandemic has accelerated adoption of new mobility habits around the world,” said James Rose, head of Marsh’s U.S. Sharing Economy and Mobility Center of Excellence. “What hasn’t changed, however, is the need for society to trust that these modes of transport are safe. Insurance is essentially a ‘promise to pay’ and as such, plays an essential part in the trust dynamic that facilitates permission to operate and protects the platform and the user where responsibility for risks may not be clear. If insurance can keep pace and evolve with this accelerating mobility shift, it can empower growth and possibility in this sector for many years to come.” The authors see several trends creating opportunities for insurance, including supporting gig-workers at scale. Digital companies providing wheel-based services have accelerated access to independent contractor or gig work and “highlighted the deficiencies in a social safety net to support them” should they be injured on the job and lose income. “In the same way that digitized payments can lead to digitized risk, so too can digitized income lead to a form of distributed portable benefits supported through a combination of public programs and private industry,” Marsh notes. Opportunity also exists with advanced sensor technology that can track human driving behavior, the report says. A number of Original Equipment Manufacturers (OEMs) are investing in their own early stage in-house insurance companies, capitalizing on a new crop of sensor-enabled electric vehicle models. With OEMs offering personal auto liability/motor insurance at the point of sale and rewarding insureds with safer driving behavior based on the data they collect, traditional insurers may find themselves “on a burning platform, with an acute need to evolve,” the report states. There should also be products to address the increased use of digital payments for various modes of transport. “The use of data from individual digital journeys can not only drastically improve the claims management process, but also create an opportunity for real-time individualized on-demand insurance,” the authors contend. NOVEMBER 1, 2021 INSURANCE JOURNAL | 13
News & Markets Business Owners’ Risk Management Acumen Falls Short in Modern Era: Broker
I
n an era of increased business risk, the owners, CEOs and founders of small-medium enterprises (SME) and technology startups are falling short in both evaluating these risks and showing the right acumen for risk management. According to a report released by Embroker, a digital business insurance brokerage, these owners’ and founders’ perception of business risk is not aligned with how they manage and transfer that risk. They acknowledge critical business risks like labor shortages and product malfunctions, yet only 22% have read and understood all of their insurance policies and half are relying on their brokers to sign up for coverage. For the report, Big Risks for Small Businesses, Embroker surveyed more than 500 SME owners and CEOs and tech startup founders in August 2021. “While many SME owners and startup founders have been experiencing strong growth and financial backing in the past year, modern day risks including cyber attacks, supply chain breakdowns, and remote workforce issues can stop progress in its tracks. This means companies need to constantly evaluate risk and protect 14 | INSURANCE JOURNAL | NOVEMBER 1, 2021
their business,” said Matt Miller, Embroker CEO. The survey found misaligned priorities on the part of owners and founders who said their top three risks are around reputational harm to the company or brand (43%), product or equipment malfunction (42%), and labor shortage or overworked employees (37%). But, when asked about the areas of focus on their overall business, they identified a different set of issues: customer retention and growth, generating demand and managing costs. The survey found that most business owners are aware of risks and concerns when it comes to their business, however very few (22%) have fully read through their policies or understand the cost behind their policy, with 56% of businesses saying they do not know the exact cost of their business insurance. Miller said business insurance is a “critical element in a company’s growth strategy, allowing a company to effectively transfer risk and ensure that unforeseen events don’t impede their growth” — it is not a decision and process a business can put on “autopilot.” The authors of the report say owners
and founders could be doing more to stay on top of their risks and act on those changes as they evaluate their business insurance renewal. Some owners and founders are engaged: the report shows half of owners and founders rely on the expertise of a broker to sign up for coverage, and 25% rely on the broker to fully research and price out their options. Others are less engaged: 1 in 5 admitted to not knowing how their insurance purchases are handled. When it comes to policy renewals, though, it’s clear that owners and founders need to have more rigor in their process, according to the report. Almost one in three (29%) SME owners allow their insurance to auto-renew without making changes, while 74% of tech founders either engage with a broker or have someone internal to assess their needs and options upon renewal. According to the survey, owners’ lagging knowledge of their policies and risk assessments is leaving them vulnerable, especially to the cyber risk of data breaches and ransomware attacks. Both owners (46%) and tech founders (57%) fear they don’t have sufficient coverage in the event of a ransomware attack. But their concern
INSURANCEJOURNAL.COM
about this risk remains low: 63% of SME owners believe they are unlikely to face a data breach or ransomware attack. Technology firm founders, on the other hand, tend to be more aware of cyber risks than other industry business owners, with 58% of tech founders saying they believe they are likely to face a data breach or ransomware attack. However, tech founders are still not securing coverage, with only 34% having cyber policies.
“The data shows that while some companies feel that business insurance is like a tax or simply a checklist item, no business should have to suffer a negative impact to their business for risk that is or could be transferable,” continued Miller. Miller said his firm aims to change these perceptions and show how business insurance provides value to a company of any size, but especially to the inherent risk-takers that are business owners,
founders and leaders. “To truly be successful, these owners and founders need to embrace transferable risk as a part of their growth strategy,” Miller contends. Founded in 2015, Embroker focuses on industry-specific coverage for D&O, employment practices liability, cyber, and professional liability. Through Embroker Access, Embroker provides partner agencies and wholesalers access to its products for their customers.
Analysts Say U.S. Labor Shortage Could Last a While By Caroline Valetkevitch
L
abor shortages may be the most intractable of the cost risks that U.S. companies faced in the latest quarter, and as the earnings season moves into its peak there are signs the problem will persist, some say. Finding and paying for workers is a challenge investors are paying close attention to as third-quarter results come in, with supply bottlenecks and high energy and other commodity prices among other key risks for companies. Warnings have come already from companies in several industries, including healthcare, with hospital operator HCA Healthcare Inc. saying higher labor costs seen in the third quarter could stick around longer because of a shortage of workers. Domino’s Pizza cited a shortage of drivers as it reported recently a rare fall in U.S. sales, and FedEx Corp. also cited higher labor costs in September when it cut its full-year forecast. The coming weeks, which bring results from the bulk of S&P 500 companies, should give investors more clues on how long labor pressures could persist. “We’re going to see it come up in the next couple of quarters as we try to continue to reopen,” said Mace McCain, chief investment officer at Frost Investment Advisors. “The reopening was delayed by the Delta variant, so we haven’t seen the full impact of the labor shortage yet.”
INSURANCEJOURNAL.COM
Goldman Sachs strategists wrote in a research note that there have been some “tentative signs of improvement from supply chain data and commodity prices,” while labor market tightness could be a challenge “for many companies for years.” “Our economists expect COVID-related pressure on labor market supply will ease in coming months but forecast a U.S. unemployment rate of 3.5% by the end of 2022, meaning companies will continue to face many of the labor market challenges they face today,” they wrote. Among stocks within the leisure and hospitality industry, low-labor-cost names have outperformed high-labor-cost peers for months, the Goldman strategists said, noting that in the broader market, “the most asset- and labor-efficient firms have outperformed peers in recent years and in recent weeks.” Recent economic data has underscored the tightening labor market trend. The latest data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low in the week ended Oct. 16, marking a second straight week that claims remained below 300,000 as employers hold on to workers amid an acute labor shortage. U.S. companies managed to keep profit margins at record levels in the second quarter, but rising costs have sparked some concern among investors. So far this reporting period, stronger-than-expected earnings have raised the year-over-year profit growth forecast for S&P 500 companies to 34.8%, up from
about 30% at the start of the month, according to IBES data from Refinitiv. To be sure, a labor shortage is good news for people out of work and looking for a job. And there are several signs that suggest the labor shortage may be temporary, Thomas Lee, managing partner and head of research at Fundstrat Global Advisors, wrote in recent note. “Labor usage is actually 4.9 million lower now than pre-COVID-19,” he wrote. “Has the economy permanently changed during COVID-19 that somehow less people working means a tighter labor market? Nope.” Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago, said labor shortages seem to be more of a problem for some industries than others. “Customer-facing businesses” that were forced to close during the pandemic lockdowns are having a hard time filling jobs and getting back up to speed, he said, while “manufacturers never quite completely shut down.”
Copyright 2021 Reuters.
NOVEMBER 1, 2021 INSURANCE JOURNAL | 15
Business Moves
National
Riskonnect, ICIX
Integrated risk management software firm Riskonnect has acquired ICIX, a California-based value chain governance company that helps businesses manage their environmental, social and governance performance. The acquisition accelerates Riskonnect’s growth by expanding its integrated risk management product suite to better serve the demands of the fast-growing ESG market. ICIX provides risk and compliance managers with transparency and controls across sourcing and supply chain management, safety and quality compliance, diversity and inclusion, trading partner onboarding, information exchange, and performance management. The investment will also offer ICIX customers access to new capabilities through Riskonnect such as insurable risk management and healthcare risk solutions. Atlanta-based Riskonnect has more than 525 risk management experts in the Americas, Europe, and Asia.
East
The Morse Insurance Agency, Habig & Magoon Insurance Agency
The Morse Insurance Agency Inc. merged with the Habig & Magoon Insurance Agency. In the mid-1980s, the Morse Insurance Agency’s first merger, between the David R. Morse Insurance Agency and the John I. 16 | INSURANCE JOURNAL | NOVEMBER 1, 2021
Lowndes Insurance Agency, was executed by agency founder David Morse. Since then, identifying mutually beneficial merger and acquisition opportunities with other local, independent agencies in the Southeastern Massachusetts marketplace has been an essential part of Morse’s overall growth strategy. Morse’s Bridgewater and Norton locations were the direct result of agency acquisition deals — Arnberg Insurance in January 2000 and Peloquin Insurance in October 2010, respectively. With the addition of Habig & Magoon, the total number of mergers and acquisitions for Morse stands at 13. Across the agency’s four locations, there are now 40 team members. However, Morse leadership, which includes Dan and his brothers Tim and Brian, will continue to seek out agency owners who may be looking for a partner or to sell, whether in the near future or further down the line. David Morse’s sons Dan, Tim and Brian bought the Morse Insurance Agency from their father in 2004. Morse Insurance works closely with a variety of local, regional and national insurance carriers to bring clients personal and business insurance options.
Specialty Program Group, CM&F Group
Specialty Program Group LLC, an operator of specialty insurance brokerages and underwriting facilities, acquired the assets of CM&F Group, a digital provider of healthcare liability insurance coverage for individuals and groups. CM&F, formerly Cotterell, Mitchell &
Fifer, was founded in 1919 as a property/ casualty insurance broker in downtown Manhattan. In 1947, CM&F developed the first nursing professional liability policy. This policy would become the foundation of the business today. Over the past 70 years, CM&F has continued to offer healthcare professionals liability insurance protection. The acquisition by SPG will enable CM&F to focus on expanding its core business by providing operational, HR support, access to markets and expanding its digital footprint. Headquartered in Summit, New Jersey, Specialty Program Group is a fully licensed holding company established to acquire and scale insurance underwriting facilities and specialty businesses throughout North America.
Midwest
Arthur J. Gallagher, River Valley Capital Insurance, W.P. Dolle LLC
Arthur J. Gallagher & Co., a global insurance brokerage, risk management and consulting services firm headquartered in Rolling Meadows, Illinois, acquired Dubuque, Iowa-based River Valley Capital Insurance Inc. Founded in 2007, RVCI is a retail property/casualty brokerage that specializes in providing insurance coverage for the trucking industry, with a focus on longhaul trucking firms in the Midwest region. The team will remain in their current location under the direction of Ryan Isaacs, head of Gallagher’s Midwest region retail property/casualty brokerage operations. Arthur J. Gallagher & Co. also acquired Cincinnati, Ohio-based W.P. Dolle LLC. Founded in 1872, W.P. Dolle is a retail property/casualty agency and employee benefit consultant serving a diverse client base across the greater Cincinnati tristate region, with a focus on risk management. Mark Rummler, Rich Veleta and their team will relocate to Gallagher’s Cincinnati office under the direction of Sean Gallagher, head of Gallagher’s Great Lakes region retail property/casualty brokerage operations, and Tom Lannen, head of INSURANCEJOURNAL.COM
Gallagher’s Great Lakes region employee benefits consulting operations.
markets, and offers seven in-house binding authority contracts.
Brown & Brown, Remedy Analytics
Southeast
Brown & Brown Inc. acquired all of the stock of Remedy Analytics. Founded in 2011 by current chief executive officer, Scott L. Martin, Remedy Analytics uses its proprietary PharmaLogic data-based medication platform to offer pharmacy consulting services to employers throughout the United States. Following the acquisition, the Remedy Analytics team will continue operating from their existing Milwaukee, Wisconsin, location under the leadership of current chief operating officer, Jennifer Hill. Martin will continue to support the Remedy Analytics business as a consultant. The Remedy Analytics business will operate within Brown & Brown’s retail segment and report to Mark Abate, who oversees Brown & Brown’s Strategic Benefit Advisors operations. Brown & Brown Inc. is an insurance brokerage firm, delivering risk management solutions to individuals and businesses since 1939.
South Central One80, Equity Partners Insurance Services
Boston-based One80 Intermediaries, a national wholesale broker, program manager, third-party administrator, warranty and lender-based insurance provider, and insurance aggregator, has acquired Equity Partners Insurance Services Inc., a managing general agent and wholesaler for commercial and personal lines headquartered in Slidell, Louisiana. Terms of the deal were not disclosed. Equity Partners Insurance Services was founded in 2002 and specializes in property/casualty, garage and auto services, personal lines, professional lines, environmental, and marine insurance. In addition to Louisiana, it also has a presence throughout Alabama, Georgia, Florida, Mississippi, Oklahoma, and Texas. Equity Partners Insurance Services has been a Lloyd’s cover holder since 2006, provides access to more than 50 active INSURANCEJOURNAL.COM
Arthur J. Gallagher, SeaCoast Underwriters
Arthur J. Gallagher & Co.’s wholesale brokerage, binding authority and programs division known as Risk Placement Services has acquired Florida-based SeaCoast Underwriters. Gallagher, the global insurance brokerage and risk management firm, announced the acquisition but terms were not disclosed. Founded in 1996, SeaCoast is a wholesale specialist, a managing general agency with binding authority, and a surplus lines broker for admitted and non-admitted insurers, the company said in a news release. Headquartered in Lake Mary, Florida, SeaCoast specializes in commercial property and casualty, flood and excess flood, personal lines, and transportation and garage risks in Florida and 13 other states.
Davies, Insurance Risk Services
Davies, a professional services and technology company serving the insurance market, announced it has agreed to purchase Insurance Risk Services, a Floridabased firm that provides inspections for underwriting. Insurance Risk Services, or IRS, is based in Lake Mary, Florida. It specializes in residential and some commercial inspections, telephone audits and drone roof inspections. It has a network of more than 1,000 field inspectors, Davies said in a news release.
Associated Insurance Administrators
While some property and casualty insurers have pulled out of the troubled Florida market, Associated Insurance Administrators sees strong potential in the workers’ compensation and commercial specialty sectors. AIA, a program administrator and wholesale supplier of workers’ compensation and specialty products, announced it is expanding its territory from six Southern
states to include Florida.
West
Hub, Baird
Hub International Ltd. acquired the assets of Jerry Baird Insurance Agency and Baird Crop Insurance Agency. Fresno, Calif.-based Baird specializes in crop and commercial insurance, particularly in the agribusiness and farm industry. Jace Baird, president of Baird, will report to Michael Der Manouel, executive vice president of Hub California Central Valley. The Baird team will join Hub California. Chicago, Ill.-based Hub is a global insurance broker and financial services firm providing risk management, insurance, employee benefits, retirement and wealth management products and services.
Liberty Company, Rubicon M&A
The Liberty Company Insurance Brokers has acquired Rubicon M&A Insurance Services LLC in California. Rubicon M&A, led by its founder Patrick Stroth, specializes in executive liability. The Liberty Company is a privately held insurance broker.
The Liberty Company Insurance Brokers, Aura Risk
The Liberty Company Insurance Brokers formed a new managing general agency, Aura Risk Management, providing program administration and a wholesale trading platform for its carriers, Liberty producers, and Aura’s growing national network of select agencies. San Clemente, Calif.-based Aura Risk is led by its President Tony McIntosh. McIntosh leads the development of bespoke products and manages programs that support both the Liberty Company and select external retail partners. He spent several years with KRM Risk Management, an MGA in Southern California. Aura Risk Management is an MGA administering programs and aggregating commercial and personal lines wholesale placements through its national network of carriers, producers, and agency partners that is licensed in more than 30 states. NOVEMBER 1, 2021 INSURANCE JOURNAL | 17
People National
East
announced that President and CEO Peter Zaffino will assume the Peter Zaffino additional role of chairman of the board of directors, effective January 1, 2022. As previously announced, Brian Duperreault, currently executive chairman, will retire from the board at year end 2021. The plan to have Zaffino succeed Duperreault as CEO was announced last October, after Zaffino had taken on the role as president and also become a director. In January 2020, Zaffino took on the title of president from Duperreault. On February 11, 2021, AIG entered into letter agreements with Zaffino and Duperreault laying out the leadership transition. That agreement with Zaffino provided that he will serve as president and CEO for an initial annual target direct compensation of $17 million. Zaffino joined AIG as executive vice president and global chief operating officer in July 2017. He assumed the additional role of CEO of AIG’s general insurance business in November 2017. He joined AIG from Marsh & McLennan Companies, where he was CEO of insurance broker Marsh from 2011 to 2017 and chairman of the risk and insurance services segment of MMC from 2015 to 2017. He was also a member of MMC’s executive committee. Zaffino and Duperreault worked together at Marsh when Duperreault took over the brokerage firm in 2008.
been promoted to account manager within the environGina Bernardo mental and construction professional (ECP) practice of RT Specialty. She is based in RT ECP’s Hamilton, New Jersey, offices. Since joining the team in 2019, Bernardo has supported the practice’s production teams by creating sales proposals, developing coverage assessments and providing various account management tasks. Prior to joining the team, Bernardo served as an intern at Hartree Partners LP in New York City. RT ECP is a part of the RT Specialty division of RSG Specialty LLC, a Delaware limited liability company based in Illinois. RSG Specialty LLC, is a subsidiary of Ryan Specialty Group LLC.
American International Group
Gina Bernardo has
Cross Insurance, a subsidiary of Cross Financial Corp.
and an independent insurance provider in the Northeast, promoted Eric Jermyn as president of employee benefits. He is based in Portland, Maine. Cross Employee Benefits represents more than 15,000 clients throughout the Northeast. As president, Jermyn will lead Cross Employee Benefits by providing guidance and support to the internal management of Cross’s clients. An insurance industry veteran, Jermyn most recently served as president of Cross Benefit Solutions, a subsidiary of Cross. He also worked in a variety of sales positions for more than two decades, working in partnership with Cross
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and other brokers in Maine. Since its founding in 1954, Cross Insurance has grown through the acquisition of more than 120 insurance agencies throughout the Northeast. The company now has 1,000 employees operating out of offices in Maine, New Hampshire, Rhode Island, Massachusetts, Connecticut, New York and Florida.
Southeast
Industry veteran Bill Moore has started a new independent Bill Moore insurance agency in Ridgeland, Mississippi. Wm. Moore & Co. will specialize in high worth personal lines and small business insurance in central Mississippi. The agency is a member of SIAA. The agency offers property/ casualty insurance for both individuals and small businesses through most major carriers. Moore started in the property/casualty insurance business 25 years ago with a large, family-owned agency in Jackson, Mississippi. He has spent his career working on middle-market and large commercial accounts. Moore’s wife Leigh Anne, a school teacher since 1987, joins the firm as shareholder and account manager.
XS Brokers (XSB), an
independent insurance underwriting Brian Dunn and wholesale brokerage group, has expanded the role of Brian A. Dunn to include Southeast regional leader. The
move is part of the company’s plan to expand its brand efforts throughout the entire region. Dunn joined XS in November 2020 and has focused on developing XS Brokers as a wholesaler partner for retail agents in the Southeast, according to President Eric Wirkus. Before joining XS Brokers, Dunn worked as a marketing representative for Safeway Insurance Co. and as a commercial underwriter for Hull & Co. He also served in the U.S. Navy. With offices throughout the Northeast and Southeast, XS Brokers Insurance Agency is an independent binding authority and wholesale brokerage group headquartered in Massachusetts providing coverage exclusively to retail agents and brokers.
Engle Martin & Associates, LLC, a national independent
adjusting and claims management provider, has added Roberto Stewart to the company’s executive leadership team as the chief operating officer. Stewart will be based in the Fort Lauderdale, Florida, office and report to Stephen Beene, president of Engle Martin & Associates. He will oversee Engle Martin & Associates’ business operations. Stewart has more than two decades of domestic and international experience across multiple industries including insurance, real estate, professional services and consulting. Prior to joining Engle Martin & Associates, he held multiple executive positions for companies such as American International Group (AIG), McKinsey & Company and Allstate Insurance. INSURANCEJOURNAL.COM
Engle Martin & Associates, LLC is a privately held and owner operated company providing claims services in commercial property, casualty, inland marine/cargo, heavy equipment, large loss adjusting, subrogation, appraisal/ umpire, specialty audits and TPA/claims management.
South Central
Midlands Management Corp. appointed Jennifer (Jennie) Reed as vice president
of brokerage, based in the company’s Dallas office. Reed will oversee the wholesale brokerage unit and will co-manage the specialty program business unit, which includes strategic involvement with administration, consulting and servicing operations. Reed brings brokerage expertise to her current roles and responsibilities. With 22 years of experience in the commercial lines brokerage industry, she offers knowledge of both the retail and wholesale segments of the business. Prior to Midlands, she worked at top national wholesale brokerages where she became an expert in commercial brokerage, contract underwriting, sales and business development. She began her career as a commercial account manager for an independent retail insurance agency. Midlands Management Corporation is a managing general agent, wholesale broker, program administrator and insurance services provider with a specialty in excess workers’ compensation and occupational accident. Jennifer Reed INSURANCEJOURNAL.COM
IMA Inc. added a marine
practice group with the hiring of three new insurance veterans in its Houston office, expanding its expertise across the spectrum of marine coverages to include hull, liabilities and cargo. The new team leaders are Katie McCord, Jason Homrighaus and Allyn Roberts. The three professionals come to IMA from different firms and with different backgrounds but have been collaborating for nearly a decade. McCord will serve as IMA’s senior vice president and national marine practice leader. She has spent her 15-year career in marine insurance, including roles on both the broking and underwriting side. She started her career in London as a broker and in 2009 moved to Houston, where she later became a leading underwriter for domestic and international risks. Homrighaus joins IMA as senior vice president – energy and marine. A licensed attorney with experience at one of the world’s largest law firms and as in-house counsel for an internationally based energy company. Throughout his 20 years in the energy industry, he has amassed expertise in contractual risk transfer and indemnities, product identification, policy negotiation, risk identification, legal and regulatory issues, and contentious and complex claims resolution. Roberts also joins IMA as a senior vice president for energy and marine. With nearly 20 years in the insurance industry, he brings a range of experience that includes marketing, servicing and broking for domestic and international clients.
Midwest
The Plexus Groupe in Deer Park, Illinois, named Edmund A. Stephan III as corporate
attorney, a new role. Based in Illinois, Stephan will work with colleagues and clients across the country and directly with senior leadership to deliver and stay ahead of client needs and strengthen the firm’s legal capacity. Prior to joining The Plexus Groupe, Stephan served as associate general counsel for Wiss, Janney, Elstner Associates Inc. in Northbrook, Illinois. The Plexus Groupe provides employee benefits, property/ casualty insurance, corporate retirement plans, personal lines insurance, benefits technology services and mergers and acquisitions.
Insurance and reinsurance veteran Chris Harrington joined the Los Angeles-based reinsurance intermediary G. J. Sullivan Co., Reinsurance, as vice president. Based in Chicago, Harrington will report to John Threlfall, senior vice president and head of facultative. Harrington brings three decades of property facultative experience from Swiss Re handling a variety of underwriting, marketing and management roles over 29 years. Previously, Harrington served as an excess and surplus (E&S) underwriter at Chubb Group of Companies and as a personal lines underwriter at Amica Mutual Group. Established in 1980 and owned by Jerry Sullivan, chairman, GJS Re is a national insurance intermediary providing consulting, market connections and reinsurance
to program managers and issuing carriers, and product development services for select divisions of regional and national insurance companies.
West
IMA Financial Group named Donna MacConnell as senior
vice president and managing director of claims. MacConnell has more than 30 years in the industry, having led claims and coverage departments, and served as an individual contributor in personal and commercial lines. Before joining IMA, she spent seven years at Lockton as senior vice president and director of claims. IMA Financial Group is an insurance brokerage firm offering risk management, insurance, employee benefits and wealth management practices.
Lockton Cos. named Michelle Wong as vice
president and senior benefits consultant. She will lead client relationships and service for middle market companies in San Diego, California. Wong has 30 years of experience in employee benefits consulting, holding leadership positions at brokerages including at Mercer in San Diego. Prior to Mercer, she was an account executive at Gallagher Benefit. Lockton’s Pacific region has nine offices in the Western United States, including Portland, Oregon, and California offices located in Sonoma, San Francisco, San Jose, Sacramento, Encino, Los Angeles, Irvine and San Diego.
NOVEMBER 1, 2021 INSURANCE JOURNAL | 19
Special Report: Best Agency to Work For
East
Otterstedt Insurance Agency Englewood Cliffs, New Jersey
It’s All About Family at Otterstedt Insurance Agency By Elizabeth Blosfield
T
he home page of Otterstedt Insurance Agency’s website says, “It’s about people, not policies.” After more than 100 years in business, the agency seems to know that living up to this motto starts with its own people. “I have worked in a few agencies and none of them have gone out of their way to make their employees feel so appreciated and valued the way Otterstedt does,” wrote one employee in an anonymous Insurance Journal survey. “I feel like I am part of a big family.” The survey was conducted as part of Insurance Journal’s annual Best Agency to Work For rankings in which employees nominate their agency and respond to survey questions about why they believe it's the best. This year, Otterstedt won Insurance Journal’s Best Agency to Work For Bronze award in the East region. “Otterstedt is of a dying breed of employers that truly cultivate a family type atmosphere,” another employee wrote. “Otterstedt ownership truly attempts to make certain its employees share in the success of its business, and leadership is determined to make sure the employees realize they are the heartbeat of the organization’s success.” Indeed, Chairman and CEO Joseph Parisi Jr. said it “feels amazing” to know the agency’s environment is helping its employees thrive. “We work hard to make
sure that all members of our Otterstedt family have a place to work where they are safe, secure, and successful in all aspects of their careers,” he said. Otterstedt was originally founded in 1919 by Fred H. Otterstedt, and Parisi’s parents purchased the agency in 1955 upon Otterstedt’s retirement. It has been in the Parisi family ever since, which is a big reason why the agency understands the importance of building strong relationships. “We don’t just do transactions, we do relationships,” Parisi said. He added that his parents would be proud to know how much current employees value the agency. “We’re a family business and treat everyone as such,” he said. “These types of acknowledgements show we are going in the right direction, and my parents would be proud of where we are today.” Indeed, employees cited the agency’s pandemic response as just one example of how the agency goes above and beyond
Joseph Parisi Jr.
20 | INSURANCE JOURNAL | NOVEMBER 1, 2021
for its people. “During this pandemic, Otterstedt put the safety and needs of its employees first,” one employee wrote. “They went over and above setting us all up to work from home so our families would be safe. They kept us informed and helped us to all work as a team so that any employees with special needs were taken care of.” Another situation employees pointed to where the agency went above and beyond for its clients was in its response to the remnants of Tropical Storm Ida. Ida brought flash flooding and widespread damage to many areas of New Jersey, even areas that had never before experienced flood damage. “[During] Hurricane Ida, for example, our staff stepped up and took care of our clients who were in need of immediate attention,” one employee said in the survey. “As this created an all-hands-on-deck scenario, our staff worked together with our claims team to work better to connect with our clients who needed help the most. No questions were asked, and our staff did whatever it took to step up and help those who needed us the most.” Despite the ongoing effects of the COVID-19 pandemic and the conversation around climate change in New Jersey with increasingly widespread storm and flood events, Parisi said the agency’s values have remained the same. “We continue to be who we are even with this everchang-
ing world,” he said. This strategy appears to be working well for the agency, as evidenced by its employees’ longevity. “I have been with the agency almost 20 years and have seen us grow from a small, well-respected agency to a larger agency that now stretches from east to west New Jersey and has allowed us to help more clients throughout northern New Jersey,” one employee wrote. “I hear nothing but great things from our clients and carriers, and if you look at our staff, there are a lot of employees who have been with Otterstedt over 10 and 20 years.” Parisi said his advice to leadership teams at other agencies is to “put yourself in everyone’s shoes, be flexible with your employees and approach situations with empathy and understanding.” “We feel like Otterstedt is more than just a place for someone to collect a paycheck,” he added. “It’s a place where people like coming every morning.” The agency’s employees seem to agree. “When you enjoy going to your job everyday and the employees stay for years and years,” one employee wrote, “you are at the best agency you can possible work at.” INSURANCEJOURNAL.COM
Special Report: Best Agency to Work For
Midwest
UIS Insurance & Investments Tiffin, Ohio
The Best of Both Worlds By Stephanie K. Jones
W
ith locations in small towns throughout Northwest Ohio and Southern Michigan, Tiffin, Ohio-based UIS Insurance & Investments serves its clients with a small town sensibility and big city capabilities, and that combination suits its employees just fine. Responding to Insurance Journal’s 2021 Best Agencies to Work For survey, one UIS employee put it this way: “We are able to offer carriers and coverages comparable to the very large agencies, but with the small town touch when it comes to the service — I call it the BEST OF BOTH WORLDS!!!” Another respondent wrote: “UIS Insurance & Investments is truly a conglomerate of hometown personalized service and technology that allows us to work with clients across the globe. When many in our industry are consolidating and moving out of small town USA, we thrive in these areas! Our
belief is that personal attention to detail with face-to-face service will never go out of style.” Through IJ’s Best Agencies survey, employees nominate their agency, rate its performance in numerous categories, and offer their personal commentary on why they think their workplace is the best. As result of UIS’ employees enthusiastic praise for their employer, IJ selected UIS Insurance & Investments as the 2021 Bronze Best Agency to Work For in the Midwest. The agency currently has 113 employees and an annual revenue the $11 million to $25 million range, said UIS President Chuck Ritzler. “We try to create and maintain a family atmosphere through supporting our employees and their families. We focus on teamwork across all departments and acknowledge the outstanding job our teams do taking care of our clients. This nomination reinforces our efforts to reward and recognize
The UIS Insurance & Investments team and their families. INSURANCEJOURNAL.COM
our associates in many different ways,” he said.
‘UIS looks for ways to develop our employees and provide them opportunities to utilize their specific skill set.’ “UIS looks for ways to develop our employees and provide them opportunities to utilize their specific skill set. We support those that want to broaden their talents and encourage people that look for new challenges. We also make it a priority to invest in our communities through time and money giving our associates paid time off to volunteer,” Ritzler added. In their comments, employees noted and expressed appreciation for UIS’ commitment to its employees and their communities. “Our agency is committed to the towns we are in. We have brick and mortar agencies in a lot of small towns where we know it might benefit the bottom line more to consolidate but being part of our communities is very important,” one wrote. Another commented: “UIS is very involved in their communities. Not just in Tiffin where the main office is, but at all of our office locations and more. They are continuously giving donations to charity events, schools and businesses. Also, UIS gives each employee 15 hours a year. Which is called ‘UIS Cares Time’. This time is
for you to volunteer to work in your community or at an event and UIS will pay you to be there. This is something that gives you as an employee the time to volunteer and not use your personal/vacation time to do so.” Ritzler said his best advice for an agency owner seeking to create a workplace of choice “would be to consistently ask for feedback from your employees and look for ways to meet their needs. Asking how you can improve and providing updates on what the agency is doing to make changes where needed is key — communication!” From UIS employees’ points of view, that strategy works. One survey respondent praised the agency’s ongoing practice of seeking feedback from team members, adding: “I started as a customer service agent and have grown over the last ten years with this agency. I know this is where I will retire from. I feel valued as an employee.” Another summed up their experience at UIS saying: “I’ve been in the insurance business for 30 years and these last 6 years have been the best. This agency is by far better in many ways than other agencies I’ve worked for. Only wish I had started my career here!”
NOVEMBER 1, 2021 INSURANCE JOURNAL | 21
Special Report: Best Agency to Work For
South Central
Iscential Inc. Houston, Texas
A Place of Unlimited Opportunity By Stephanie K. Jones
I
t’s no easy task to create a working environment in which employees know they are valued, are encouraged to grow and thrive in their jobs, and voluntarily convey their admiration for their workplace. But the leadership at the Houston-based independent insurance agency, Iscential Inc., has done just that. In Insurance Journal’s 2021 Best Agencies to Work For survey, employee after employee praised the agency’s focus on building an organization in which leadership and co-workers respect and admire one another, and where the prospects for ongoing professional development are wide open. Through an online nomination process employees rank their agency’s performance in various categories and comment on why they think their workplace is the best. Iscential has been selected as IJ’s 2021 Bronze Best Agency to Work For in the South Central region on the strength of its employees’ responses to the Best Agencies survey. “Iscential Inc. is an amazing environment to work in!” one employee wrote in the comment section of the survey. Another said: “The opportunity is unlimited at Iscential. If you shoot for the stars you can carve out your own piece of financial security.” Still another wrote: “Iscential cares about its people more than anything else. The company invests in everyone who wants to grow and develop,
even if that means someone developing themselves out of Iscential and into another organization. No one is a number, and that applies to clients and employees, and it really does feel like a family.” CEO Warren Barhorst, who founded agency, says with 99 employees and 50 independent contractor agents, Iscential has annual revenues of $15 million to $20 million.
‘It is a wonderful place to work and learn. We are encouraged to continue to learn, even if that means you outgrow the company!’ “From the inception,” Barhorst said, “my goal has always been to make it someplace I would want to work. Iscential is great because there are set career paths and ways to progress in the organization. We love bringing
22 | INSURANCE JOURNAL | NOVEMBER 1, 2021
on inexperienced talent and training them our way. … For a 150-person organization, we have done a really good job of creating scalable training and rotational programs to progress everyone’s career. I often say my mission for our associates is to make them more employable through skill enhancement, professional development, and industry knowledge. Our culture is also very entrepreneurial. We are constantly launching new products, taking on new projects, and creating new roles for people. It is most definitely a growth mentally, and we have to be a little bit fearless — that is what also makes us special though.” Throughout the survey, Iscential employees lauded the agency’s emphasis on professional development and the opportunities for advancement. “I have enjoyed watching the agency grow into the company it has become. It is a wonderful place to work and learn. We
are encouraged to continue to learn, even if that means you outgrow the company!” wrote one survey respondent. Another praised the agency’s “amazing” culture and atmosphere, adding: “Everyone is treated with the utmost respect, regardless of their position. Iscential provides opportunities for Continuing Education and also pays for you to obtain designations. I have never been happier with a job! For Barhorst, it’s all about helping people. “It’s the reason why I started the company almost 30 years ago. In fact, the first requirement on many of our job descriptions is ‘must have a passion for helping others.’ Without that piece, we are nothing. I feel that this aspect of the way we do business also permeates our culture internally and that makes me really proud. Everyone here wants each other and the organization to succeed as a whole. … “I am just so proud we are making a place where people of all different backgrounds and work experience can flourish. I think that is because at the end of the day it all comes down to people and that is our focus.” He added that the agency values the “evolution of the individual as a whole, not just as an employee.”
INSURANCEJOURNAL.COM
Special Report: Best Agency to Work For
Southeast
The Huneycutt Group Wilmington, North Carolina
Huneycutt Credits Hiring Process, Communication as Keys to Success By William Rabb
L
ike other insurance agencies that have been named Best Agencies to Work For, the Huneycutt Group in Wilmington, North Carolina, credits its family atmosphere and regular group activities for promoting an environment where employees and owners can thrive. But to get to that point, the agency first had to have the right family members. “The hiring process is very extensive. We have a serious vetting process,” said Chad Huneycutt, president and CEO of the agency that is this year’s Bronze award winner for the Southeast. “We have to make sure the person is a good fit. That plays a vital role in our agency’s experience and peoples’ happiness.” The pandemic-fueled labor shortage has made it more difficult than ever to find the right people for the rapidly growing all-lines firm, which places insurance throughout Coastal Carolina and several other states. Once the pieces are in place, the agency holds regular events to help employees feel like they’re all part of the family, Huneycutt said. Those include gatherings away from the office as well as office parties for birthdays and work anniversaries. “We do try to work hard and play hard together,” said Chad, who runs the agency with his wife, Tara, who is the marketing director and also is owner of a clothing store in nearby Wrightsville Beach. INSURANCEJOURNAL.COM
Employees agreed. “The main thing that stands out about our agency is the family atmosphere,” one wrote. “THG is backed by a great family.” Chad Huneycutt started his career in the banking arena but had long wanted to manage his own business. That came in the form of a captive agency for a major carrier. When that carrier decided to reduce its presence in some coastal areas, it opened up the opportunity for the Huneycutts to launch an independent agency in 2007. Since then, it has steadily expanded, acquiring three regional property and casualty agencies and a title insurance agency. About 70% of the group’s policies are for residential property, Chad said. The Huneycutt Group has made of point of keeping up
with technological changes, including cloud computing and internet-based phone systems. So, when the COVID-19 pandemic hit, “that made it easy to make the transition to people working at home,” Chad said. “I’ve been supported as a work-from-home employee since the pandemic with whatever I need,” one employee wrote in comments in the survey. “The flexibility shown by my boss has allowed us to adapt and become even better.” For those who chose to return to the office, Huneycutt installed generators to keep the lights on when storms knock out power to the area. Employees also noted the employee review process and incentives program. “We have a fair evaluation process for producers and have a great opportunity to earn,”
one commented. “There is a constant discussion about salaries and everchanging payment structures to benefit the agents,” said another. The agency also is involved in the community. Early this year, the team helped build a house with the local Habitat for Humanity. “It was great to see that our organization is committed to both insuring and creating places for people to live,” one employee wrote in the survey.
The Huneycutt Group Team NOVEMBER 1, 2021 INSURANCE JOURNAL | 23
Special Report: Best Agency to Work For
West
Morris & Garritano San Luis Obispo, California
Agency Walks the Walk, Gives Employees a Voice By Don Jergler
I
f you work at Morris & Garritano you’re probably quite familiar with the term “walk the walk.” The agency was voted by its employees as Insurance Journal’s Best Agency to Work For – West. The San Louis Obispo, Calif.-based agency took home the Bronze award, earning high marks because the firm’s leaders, to use another cliché, practice what they preach. “I have worked for many companies in my career. Morris & Garritano is the first company to talk the talk, and actually walk the walk,” one employee wrote in extensive comment to nominate the firm for the award. “I am made to feel part of the group even though I work remote. They go an extra mile to communicate, include and encourage employees. I am looking forward to long
and happy relationships with M&G.” Another employee wrote that the firm emphasizes constantly improving as a core value. “We walk the walk,” the employee wrote. “There is room for collaboration and exploring ideas from all levels of staff and extends to our clients.” The employee touched on another common phrase (work/life balance) that was frequent in comments in the nominations. “There is a value on work/ life balance that allows for regeneration and dedication to the tasks at hand,” the employee wrote. “Team members are generous and considerate of workflow and are always willing to help. The depth of knowledge is extensive and allows us to guide our clients in their decision-making process
Morris & Garritano’s employee benefits team celebrates winning the BRUNY (Bragging Rights Until Next Year) award at their annual employee appreciation party in August 2019. The week-long event consists of games, prizes, and a party to recognize and reward hard work and dedication. The firm continued the appreciation party virtually for 2020 and 2021. 24 | INSURANCE JOURNAL | NOVEMBER 1, 2021
to preserve and improve their business.” The firm reports roughly $23 million in annual revenue, and employs more than 125 people — two figures that are expected to continue to be on the rise, according to Kerry Morris, the firm’s chief operating officer.
Kerry Morris, COO Morris said that while the firm is focusing on organic growth, it’s also evaluating acquisitions, and is looking to expand. “We want to become one of the largest independent agencies in California,” Morris said, adding that they are mostly “looking southward” in terms of geographic growth. Morris, when asked about the “walk the walk” comments, explained that she believes it’s a function of good communication. “I think we’re honest and transparent with our employees,” Morris said. Decisions are not made lightly, employees are given a clear picture of changes and where the firm is headed, and they “respect their voice,” she added.
The firm also apparently does a lot of communicating with its clients. “M&G is constantly thinking about their clients and employees when they are planning for the future,” one employee wrote. “It makes me proud to work for a company that goes above and beyond to make sure that their client’s needs are being met while their employees are being taken care of.” If the “walk the walk” and work/life balance themes were most prevalent among comments, a very close third most popular theme would be that having one’s voice heard is key part of the culture at the firm. “Every employee from the bottom to the top is valued, included, heard and appreciated,” another employee wrote. “The work ethic between the majority of the employees is the same, highly motivated, do the right thing by each other and our clients, and work hard and have fun together.” There is much room for advancement if the interest is shown, the employee continued. “Our supervisors and leadership will do everything they can to help you learn and move forward in your growth plan if you show interest in something and prove that you are willing to put in the work to accomplish it.” INSURANCEJOURNAL.COM
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News & Markets Recoop Disaster Policy Vows Quick Cash to Homeowners, Renters
H
omeowners in 37 states now have access to a parametric-like multi-peril disaster insurance product designed to deliver quick cash in the wake of a natural disaster. The product, Recoop Disaster Insurance, pays out a lump-sum cash benefit from $5,000 up to $25,000 after a declared disaster that causes at least $1,000 in damage. To be eligible for a policy, customers must have an existing homeowners or renters insurance policy. Unlike typical home and renters’ insurance policies, Recoop covers multiple natural disasters ranging from earthquakes, hurricanes (including storm surge but not freshwater flooding), tornadoes, and wildfires to gas explosions, dust storms, and winter storms. Recoop promises policyholders they can receive their cash benefit within 24-48 hours of a disaster declaration in most cases. It says that compares to typical insurance that can take upwards of 30 days to process and pay policyholders. There are no restrictions on how policyholders spend their payout. To be eligible for a payout, customers must be in a state or federally declared disaster area and have sustained damages of $1,000 or more. A disaster does not need to be declared after a gas explosion for you to submit a claim. Winter storms and hazardous winter weather are covered when at least five inches or more of snow or sleet accumulate within a 12-hour period, or at least seven inches or more of snow or sleet accumulate in a 24-hour period. The product is being offered directly to consumers online at recoopinsurance. com, as well as through employers as a group benefit. Des Moines, Iowa-based Recoop notes that the number of disasters per year has more than doubled from the 1990s to the 2010s and in 2020 alone there were 22 natural disasters with losses exceeding $1 billion each. “While we can’t eliminate the risk of 26 | INSURANCE JOURNAL | NOVEMBER 1, 2021
natural disasters or put a price on peace of mind, we can give security to millions of families coast to coast,” said Recoop Founder Darren Wood. “We like to say that Recoop picks up where insurance stops. We help pick up the tab, and the pieces, so consumers can bounce back faster after a disaster.”
How It Works
Policyholders upload photos of their home upon enrolling. After a disaster, customers start their claim by answering several questions and sending photos of their home for proof of loss. Sedgwick, which handles Recoop’s claims, compares the original photos with post-disaster photos to assess the damage and help process claims swiftly. If the damages surpass the $1,000 damage threshold, customers qualify to receive the full amount of their Recoop benefit, except in states with total incurred loss clauses. Recoop Disaster Insurance is currently available in Alabama, Alaska, Arizona, Arkansas, Colorado, Delaware, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington D.C., and Wisconsin. The company said it is focused on online purchases and distribution through employee benefit brokers at this time but envisions adding agents and other distribution later. It says it plans to enter additional states and be in all 50 “in the near future.”
Recoop is underwritten by Professional Solutions Insurance Co. and backed by Swiss Re and Munich Re.
Other Parametrics
Recoop says its disaster insurance is the “first and only multi-peril” property/casualty insurance product designed to quickly pay claims following a natural disaster. However, Recoop joins a small roster of parametric products that bypass a typical claims process and pay out based on a formula or event. Jumpstart Insurance Solutions began offering earthquake insurance in California in 2019 in the form of a parametric product, with payments linked to a formula and based on U.S. Geological Survey earthquake measurements. The company provides a set payout based on the quake intensity, rather than the cost of damage. Irish insurtech Blink has launched a hurricane non-damage parametric insurance product called “Blink Interruption.” The product aims to cut average business interruption claims processing time by up to 95%. It uses automated financial validation and immediate payouts to allow businesses to get back on their feet just days after the event occurs. Also, First Insurance Co. of Hawaii has a parametric product for Hawaii homeowners and renters. The company’s FirstTrack product provides coverage for expenses that fall below most hurricane policy deductibles, including hurricane preparation and immediate post-hurricane expenses. FirstTrack bases payments on two variables: storm wind speed (as determined by the National Hurricane Center) and the proximity of the storm to the insured home. Swiss Re Corporate Solutions (SRCS) has a parametric offering called HAIL that is designed to protect companies in U.S. hail-prone states from the financial impact of a significant hail event, such as physical damage, lost revenue due to business interruption, or significant retentions in traditional property policies. INSURANCEJOURNAL.COM
News & Markets Parents of Unrestrained Girl Killed on Ride Sue Colorado Theme Park
O
n her family’s first trip since the pandemic began, 6-year-old Wongel Estifanos got on a vertical drop ride at a Colorado amusement park with her uncle, aunt and cousins last month.
W2 | INSURANCE JOURNAL | NOVEMBER 1, 2021
When the floor pulled away, everyone else fell in their seats down a 110-foot underground shaft. But Wongel, who was not strapped to her seat, plunged to her death, according to a lawsuit filed by her parents against the park in late October.
After the ride stopped at the bottom, Wongel’s uncle looked to see if she had enjoyed it and was horrified to see she was not in her seat. Instead he saw her battered body at the bottom of the shaft. The lawsuit alleges that Glenwood Caverns Adventure Park recklessly caused the girl’s Sept. 5 death by failing to train operators of the Haunted Mine Drop ride despite previous problems with its seat belts. State investigators concluded that Wongel’s death was the result of multiple operator errors. The girl was sitting on top of two seat belts instead of wearing them across her lap, and two newly hired operators never noticed despite doing checks, according to a report from the Colorado Department of Labor and Employment released last month. Investigators also found that an alarm system warned of a problem, but one of the workers reset it and started the ride because they weren’t trained well enough to know what to do about it, the report said. The lawsuit cites the findings of the investigation and alleges the park failed to turn over two previous complaints about passengers not being initially strapped into the ride, according to state investigators. In a statement, park officials said they could not comment on pending litigation but extended their condolences to Wongel’s family. Wongel’s parents, Estifanos Dagne and Rahel Estifanos, are suing so that they and the public can learn the full truth about what happened, their lawyer, Dan Caplis, said in a statement. “Their mission is to protect other families by holding all who are responsible for the killing of their daughter fully accountable, and by sending a loud and clear message to the entire amusement park industry,” he said. Copyright 2021 Associated Press. All rights reserved. INSURANCEJOURNAL.COM
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Closer Look: Commerical Lines Leaders Commercial Lines Leaders
About the Commercial Lines Leaders: The 2021 Commercial Lines Leaders in this special feature are taken from Insurance Journal’s Top 100 Property/Casualty Independent Agencies as reported in August. This list utilizes only the 2020 commercial lines property/casualty revenue numbers of the independent agencies and brokerages that submitted data to the Top 100 agencies report. For more information on Insurance Journal’s Top 100 Property/Casualty Independent Agencies list, contact awells@insurancejournal.com.
Top 50 Commercial Lines Agencies
Ranked by Total 2020 Commercial Lines P/C Revenue 2021 Rank Company Name
2020 Commerical Lines Revenue
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
$1,442,893,000 $16,042,240,000 $1,398,732,027 $11,365,390,489 $1,274,605,051 $10,000,000,000 $1,255,979,132 $8,063,824,556 $1,137,892,981 $11,611,152,872 $1,079,286,675 $8,597,182,623 $582,530,000 $4,609,000,000 $518,528,819 $3,750,000,000 $407,527,705 $291,762,792 $347,956,000 $2,369,102,208 $292,750,000 $2,637,387,387 $210,259,526 $3,268,146,074 $209,000,000 $177,267,000 $1,435,456,000 $175,424,003 $1,795,154,104 $151,195,226 $1,400,000,000 $148,500,000 $1,696,200,000 $141,000,000 $138,763,634 $1,095,619,445 $134,406,651 $1,200,059,384 $116,023,000 $826,010,000 $113,549,218 $808,140,316 $90,566,112 $848,299,632 $89,000,000 $633,000,000 $88,579,690 $698,076,000 $81,580,527 $675,718,321 $74,779,970 $601,549,912 $71,578,065 $62,000,000 $456,700,000 $60,394,320 $837,785,392 $58,000,000 $621,000,000 $54,310,000 $509,000,000 $50,059,438 $353,134,647 $49,328,305 $380,597,499 $46,243,875 $394,288,976 $46,053,852 $375,286,570 $45,929,561 $380,862,951 $44,774,991 $400,381,124 $41,559,681 $299,855,897 $40,570,570 $292,350,517 $40,358,451 $320,975,839 $39,651,231 $339,784,701 $39,560,000 $335,043,000 $38,253,352 $287,032,281 $36,672,654 $259,855,066 $36,535,839 $304,297,000 $36,106,000 $147,300,000 $35,000,000 $255,000,000 $34,500,000 $236,100,000 $31,001,944 $231,490,329
Lockton Acrisure LLC HUB International Ltd. Alliant Insurance Services Inc. AssuredPartners Inc. USI Insurance Services BroadStreet Partners Inc. EPIC Insurance Brokers & Consultants Starkweather & Shepley Insurance Brokerage Inc. NFP RSC Insurance Brokerage Inc. (DBA Risk Strategies) IMA Alera Group Higginbotham Insurance Office of America Inc. Baldwin Risk Partners Woodruff Sawyer PCF Insurance Services Leavitt Group The Hilb Group Cross Insurance Heffernan Insurance Brokers Hylant Propel Insurance INSURICA Inc. BXS Insurance** Cobbs Allen/CAC Specialty Relation Insurance Inc. Parker, Smith & Feek Inc. TrueNorth Companies Sunstar Insurance Group ABD Insurance & Financial Services Graham Company Houchens Insurance Group Inc. James A. Scott & Son Inc. dba Scott Insurance Sterling Seacrest Pritchard Marshall & Sterling Enterprises Inc World Insurance Associates LLC Towne Insurance** Bowen Miceltte & Britt Insurance Agency LLC Lawley Insurance High Street Insurance Partners The Horton Group Inc. Shepherd Insurance The Mahoney Group Robertson Ryan & Associates JGS Insurance Professional Insurance Associates Patriot Growth Insurance Services LLC Rich & Cartmill Inc.
2020 Total Commercial Lines Premium
2020 Total P/C Revenue
Total Main Employees Office
$1,464,722,000 $1,625,552,907 $1,720,414,956 $1,308,752,191 $1,304,675,748 $1,183,528,929 $701,660,000 $586,625,618 $61,586,900 $494,969,000 $348,550,000 $212,830,111 $209,000,000 $198,735,000 $193,887,901 $285,800,000 $150,400,000 $176,000,000 $214,879,013 $260,608,909 $183,586,000 $135,052,430 $97,924,742 $93,400,000 $105,682,127 $9,872,403 $76,617,804 $91,558,357 $65,500,000 $65,610,592 $80,000,000 $63,062,000 $63,043,937 $53,368,347 $47,619,904 $46,053,852 $62,625,485 $81,374,408 $62,047,760 $44,739,603 $53,061,369 $60,291,028 $44,954,000 $50,333,359 $38,627,252 $49,230,286 $37,837,000 $59,000,000 $49,000,000 $40,633,892
8,500 8,007 13,425 4,635 7,546 8,257 4,330 2,700 265 6,072 2,218 1,219 2,200 1,522 1,189 2,000 513 1,500 2,303 1,500 1,045 420 764 437 620 680 301 615 310 443 494 379 167 319 340 294 550 600 436 212 425 634 359 415 165 395 114 57 820 185
Kansas City, Missouri Grand Rapids, Michigan Chicago, Illinois Newport Beach, California Lake Mary, Florida Valhalla, New York Columbus, Ohio San Francisco, California East Providence, Rhode Island New York, New York Boston, Massachusetts Denver, Colorado Deerfield, Illinois Fort Worth, Texas Longwood, Florida Tampa, Florida San Francisco, California Lehi, Utah Cedar City, Utah Richmond, Virginia Bangor, Maine Walnut Creek, California Toledo, Ohio Tacoma, Washington Oklahoma City, Oklahoma Gulfport, Mississippi Denver, Colorado Walnut Creek, California Bellevue, Washington Cedar Rapids, Iowa Memphis, Tennessee Walnut Creek, California Philadelphia, Pennsylvania Bowling Green, Kentucky Lynchburg, Virginia Atlanta, Georgia Poughkeepsie, New York Tinton Falls, New Jersey Virginia Beach, Virginia Houston, Texas Buffalo, New York Traverse City, Michigan Orland Park, Illinois Carmel, Indiana Mesa, Arizona Milwaukee, Wisconsin Holmdel, New Jersey San Carlos, California Fort Washington, Pennsylvania Tulsa, Oklahoma
Editor’s Note: ** = Bank Owned Agency
INSURANCEJOURNAL.COM
NOVEMBER 1, 2021 INSURANCE JOURNAL | 27
Special Report: Agency Errors & Omissions
Surfing for The Next Agency E&O
Claims Wave
28 | INSURANCE JOURNAL | NOVEMBER 1, 2021
INSURANCEJOURNAL.COM
Decreased Stayed the same
$25,001 to $50,000
ency E&O Premium ange in the Past Three ars By Andrea Wells
E
More than $50,000
of Insurance Agents, agreed. 64.8%
13.2%
&O Claims History Respondents
16.8%
Annual Cost of 11.2% Agency44.1% E&O Coverage
Never had a claim Had a claim in the past 5 years $1,000 or less Had a claim 6 to 10 years ago Had a claim more than 10 years ago $1,001 to $2,500
6.3% 28.0% 13.1%
$2,501 to $5,000
22.5%
$5,001 to $10,000 umber of Agency E&O arriers in Past Five Years $10,001 to $15,000
13.8%
8.8% 8.8%
$15,001 to $25,000 One carrier Two carriers $25,001 to $50,000 Three carriers More than $50,000
11.3% 50.6%
40.6%
10.0% 14.4%
0%
5%
10%
15%
Comparison of Changes in E&O Premium By Region
INSURANCEJOURNAL.COM
Region
Decreased
14.4%
0%
22.0%
“The agents’ E&O book of rrors & omissions claims business has not been, fortunately, impacted as much as against agencies related what was anticipated,” he said. to the COVID-19 pandemic have not materialized as “That is very much playing out ediction on E&O Premium m a year ago. Overall, E&O feared positively for the agencies in claimsRenewal against agencies actually our marketplace.” ange at Next According to Swiss Re’s dropped in 2020. 36.7% That’s basically good news Whitney, E&O claims actually 61.5% Increase for agency owners. fell during 2020 by 5% and Decrease Remain the same that However, experts warn 1.9% have continued to stay at the agencies are not totally out same level through 2021. But of the woods regarding the she doesn’t expect that claims pandemic. They also warn that trends will stay suppressed forever. “It’ll bounce back to the current environment of a tisfactioncontinuing with Agency normal,” she said. hard market and O Terms,more Conditions shopping around and That’s been a positive for 21.7% agencies, Hulcher said. Having d Limits switching of carriers, along 4.5% with heightened exposure of fewer claims has helped the 73.9% Yes agencies to cyber risks amounts agency E&O market to stabilize No to fertile ground for sprouting in price, Hulcher said. “Like Somewhat satisfied of claims against agencies. many other marketplaces, agency E&O underwriters “Everything’s really calm,” got more conservative [with said Elizabeth Whitney, head US Agents, senior creased Agency E&O Limit mit vice 1.2% deductibles and limits] not president at Swiss Re Corporate 10.0% knowing what to expect with Last Renewal Solutions, who manages the claims activity but I think that Big I’s Agency E&O Program. is starting to probably loosen “We’re waiting to see how a up a little bit,” he said. But Yes 88.8% No couple of COVID cases play out now, for the average insurance Somewhat satisfied in a couple states, but so far, it’s agent, the market is beginning to “loosen up as claims haven’t really calm.” David Hulcher, executive been as big of a factor as they continued on page 30 director at Kansas Association
Increase Decrease Remain the same
10.0%
Increased
Same
20%
25%
30%
5%
10%
15%
20%
Comparison of Changes in E&O Premium By Region Region
Decreased
Increased
Same
Midwest East South Central Southeast West
16.0% 0.0% 25.0% 28.0% 12.0%
84.0% 100.0% 75.0% 72.0% 88.0%
58.0% 57.0% 30.0% 32.0% 38.0%
Why Change in E&O Carriers Lower price Nonrenewed due to claims Nonrenewed due to change in underwriting criteria Carrier withdrew from agency E&O market Needed broader coverage Other reasons
24.5% 1.3% 3.3% 10.6% 9.3% 10.6%
Risk Management Steps Implemented in Past Three Years Attended an E&O class Agency staff has achieved additional designations More actively utilized an exposure analysis checklist Hired a third-party to perform an agency audit Enhanced agency focus on internal quality control Developed/updated agency procedural manual
78.1% 36.7% 35.2% 7.8% 56.3% 34.4%
Recent E&O Restrictions, Exclusions or Underwriting Changes Deductible Company insolvency Certain breaches of personal data Insured vs. insured Fraud, dishonest acts, illegal acts, false advertising, discrimination Services provided but not covered Pollution and/or mold Restrictions on excess/surplus lines Bodily injury/property damage Fines and penalties Fiduciary failure of money Libel, slander Patents & trade secrets Licensure Other
51.1% 13.3% 21.1% 3.3% 12.2% 2.2% 3.3% 6.7% 7.8% 4.4% 3.3% 4.4% 4.4% 1.1% 22.2%
NOVEMBER 1, 2021 INSURANCE JOURNAL | 29
Compared to 2020 Increased Decreased Stayed the same
58.4% 11.2%
Special Report: Agency Errors & Omissions No. 1 Reason Agencies Carrry E&O Coverage
1.3% 13.3%
Protect the assets of the agency Required by my carriers Other
Agency E&O Premium Change in 2021 Compared to 2020 Increased Decreased Stayed the same
Agency E&O Premium Change in the Past Three Years Increase Decrease Remain the same
85.4%
30.4% 58.4% 11.2%
22.0% 64.8%
13.2%
Prediction on E&O Premium m Change at Next Renewal 36.7% Increase Decrease Remain the same
61.5% 1.9%
Agency E&O Premium
Annual Cost of Agency E&O C
continued page 29 Three Change from in the Past
raise premiums, avoid certain 22.0% could have been,” he said. risks, reduce coverage limits, Years Steve Vallone, senior vice and13.2% increase exclusions. 64.8% 6.3% Increaseand broker at$1,000 or less president Historically, hard market Decrease AmWINS who specializes in conditions have also increased Remain the same $1,001 13.1% agency E&O coverages, saidto $2,500 claims litigation and coverage there was a big fear and an denials, leading to a higher $2,501that to $5,000 expectation in the market number of E&O claims against Prediction on E&O Premium mbrokers, Vallone said. He uncovered business income loss claims at would lead to ato rise advises agents to pay close Change Next Renewal $5,001 $10,000 13.8% in E&O claims against agents. attention 36.7% when moving E&OIncrease markets priced for theto $15,000 coverages to a61.5% new carrier and $10,001 8.8% worst scenarios. But so far, the be sure to explain in detail to Decrease 1.9% Remain the same claims haven’t followed. “I still their customers any changes to $15,001 to $25,000 11.3% think there is a fear, but I don’t terms and conditions. know if there’s an ‘expectation’ “Today’s combination of anymore,” he said.$25,001 to $50,000 hard market conditions and 10.0% Vallone still believes Satisfaction with Agency COVID-19 is creating even more 14.4% there’s uncertaintyMore overthan how$50,000 challenges as pandemic-related E&O Terms, Conditions pandemic-related business exclusions, 21.7% limits and supple0% 5% 10% 15% mental income loss claims could bring and Limits 4.5% applications are being every line trouble for agents in the future. added to nearly 73.9% Yes of business — including E&O “But No so far, they haven’t made Comparison ChangesVallone in E&O Premium Somewhat satisfied wrote in an any waves and that expectation ofinsurance,” Insurance Journal blog in April. that agents did By something Region Vallone views capacity in wrong, seems to be lessening.” Region Decreased Increased Same the agents and brokers E&O Midwest 16.0% 84.0% 58.0% Hard Market Concerns market as limited even while Increased Agency E&O Limit mit 1.2% East 0.0% 100.0% 57.0% Continue claims have10.0% trended down. at Last Renewal South Central 25.0% 75.0% 30.0% The hard insurance market “The fear of a COVID wave of Southeast 28.0% 72.0% presents an E&O challenge as claims against agency E&O has 32.0% West 12.0% 88.0% Yes agents and brokers implement made the 88.8% market less appealing 38.0% No policy changes for their clients. to underwriters so there hasn’t Somewhat satisfied Hard market conditions have been new carrier entrants,” he Change insaid. E&OAnd Carriers been a catalyst Why for carriers to carriers already active
Lower price
Satisfaction with Agency E&O Terms, Conditions and Limits
E&O ClaimsNonrenewed History due to claims Nonrenewed due to change16.8% in underwriting criteria of Respondents Carrier withdrew from agency E&O market
21.7% 4.5% 73.9%
Yes No Somewhat satisfied
11.2% Needed broader coverage Never had a claim Had a claim in the past 5 years Other reasons 28.0% Had a claim 6 to 10 years ago Had a claim more than 10 years ago
44.1%
Risk Management Steps Implemented in Past Three Years
Increased Agency E&O Limit mit at Last Renewal
1.2%
10.0%
Number of Agency E&O Attended an E&O class 8.8% Carriers in Past Five Years Agency staff has achieved additional designations
More actively utilized an exposure analysis checklist
Yes No Somewhat satisfied
88.8%
40.6% 50.6%audit One carrier Hired a third-party to perform an agency Two carriers Enhanced agency focus on internal quality control Three carriers
Developed/updated agency procedural manual
30 | INSURANCE JOURNAL | NOVEMBER 1, 2021
E&O Claims History of Respondents
24.5% 1.3% 3.3% 10.6% 9.3% 10.6%
16.8%
INSURANCEJOURNAL.COM Recent E&O Restrictions, Exclusions or Underwriting Changes
78.1% 36.7% 35.2% 7.8% 56.3% 34.4%
in agency E&O are raising rates, he added. “The lack of supply and the increased demand is causing that increase in price,” not claims, he added. The Kansas association leader Hulcher advises agents to make sure that they’re reviewing policies carefully when they are placing business in the surplus lines market. “It becomes more important to be reading your customer’s policy, to make sure you understand the changes within that policy going forward, and to make sure that customers are aware that the non-admitted business is not subject to the guarantee fund in a lot of states.” These exposures are always a concern in a hard insurance market, he added. “We’re also seeing a hardening in the marketplace, which consumers may be asking their agents to shop their accounts. And if that’s the case, anytime you are changing carriers, you need to make sure that you understand what the differences are and are thoroughly checking policies,” he said. Whitney added that agencies should have tight processes in place when switching carriers. “As the market hardens across property and other casualty, having a very clear process in place for everyone on your staff to follow when you are moving coverage and having appropriate disclaimers, and making sure you’re communicating to your clients every time you switch a policy form,” she said. “There’s the risk that some things may get interpreted differently so agencies really need to cover all bases.” While policy comparison is critical for agents, so is communication with clients, she added. “Your clients have INSURANCEJOURNAL.COM
a duty to read the policy, too, but you want to make sure that they realize, ‘Hey, this sublimit is less,’ or whatever the differences are,” she said. In hard market times like these there could be an uptick in E&O claims because changes in coverage were not properly communicated to the client, she said.
Cyber and Other Exposures
While the hard market and the ongoing pandemic remain top concerns for agencies, cyber risk might be the most pressing issue right now, according to Hulcher. “The two biggest exposures that an agency has are E&O exposures and their cyber exposure,” he said. Some agencies rely on minimal data breach coverage sometimes given in their E&O policy rather than purchasing a standalone cyber policy, he said. That’s concerning, according to Hulcher. Swiss Re’s agents’ E&O policy includes a small sublimit for first party cyber coverage, but Whitney said the coverage does not address the cyber exposure seen most often today: ransomware. Whitney has seen some agencies with ransomware claims, including a recent incident involving an agency that had failed to back up its files for more than a year. “Fortunately, they had cyber coverage so they are working through that.” Had the agency relied on its E&O policy sublimit there would be no coverage. “We’re not covering ransomware in an E&O policy,” she said. “Everyone should have a standalone cyber policy.” Hulcher says that many of KAIA’s independent agencies
are not buying standalone cyber policies to cover their risks. “When I look at our membership, I would estimate that 60% of them do not have a standalone cyber policy,” he said. One cyber-related incident without cyber coverage could destroy their agency, he added. “Agencies need the E&O coverage to continue to
operate as an insurance agent,” he said. But agents also need a standalone cyber policy as much as their E&O coverage. “They cannot rely on the little bit of coverage that they get in their agent’s E&O policy.” Agency staff working from home has increased an agency’s cyber exposure as well, said Chris Burand, owner
continued on page 32
E&O Limits Purchased $2 million or less per claim $3 million per claim $4 million per claim $5 million per claim $6 million to $10 million per claim $11 million-plus per claim
51.3% 10.6% 3.1% 15.6% 11.3% 2.5%
Most Important Issues When Selecting E&O 1. Claims handling experience 2. Longevity of the E&O carrier in providing this coverage 3. Past experience with the carrier 4. Extended reporting period (tail) options 5. Price 6. Direct access to underwriting and claims personnel 7. Availability of risk management information/advice 8. Flexibility with deductible options 9. Experience/recommendation of another agent 10. Trade association endorsement
Agencies with Risk Management Plan to Mitigate E&O During Natural Disasters Yes, we have a specific risk manage plan for natural disasters We have some steps in place for natural disasters We are planning to write a plan for natural disasters No, we do not have an E&O disaster risk management plan
23.2% 29.6% 3.5% 43.7%
Why Premiums Increased Agency growth/expansion/acquisition Change to underwriting risk factors (other than growth) Changes in policy such as higher limits Carrier’s rates increased Changed our carrier Our agency’s own claims experience Don’t know
34.4% 5.3% 2.3% 47.3% 2.3% 6.9% 4.6%
NOVEMBER 1, 2021 INSURANCE JOURNAL | 31
Special Report: Agency Errors & Omissions continued from page 31
New E&O Risk Management Steps in the Past Year 37.1% Yes No
62.9%
Purchased E&O from Agent Trade Association 57.8%
42.2%
Yes No
Agency That Specialize in Particular Markets 40.3% 59.7% Yes No
Placing More E&S Businesss than a Year Ago Yes No Not Sure
10.6% 35.2% 54.2%
Agencies’ Use of Coverage Checklists Auto Home Professional services Small business Medium business Large business 32 | INSURANCE JOURNAL | NOVEMBER 1, 2021
67.8% 66.1% 51.3% 71.3% 60.9% 51.3%
of Burand & Associates LLC in Pueblo, Colorado. “I saw one recent case where a person working at home didn’t have the right technology in place and they had a breach as a result,” he said. While the claim was cyber related, it could have turned into an E&O allegation because the staff was not equipped with adequate technology, he added. Remote work can also lead to procedural errors for an agency. “Maybe some people were sent home and they only have one screen [monitor]; and it was a small screen,” Burand said. That small monitor could be seen as an inadequate technology solution which could result in more procedural errors. Another potential E&O exposure arises with the ongoing loss of expertise in the agency ranks, according to Hulcher. “The transition of people that are retiring that have been in the business for 40 years, the expertise that is walking out the door, and then trying to get your new employees, who are less experienced, trained, that’s obviously a potential exposure,” he said. Hulcher said newer hires are not as familiar with coverages and may not realize the importance of adhering to critical agency procedures. That’s why he encourages agencies to invest in new employees. “Get them up to speed from a coverage perspective, and make sure that your procedures are buttoned up, and that people understand why you have those procedures in place,” Hulcher said. “Because you want to have those invariable practices as a future defense, should an E&O claim come up.”
Burand says that while the next wave E&O claims may not have hit, yet, E&O exposures in agencies nationwide have increased throughout the pandemic. “I’ve definitely seen the exposures increase. Maybe everybody will just get lucky, and it won’t result in a claim.” But don’t count on it. “I think that continued diligence on being consistent in your procedures and understanding that whatever it is that you promise you’re going to do in the event of any lawsuit, you better have done,” he said. All it takes is one plaintiff’s attorney to quickly look on the agency’s website and then map the website’s promises to their client’s situation. “They ask: ‘Did they do this? The website promises it, so did they do it?’ That’s the litmus test that a lot of plaintiff attorneys used to determine whether they’re going to go forth with a case.” Swiss Re’s Whitney says more and more claims are being argued on the premise INSURANCEJOURNAL.COM
Agency E&O Survey: More Agencies See Premiums Rise, Again
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that the agency has created a special relationship, raising the agency’s duty of care, because of promises made on a website. “And when that happens, all our great defenses can go out the window,” she said. “It’s one of those things that’s a struggle because if you are any business, you want to have what you do on your website. You want to make yourself look good so you to stand out from your competitors,” she said. “It’s natural that you’re going to say that you do all these great things. The problem is, if you say all those great things and you haven’t done all those great things, that can create exposure problems.” Lastly, Hulcher reminds agents to look beyond price when it comes to insuring the agency. “You can’t only focus on the price; you have to make sure that you understand the underlying policy behind that price,” he said. Agencies tend to look to their carrier contracts, and purchase agency INSURANCEJOURNAL.COM
E&O limits based on those contractual requirements. “Just because it is an agency contract that says this is the minimum coverage you should continue to hold, doesn’t mean that is the right limit of liability for your agency,” he said. “You have to look at your book of business, evaluate the underlying exposure, and purchase the amount of limits that you feel like you can afford,” he said. “Make sure that you have adequate limits in place,” he said. “Ask yourself, ‘if I have a $1 million E&O limit and I have a $2 million claim, could my business survive?’ The answer is probably not.” And don’t rely on an agency E&O policy for cyber coverage, he added. “Get a standalone cyber policy,” he said. “The reality is, there is no bigger exposure than E&O,” Hulcher added. “You need to look at your E&O policy as an investment in protecting your business, your largest asset, and that should be how you approach it.”
ccording to Insurance Journal’s 2021 Agency E&O survey, 58.4% of respondents saw an increase in their E&O renewal premium from 2020 to 2021, up from 50.2% in last year’s survey. And 61.8% expect another increase at their next renewal; that’s up from 53.8% in last year’s survey. Almost half (47.3%) of the agency E&O buyers who responded to the survey said the increase in premium was due to a rate increase from the agency’s E&O carrier while another 34.4% of respondents cited the increase came from agency growth/expansion/acquisition. Only 6.9% said the increase was due to the agency’s own claims experience while 5.3% reported the increase was due to changes to underwriting risk factors (other than growth. Just 2.3% noted the increase in premium was due to changes in their policy such as higher limits of coverage. More agencies are placing business in the excess and surplus lines market than a year ago. More than one-third of respondents (35.2%) reported planning more E&S business than one year ago where just 25.0% reported placing more E&S business in last year’s survey. One area that has continue to change is agency E&O deductibles. Some 51.1% of respondents reported a recent change to policy deductibles. That’s slightly down from 54.5% of agencies that reported changes to deductibles in the 2020 survey. Certain breaches of personal data (21.1%), company insolvency exclusions (13.3%) and changes to fraud, dishonest acts, illegal acts, false advertising, discrimination (12.2%) were other areas survey respondents noted as recent areas of change in coverage. However, a majority of respondents (73.0%) continue to report satisfaction with E&O terms, conditions and limits on their agency E&O policies, which was a slight increase (72.3%) from satisfaction levels reported in the 2020 survey. The vast majority of respondents (85.4%) continue to report that the number one reason they carrier agency E&O coverage is to protect the assets of the agency. Only 10.0% reported increasing their agency E&O limit at the last renewal.
Insurance Journal’s Agency E&O Survey collected more than 200 responses from agency owners nationwide via an online survey in late September and early October. Demotech Inc., Insurance Journal’s research partner, assisted with analysis of this survey. For more information, contact Andrea Wells at: awells@insurancejournal.com.
NOVEMBER 1, 2021 INSURANCE JOURNAL | 33
Spotlight: Cyber Business Interruption, Recovery Costs Drive Financial Losses From Cyber Attacks: Report By L.S. Howard
D
uring the COVID-19 crisis, global cyber attacks skyrocketed in a digital pandemic driven by ransomware, according to a report published by Allianz Global Corporate & Specialty (AGCS). Further, the report noted, business interruption and restoration costs are the main causes of financial loss for companies. An AGCS analysis of its overall cyber-related claims, seen over the past six years, reveal that business interruption and post-attack recovery costs account for over 50% of the value of close to 3,000 insurance industry cyber claims worth around €750 million ($885 million). (AGCS started writing cyber insurance in 2013). “The average total cost of recovery and downtime – on average 23 days – from a ransomware attack more than doubled over the past year, increasing from $761,106 to $1.85 million in 2021,” said the AGCS cyber insights report, titled “Ransomware trends: Risks and
34 | INSURANCE JOURNAL | NOVEMBER 1, 2021
Resilience,” published last month. “When it comes to cyber business interruption, timing is everything. If you pay a ransom demand after a week, the loss has already crystalized, and the cost of restoration is already set in motion. For example, the cost of hiring forensic experts and response consultants can run to $2,500 per day and easily reach a sevendigit figure,” commented Rishi Baviskar, global cyber experts leader, Risk Consulting, AGCS, who is quoted in the report. “Malware attacks that encrypt company data and systems and demand a ransom payment for release are surging globally,” said a press release accompanying the report. As an indicator of this surge, AGCS cited a report from Accenture that revealed that cyber intrusion activity globally jumped 125% in the first half of 2021, compared with the same period in 2020, with ransomware and extortion operations top two contributors behind this tripledigit increase.
Further, there was a 62% increase in ransomware incidents through the first six months of 2021 in the U.S., which followed a 20% increase in the number of incidents for the whole of 2020 and a 225% increase in ransom demands, said the AGCS report, citing statistics from the Federal Bureau of Investigation (FBI) and the Cybersecurity and Infrastructure Security Agency (CISA). AGCS said these cyber risk trends are mirrored in its own claims experience. AGCS saw more than 1,000 cyber claims overall in 2020, up from around 80 in 2016. Further, it received 90 ransomware claims in 2020, an increase of 50% from 2019 (when it received 60 claims). This trend has continued in 2021 with more than 500 overall cyber claims received by AGCS in the first half of the year, while the number of ransomware claims in the first half are already equal to the number reported (60) during the whole of 2019. “Losses resulting from external incidents, such as distributed denial of service (DDoS) attacks and ransomware campaigns, account for the majority of the value of cyber claims (81%) analyzed by AGCS over the past six years,” said the report. The increasing reliance on digitalization, the surge in remote working during COVID19, and IT budget constraints are just some of the reasons IT vulnerabilities have intensified, said the report, explaining that there are now countless numbers of access points for criminals to exploit. Further, the wider adoption of cryptocurrencies, such as Bitcoin, which enable anonymous payments, is another key factor in the rise of ransomware incidents, said AGCS in the press release. Bitcoin, which is estimated to account for approximately 98% of ransomware payments, is relatively easy to acquire and use, while payments are verifiable, said the report. “Transactions can also be carried out with anonymity, enabling perpetrators to keep their identities hidden.” INSURANCEJOURNAL.COM
Cryptocurrencies are “the weak link that enables criminals to bypass traditional institutions and hide behind the anonymity built into the technology,” said Thomas Kang, head of Cyber, Tech and Media, North America at AGCS, who was quoted in the report. “More stringent enforcement and compliance with ‘knowyourcustomer’ and antimoney laundering laws could, however, help disrupt the ransomware business model.” The report identifies key trends in the current ransomware space: • Development of Ransomware as a Service (RaaS). RaaS has made it easier for criminals to carry out attacks. Run like a commercial business, hacker groups such as REvil and Darkside sell or rent their hacking tools to others. They also provide a range of support services. As a result, many more malicious threat actors are operating. “From as little as a $40 per month subscription, successful attacks can yield many thousands of dollars from ransomware payments.” • Increase of Double and Triple Extortion Tactics. “Double extortion” tactics are on the rise. Criminals combine the initial encryption of data or systems, or increasingly even their back-ups, with a secondary form of extortion, such as the threat to release sensitive or personal data. In such a scenario, affected companies have to manage the possibility of both a major business interruption and a data breach event, which can significantly increase the final cost of the incident. “Triple extortion” incidents can combine distributed denial-of-service (DDoS) attacks, file encryption and data theft – and don’t just target one company, but potentially also its customers and business partners. A notable case cited by the report was a psychotherapy clinic in Finland which received a ransom demand, while smaller sums were also demanded from the patients who received individual ransom demands by email. “The attackers threatened to publish therapist session notes unless ransoms were paid.”
• Rising Supply Chain Attacks. “There INSURANCEJOURNAL.COM
are two main types [of supply chain attacks] – ones that target software/IT service providers and use them to spread the malware and ones that target physical supply chains, such as critical infrastructure. Examples of attack that targeted software/IT services providers was the Kaseya and Solarwinds attacks, while an example of a physical supply chain attack was the one that hit Colonial Pipeline, which was the largest cyber attack on U.S. oil infrastructure to date. The report noted that service providers are likely to become prime targets as they often supply hundreds or thousands of businesses with software solutions and therefore offer criminals the chance of a higher payout. • Skyrocketing Ransom Demands. Ransom demands have rocketed over the past 18 months, the report said, noting that the average extortion demand in the U.S. was $5.3 million in the first half of 2021, a 518% increase on the 2020 average. The report quoted cyber security firm Palo Alto Networks, which said the highest demand was $50 million, up from $30 million last year.
To Pay or Not to Pay Ransom Demands
The AGCS report highlighted the fact that paying cyber ransoms is controversial. “Law enforcement agencies typically advise against paying extortion demands, which is thought to fuel the problem and potentially incentivize further attacks in the future,” it said. “Paying a ransom is also not a guarantee that a business will be able to quickly retrieve its files and restore its systems.
In many cases, by the time the ransom is paid, the damage is already done, and most organizations will have already suffered loss of income and incurred the expense of restoring files and systems,” the report continued. “Even when a company pays a ransom, it takes a huge effort to restore files and get systems back up and running. This is a huge undertaking, even when you have a decryption key,” said Marek Stanislawski, global cyber underwriting lead at AGCS, in the report.
Cyber Insurance
The report said the ransomware pandemic of recent years has sparked a major shift in the cyber insurance market, “as carriers and insureds endeavor to mitigate the rising frequency and severity of attacks and resulting cyber insurance claims.” As a result of these loss trends, cyber insurance rates have been rising and capacity has tightened. U.S. rates rose by more than 50% in the second quarter of 2021 alone, said AGCS, quoting a Marsh report. “Underwriters are placing increasing scrutiny on the cyber security controls that are employed by organizations and pricing risks accordingly,” said the AGCS report, noting that three out of four companies do not meet AGCS’ requirements for cyber security. “As insurers, we have to continue to work with our clients using a combination of policy and service improvements to help businesses understand the need to strengthen their controls,” said Scott Sayce, global head of Cyber at AGCS and the global head of the Cyber Center of Competence for AGCS and the Allianz Group, in the report. “Not all ransomware attacks are targeted. Criminals also deploy wild scattergun approaches to exploit those businesses that aren’t addressing or understanding the vulnerabilities they may have,” he added. Those companies that take steps to prevent attacks and mitigate the impact will be far less likely to fall victim to ransomware, the report affirmed. NOVEMBER 1, 2021 INSURANCE JOURNAL | 35
Spotlight: Trucking
U.S. Trucking Sector Struggles with Rising Rates, Driver Shortage
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.S. commercial auto insurers continue to face disruptions on their road to profitability due to inflation and the spotty post-pandemic economic recovery, according to a Standard & Poor’s Global Ratings report. The commercial auto sector had a reprieve in 2020 because COVID-19 restrictions led to significantly less driving, something that was particularly compelling in the commercial auto insurance field. That year, accident fatalities involving large trucks and buses dropped nearly 13% to 4,565 fatalities. Nonfatal crashes in the space plunged 14% to 156,707, according to statistics from the National Highway Traffic Safety Administration. S&P Global Ratings predicts more miles driven, along with inflation, supply shortages, a shortage of experienced drivers and rising litigation costs will delay any 36 | INSURANCE JOURNAL | NOVEMBER 1, 2021
positive momentum for the sector, at least in the short term. Trucking is perhaps the hardest hit industry segment in the current commercial auto market, according to the “2021 U.S. Transportation Market Outlook” report by RPS. “Standard carriers are limiting capacity, especially for distressed fleets with poor loss experience and unacceptable safety scores.” “Standard markets also are lowering limits on primary policies to below $2 million, forcing buyers to purchase more excess coverage to obtain desired coverage levels,” the RPS report noted. Though the lower loss frequency during the pandemic did fuel some market softening, claim severity was worse, and carriers are still trying to offset more than a decade-long problematic loss ratio, the report noted. “Medium and large fleets are getting better pricing than small fleets
because they usually are more committed to loss control, and typically employ full-time safety managers and dedicated mechanics to monitor and correct poor driver behavior and maintain vehicles.” One area that challenges this sector is labor shortages. For years, transportation experts have warned of a looming trucker shortage, particularly for long-haul drivers delivering across state lines and among the older ages of experienced drivers. In 2020, the ATA American Trucking Association (ATA) estimated the industry will need 1.1 million new drivers to replace those who will be retiring over the next 10 years. Trucking accounts for nearly 6% of all U.S. full-time employment, according to the Bureau of Labor Statistics, and the industry employs about 7.4 million workers to support the $800 billion sector. The trucking industry’s labor force INSURANCEJOURNAL.COM
is fluid, with a very high attrition rate, as it competes with industries such as warehouses and construction. This, along with time away from home, health issues, and stagnant wages for many truckers are some reasons behind the persistently low retention and shortage of drivers. According to a recent survey by the American Transportation Research Institute’s (ATRI), driver shortages, driver retention, driver compensation, lawsuit abuse reform, truck parking and the shortage of diesel technicians are top industry concerns for the sector. A few pressures which are contributing to the driver shortage issue, include growing freight demand, the aging driver workforce, drivers who left the industry over health concerns during COVID, new entrant training and licensing backlogs from COVID-related closures, and drivers who are not initiating the return-to-duty process after positive drug tests, the ATRI said. In addition, the recently announced vaccine mandate for all employers over 100 employees has raised concerns that additional drivers will leave the industry rather than get the COVID vaccine, the ATRI said.
Verdict Awards Spike
Significant attention has been brought to the issues surrounding truck crash litigation over the past two years including the rise in nuclear verdicts, according to ATRI’s 2020 Nuclear Verdicts study which revealed a 967% increase in average verdict size between 2010 and 2018. ATRI’s research showed the average verdict award spiked dramatically in 2018 by a factor of nearly five times from less than $5 million in 2017 to $22.3 million in 2018. Longer term, the average verdict grew 32.8% annually (rising to $22.3 million from $2.3 million) while the Consumer Price Index (CPI) grew about 2.0% and health-care costs at 5.4% annually between 2010 and 2018, highlighting how social inflationary pressures have led to ever more severe verdicts. ATRI also claims that large verdicts against trucking fleets are increasing both in number and in size of awards. Of the INSURANCEJOURNAL.COM
451 cases compiled by ATRI in 2006-2019, it found 265 cases with verdicts exceeding $1 million from 2012-2019 compared with 79 cases from 2005-2011. As a result insurance costs continue to rise. According to FreightWaves, a third-party U.S.-based supply-chain and logistics freight data analytic firm,
insurance expenses, as percentage of total revenue for the trucking industry, climbed to 4.8% as of first-quarter 2021, up from 3.4% at year-end 2016 due to rising costs of insurance as insurance carriers pushed rate increases over the past four years to offset losses from a rising number of accidents and higher settlement costs.
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NOVEMBER 1, 2021 INSURANCE JOURNAL | 37
Idea Exchange: Is It Covered?
Logic & Language and Forms & Facts The Match Game
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n over 30 years of assisting agents and others in resolving insurance claims, some issues just keep coming up over, and over, again.
By Bill Wilson
Coverage Issue?
Do you have a coverage issue you’d like to see addressed in this column? If so, email me at Bill@ InsuranceCommentary.com and I’ll consider it for a future column. Otherwise, if there is an existing article on the subject, I’ll direct you to that. 38 | INSURANCE JOURNAL | NOVEMBER 1, 2021
One such dilemma involves “matching” issues, especially in homeowners insurance claims where hail or windstorm cause damage to asphalt roofing or vinyl siding. When some, but not all, shingles or vinyl siding panels are damaged by hail or windstorm, the insured of course wants the entire roofing or siding replaced. The reason for this is that replacing older, somewhat worn shingles or siding with new material reduces the overall value of the entire premises because of the resulting degraded aesthetic or cosmetic appearance. And, after all, the general purpose of insurance is to financially restore the insured to the same position enjoyed immediately prior to the loss. However, the problem is the actual
language in most property insurance contracts. For example, the current ISO HO 00 03 form says, “We insure against direct physical loss to property…” [emphasis added]. Property losses can be direct or indirect. Direct losses are those involving property that is directly damaged. Indirect, or consequential, losses are economic losses to property not directly damaged that arise, in this case, because of direct damage to other property. In other words, for our claim scenario, a literal reading of the contract language results in coverage only for the shingles or siding that are actually physically damaged by the covered peril. The economic loss to the entire building because of a mismatch of new material with older material or material no longer available is not covered. INSURANCEJOURNAL.COM
However, there may be one exception to this in ISO and most other homeowners forms. I’ll come back to this momentarily. In addition, there are two other considerations. First, many insurers address this issue with proprietary forms or endorsements and the variations in coverage are widespread. Some forms say, in no uncertain terms, that this type of consequential damage is not covered. Other forms provide coverage for damage beyond that which is “cosmetic” or superficial. Still other forms explicitly cover such losses on an optional basis, perhaps with a replacement cost offset for depreciation with regard to the consequential damage. Second, regardless of the contract language, some states have statutes or case law that govern claims of this type. At the end of this article, I’ll provide two links to other articles that dig deeper into the “matching” issue and include listings of state statutes, regulations, and case law. Given that case law often governs the interpretation of insurance policy language under equivalent circumstances — and that statutes usually override insurance contract provisions — knowing what the law is in a state is critical to properly resolving these claims. A third possibility referenced above exists in existing ISO and most non-ISO policy forms, and that is the Pair or Set clause. This is the wording in the current ISO HO 00 03 form:
with those new shingles that replaced the relocated shingles. The second option is to pay the difference in value of the entire “set” of shingles or siding before and after loss. The problem with this is that this valuation is subjective and it’s based on actual cash value (ACV), not replacement cost. In 2013, my residence was hit by a tornado. Fortunately, it was “only” an EF0 tornado so my total property damage was less than $50,000 and a good part of that was the debris removal expense of the 19 trees I lost (some covered and some not covered, but that’s a subject for a future article). The biggest loss to the dwelling itself was to about a third of the shutters that were gone or damaged beyond repair. In my case, my homeowners insurer used the 1991 edition of ISO’s HO 00 03 form but added a broadening endorsement. One of the broadenings was applying the Pair or Set clause on a replacement cost, not ACV, basis. To make a long story short, I received all new shutters because of this added coverage. It didn’t hurt that my state also has an insurance regulation and case law that requires the repair or
replacement to conform to a “reasonably uniform appearance.” As mentioned earlier, I recommend that you read two excellent white papers, both including listings of state statutes, regulations, and case law, and file them away for future reference. Those are: • “‘Matching’ in Replacement Cost Homeowners Insurance Policies” (https://tinyurl.com/Matching01) • “Matching Regulations’ and Laws Affecting Homeowners’ Property Claims in All 50 States” (https://tinyurl.com/ Matching02) Do you have a coverage issue you’d like to see addressed in this column? If so, email Bill@InsuranceCommentary.com and I’ll consider it for a future column. Otherwise, if there is an existing article on the subject, I’ll direct you to that. Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide: Resolving Insurance Coverage and Claims Disputes,” available on Amazon
Loss To A Pair Or Set In case of loss to a pair or set we may elect to: 1. Repair or replace any part to restore the pair or set to its value before the loss; or 2. Pay the difference between actual
cash value of the property before and after the loss. I’ve seen the first option exercised when some shingles on the front of the house were damaged and they were replaced with undamaged shingles from the back of the house to maintain a consistent appearance from the street, though the appearance from the back yard isn’t so hot INSURANCEJOURNAL.COM
NOVEMBER 1, 2021 INSURANCE JOURNAL | 39
Idea Exchange: The Wedge
Silver Linings:
Uncovering Opportunities in the Shifting Landscape Emerging from COVID-19
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s I write this, in the fall of 2021, it’s now clear that we are going to be living and working with COVID-19 for the By Tony Caldwell indeterminant future – perhaps forever. Regardless of one’s opinions about vaccines, masks, social distancing and other mitigation strategies, the United States today ranks 28th among the world’s largest economies in terms of COVID-19 containment, vaccinations, fatalities, healthcare and more, according to Bloomberg. With that in mind, I’d like to talk for a moment about how insurance agency entrepreneurs can navigate the continuing impacts of the COVID-19 pandemic on their businesses and highlight some of the opportunities this continually shifting landscape emerging from COVID-19 may uncover.
Finding the Positives in Flexibility
The workplace is clearly different today than it was two years ago, regardless of what coping strategies you may have adopted. Some agencies are still completely virtual, while others never went remote. Now, many agencies have adopted a blended remote-office work model. While no one knows if or when work style may go back to pre-COVID-19 norms, it’s become increasingly apparent that employees want more flexibility than they had before the pandemic. In fact, a recent report from PWC found that 55% of employees would prefer to work remotely at least three days a week
going forward. With many agencies offering new flexibility, the fierce competition for talent that the industry was already experiencing pre-COVID-19 – and made worse by reduced workforce participation during the pandemic – is only increasing. This means that agency owners who don’t offer work flexibility may find it harder to attract and retain talent. On the positive side, this pressure for increased flexibility offers at least two opportunities, and possibly a third, to grow your agency: Because remote workers can work from anywhere, you have a much larger, potentially national, pool to recruit from if you can adapt to such an arrangement. This pool can become even larger if you focus your talent searches in smaller communities with fewer competing local job opportunities. Recruiting without geographic restrictions not only opens up the pool of potential candidates, it also offers greater opportunity for those candidates while providing, in some instances, a broader salary range for employers who need to maximize their budgets. The so called “Great Resignation” is further exacerbating the challenges
for agency owners in retaining talent. People have decided to change jobs for a number of reasons. They no longer are willing to put up with something they don’t like, they’re bored, or they’ve found another employer offering more money, among other things. This workforce mobility can work to an agency owner’s advantage if you offer better-than-average working conditions, a great culture or superior opportunities for growth. Now, is the time to focus on your employees.
‘This workforce mobility can work to an agency owner’s advantage if you offer better-than-average working conditions, a great culture or superior opportunities for growth.’
Buying and Selling
More Opportunities to Uncover
This new landscape also presents a renewed opportunity to acquire agencies or books of business. Pre-COVID-19, the aging of the workforce in the independent agency system was an increasingly urgent issue. The pandemic only contributed to the problem, inciting retirements. Though this trend is perceived as a negative by many agency owners who are trying to grow, others see it boosting their own desires to retire and sell. Those who are thinking of retiring and selling are feeling a sense of urgency to do so recognizing a potential for higher capital gains taxes beginning in 2022. Additionally, for those looking to sell, it’s become apparent that interest rates, which are tied to agency values to some degree, will also rise next year. With many exploring exit options, now is the time for aggressive, ambitious acquirers to
reach out and begin discussions with likely sellers.
Another opportunity that this evolving COVID-19 landscape has highlighted is the value of carrier service centers. When faced with talent challenges in the agency, carrier service centers provide a way to maintain service levels, lower costs by turning a fixed salary expense into a variable one, as well as a way to further lower costs overall as service staff typically cost about 25% of revenue. Service centers typically cost only 10% to 12% of revenue. Further, cyber insurance is something that must be considered in this new environment. Cybercrime and its negative impacts on commercial clients are exploding. Many businesses weren’t prepared for safely moving to remote work, but criminals were prepared to exploit the situation, and cybercrimes of all kinds are skyrocketing. Also critical to note is that a cyberattack can create a potential E&O exposure for agencies that haven’t offered this coverage to every business client. But once again, we see opportunity. In this new environment, clients’ interest in cyber coverage is rapidly increasing, as higher premiums and claims come along for the
ride. Both things have the potential to add to agency revenues. Finally, business continuation and perpetuation are issues that are perennially important to agency owners – but never more so than in the COVID-19 era. Sadly, we’ve seen too many unfortunate deaths in the last year and a half – many of them older agency owners. But the last six months or so have seen the average age of seriously ill or dying people decline. The CDC reported 15,350 deaths in 2021 as of Oct. 6 for those under age 45. That number for 2020 was 10,157. In our organization, we’ve been fortunate to have seen no deaths among our team members, but we have had several owners in their 30s and 40s hospitalized or incapacitated for weeks and even months. If you don’t have a carefully thought out plan detailing how the agency will operate with you, or another key employee, this needs to be a priority! COVID-19’s future is uncertain and many of the consequences it will create are also yet unknown. But one thing is always clear – entrepreneurially minded agency owners can see opportunities where others only see problems and dead ends. The opportunities I’ve listed here are just the tip of the iceberg. I predict that many agencies are going to look back on this period of time as challenging, but also transformational and a period of great growth and progress. I hope that is true for you. Caldwell is an author, speaker and mentor who has helped independent agents create over 250 independent insurance agencies. Website: www.tonycaldwell.net. Email: tonyc@oneagentsalliance.net.
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elcome to Insurance Journal’s 2021 Premium Finance Directory, a comprehensive listing of premium finance companies able to assist agents and brokers with their clients’ financing needs. All company information listed in this directory was directly submitted to Insurance Journal. To be listed in future editions of Insurance Journal’s Premium Finance Directory, or any other directory, contact Kristine Honey at: khoney@insurancejournal.com. We hope you find this directory to be a valuable resource when searching for financing options for your clients. Feel free to send us comments and suggestions on how we might improve this directory, or for additional help, e-mail: editorial@insurancejournal.com.
The 2021 Premium Finance Directory is Sponsored By:
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AFCO Credit Corp.
Agile Premium Finance
5600 North River Rd., Ste. 400 Rosemont, IL 60018-5187 Toll-free: 1 (800) 288-6901 Email: newbusiness@afco.com or promptservice@afco.com www.afco.com
475 Half Day Road, Lincolnshire, IL 60069 Phone: (877) 359-7767 Email: sales@agile-pf.com www.agile-pf.com
• AFCO customizes premium finance options for insurance agents, brokers and their customers • Unmatched expertise in premium finance with comprehensive underwriting, legal and support resources • Proven reliability, flexible terms and the ability to support insureds with non-standard needs
42 | INSURANCE JOURNAL November 1, 2021
A d i vi s i on of Met a B a n k ®
AFS/IBEX Financial Services, Inc. 750 N. St. Paul, Ste. 1500, Dallas, TX 75201 Phone: (800) 299-5626, Fax: (214) 954-0537 Email: service@afsibex.com www.afsibex.com • Proven Stability – We’ve been operating for over 30 years under the same proven leadership, where premium finance is our only focus • Evolving with the times – As a division of MetaBank, our financial strength and stability offer our partners peace of mind that we will be here today, tomorrow, and in the future • Partnering for the future – As a good corporate partner, our programs evolve and enhance the benefits you can offer your insureds, increasing your retention • Ask us about offering agency loans and credit lines
• Driven by innovation and backed by Valley National Bank (NASDAQ: VLY), Agile is one of the fastest growing companies in premium finance. • Offering convenient, efficient premium finance technology solutions designed to make your days more productive. • Agile takes great pride in offering the best customer experience for both agent partners and insureds. We go above and beyond to deliver for our clients.
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Premium Finance Directory Automated Installment Systems
Capital Premium Financing
Cypress Premium Funding, Inc.
955 Executive Pkwy, Ste. 216, St. Louis, MO 63141 Phone: (800) 624-6308 Email: sales@automatedinstallment.com www.automatedinstallment.com
12235 S. 800 E, Draper, UT 84020 Phone: (800) 767-0705, Fax: (800) 700-3170 Email: info@capitalpremium.net www.capitalpremium.net
28202 Cabot Rd., Ste 435, Laguna Niguel, CA 92677 Phone: (949) 487-0602, Fax: (949) 487-0640 Email: info@cypressfunding.com www.cypressfunding.com
• An industry leading provider of premium finance and installment billing outsource solutions to all segments of the insurance industry for over 30 years. • AIS’s extensive product offerings are technology driven solutions that automate the presentation of payment products and payment options to policyholders. • Our experienced staff consistently delivers innovative services and processing solutions to agencies, general agencies, and insurance carriers throughout the country.
• Industry leading Agency Revenue Programs • Highest level of Agent/Client service available in the industry • Local presence, multiple payment options, and online access
• Competitive Rates and Terms • Immediate Funding • Cancellation Prevention Programs
FIRST Insurance Funding Corp. Capitol Payment Plan 52 Corporate Circle, Ste. 208, Albany, NY 12203 Phone: (866) 639-1333, Fax: (518) 862-7522 Email: sternj@cappay.com www.cappay.com
BankDirect Capital Finance
Brokers Financial Services 19500 Middlebelt Rd., Ste. 360 W, Livonia, MI 48152 Phone: (248) 478-8723, Fax: (248) 478-8729 Email: nmorrison@brokfinsvc.com www.brokfinsvc.com • Competitive flexible rates and payment plan options • Fast and efficient payment to Brokers and Insurance companies • 24/7 live phone customer service for our agents and clients
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• Premium Finance – Simplified with our
customizable online loan process that works
150 N. Field Dr., Ste. 190, Lake Forest, IL 60045 Phone: (877) 226-5456 Email: info@bankdirectcapital.com www.bankdirectcapital.com • Commercial premium finance solutions that offer agency revenue opportunities, multiple payment options for insureds and cancellation prevention. • Effortless technology makes the process fast and efficient as well as puts the latest tools at your fingertips, such as e-signature, e-down payment and more. • Our expert team takes a consultative approach to deliver a best-in-class partnership experience.
450 Skokie Blvd, Ste. 1000, Northbrook, IL 60062 Phone: (847) 572-4650 Email: jim.miller@firstinsurancefunding.com firstinsurancefunding.com
• Committed to helping insurance agents maintain wherever you and your insureds are their competitive edge through premium • Most complete payment options in the industry financing solutions since 1979 for your insureds including Amex, Visa, Mastercard, • Leading local experts to address the unique needs Discover or by bank account for down payments of the personal lines business and installments • State-of-the-art products and programs that • Agency lending, 401K management, Deposit maximize efficiency in quoting, leaving more time services, and Capital Leasing programs to focus on your customers • Training options for everyone in your agency
ClassicPlan Insurance Premium Financing 13750 Pipeline Ave., Chino, CA 91710 Phone: (800) 347-6481, Fax: (909) 628-5490 Email: info@classicplan.com www.classicplan.com • Most lines of business accepted, including Cannabis • Mobile App, credit card payments, ACH and more for insureds payment submission • Extra services to help increase retention and market your agency
COST Financial Group, Inc.
General Agents Acceptance Corporation 23441 S. Pointe Dr., Ste. 220, Laguna Hills, CA 92653 Phone: (949) 470-9674, Fax: (800) 568-5462 Email: james@mygaac.com www.mygaac.com
807 W. Highway 50, Ste. 4, O’Fallon, IL 62269 Phone: (800) 844-2678, Fax: (618) 206-3223 Email: daveg@costfinancial.com www.costfinancial.com
• Our Insurance Premium Finance Program increases retention by calling customers before cancelling & allowing them more time to pay. • We offer competitive rates & exceptional customer service. • COST makes it easy for YOU TO OWN your own • You can quote online or send us the quote from Premium Finance Company the carrier & we will quote the finance • COST does the set-up, COST runs the back room, agreement for you. YOU EARN ALL THE PROFIT • Let COST’s 29 years’ experience put the PROFIT from YOUR premium financing IN YOUR POCKET! November 1, 2021 INSURANCE JOURNAL | 43
Premium Finance Directory gotoPremiumFinance.com
Johnson & Johnson Preferred Financing, Inc.
6200 Canoga Ave., Ste. 400, Woodland Hills, CA 91367 Phone: (888) 875-4000 Ext. 2135, Fax: (818) 610-2066 Email: sales@gotopremiumfinance.com www.gotopremiumfinance.com
200 Wingo Way, Ste. 200, Mt. Pleasant, SC 27464 Phone: (800) 868-5573, Fax: (843) 724-7085 Email: finance@jjpf.com www.jjpf.com
• A unique one of a kind paperless premium finance billing option that is also designed to help agents grow their insurance business and increase their income. • Nationwide premium finance provider for agents, MGAs & insurance companies. • Online quoting, online payment options, real time account status, online cancellation holds, customized notice delivery & more.
• Finance most lines of coverage both Commercial and Personal lines • Online software for 24/7 access to quoting, account management and reporting • Multiple funding options for Money in & Money out!
Liberty Premium Finance, Inc. 4 Centerpointe Dr., Ste. 300, La Palma, CA 90623 Phone: (800) 229-8793, Fax: (562) 356-0131 Email: sporter@libertypf.com www.libertypf.com
NCMIC Finance Corporation 14001 University Ave., Clive, IA 50325 Phone: 1-(800) 600-9250, Fax: 1-(800) 630-9250 Email: LLogan@ncmic.com www.nfcfinance.com • Real relationships with people who care about you and your business. • Immediate funding, because we know how important it is to maintain your revenue flow. • Programs with low down payments tailored just for you – not one-size-fits-all solutions.
• Flexible monthly payment options for commercial insurance policies • Quote, bind and archive your contracts with our easy-to-use online quoting center • Pay by mail, phone, online or in person with credit card, check or check by fax
Imperial PFS 1055 Broadway, 11th Fl, Kansas City, MO 64105 Phone: (800) 838-2350, Fax: (816) 627-0502 Email: marketing@ipfs.com www.ipfs.com • The size and independence of Imperial PFS® provides the financial strength and flexibility to handle a wide range of accounts from large, complex deals to those that are smaller and more streamlined. • As a nationally-recognized premium financing leader, Imperial PFS® is committed to developing technology resources and services to best meeting the needs of Agencies and their Insureds. • Nationwide strength, local service – Imperial PFS® is powered by a network of more than 30 branches strategically located across the United States and in Puerto Rico.
Insurance Finance Company, LLC P.O. Box 315, Des Moines, IA 50306-1315 Phone: (800) 247-4190, Fax: (515) 223-0226 Email: Brian@ifcorp.biz or banstoetter@ifcorp.biz www.ifcorp.biz • Re-Engineering PREMIUM FINANCE from the Agent Up! • Celebrating 50 years in business • Fanatical Service – Flexible rewards and agency incentives – Competitive terms.
| INSURANCE JOURNAL November 1, 2021
Monarch Premium Resources, Inc.
P1 Finance
28202 Cabot Rd., Ste 435, Laguna Niguel, CA 92677 Phone: (949) 487-0602, Fax: (949) 487-0640 Email: info@MonarchPremium.com www.monarchpremium.com
280 Technology Pkwy, Ste. 100, Norcross, GA 30092 Phone: 1 (877) 395-6770, Fax: (404) 745-0737 Email: customerservice@P1Finance.com www.P1Finance.com
• Exclusive financing arrangements for brokers of Monarch E&S • Interactive Web site for account viewing, reports and On-line payments • Financing Commercial and Personal Lines Insurance Premiums
• NOW HIRING: Experienced professionals are needed in multiple departments to ensure we continue to provide industry-leading service as P1 continues to grow month over month • TECHNOLOGY: Best in class, web-based digital technology for 24/7 access, iPad, iPhone and Android App, IVR, for 24/7 access for your customers account status and payments • VALUE: Customizable and flexible payment options and pricing terms to maximize the profitability of your business
Mountain West Premium Finance 2535 Kettner Blvd., Ste. 3-A2, San Diego, CA 92101 Phone: (888) 280-0235, Fax: (619) 697-0326 Email: mike@financepremium.com www.financepremium.com • ZERO Down - 100% Financing • Auto-Renewal Premium Financing • Form Your Own Premium Finance Company
PREMCO Financial Corporation P.O. Box 19367, Kalamazoo, MI 49019-0367 Phone: (269) 375-3936, Fax: (269) 375-6913 Email: greg@go-premco.com www.go-premco.com • We finance all Commercial & Personal lines with same day funding • Rate Share, Profit Sharing, Stock Dividends & Referral Fees • FREE Online payments and the option to pay with Credit/Debit cards
www.insurancejournal.com
Premium Finance Directory Premins Company
SIUPREM, Inc.
132 32nd St., Ste. 408, Brooklyn, NY 11232 Phone: (800) 599-3279, Fax: (718) 376-8330 Email: info@premins.com www.premins.com
P.O. Box 105611, Atlanta, GA 30348 Phone: (678) 498-4730, Fax: (678) 498-4747 Email: info@siuprem.com www.siuprem.com
• Commercial and personal financing for over 50 years • Batched once-a-week cancellations with free/low fee payment options • Get answers and quotes quickly with our fast and effective customer service on the phone and on our customized website
• Independently owned, full service online premium finance company servicing independent agents since 1969. • Industry leading technologies providing real-time data for online policy service by the insured or the agent. • SIUPREM CARES. Each time a commercial policy is financed with SIUPREM $5 of the proceeds will be committed toward Breast Cancer Awareness and Research.
Premium Finance Brokerage, LLC P.O. Box 623, Jarrettsville, MD 21084 Phone: (866) 381-6501, Fax: (866) 381-6502 Email: tlarsen@premiumfinancebrokerage.com www.premiumfinancebrokerage.com • Guaranteed Lowest Interest Rates • Access to several national premium finance companies through one point of contact • Flexible payment options, cutting edge technology and a service pledge that’s put in writing
Premium Finance Consulting, LLC Phone: (408) 800-3876 Email: info@premiumfinance.consulting www.premiumfinance.consulting • Is your agency large enough for a profit sharing arrangement? • Is creating your own premium finance company appropriate for you? • We can assist you in finding the best premium finance relationship for your agency.
Prime Rate Premium Finance Corporation 2141 Enterprise Dr., Florence, SC 29501 Phone: (866) 669-0937, Fax: (800) 677-9850 Email: info@primeratepfc.com www.primeratepfc.com • Financing commercial accounts nationwide • User-friendly 24/7 Web-based access • Exceptional customer service
South Bay Acceptance Corp. 10151 Deerwood Park Blvd., Bldg 100, Ste. 330 Jacksonville, FL 32256 Phone: (800) 393-2012, Fax: (888) 328-6747 Email: contact@sbac-finance.com www.sbac-finance.com • Flexible premium financing programs with multiple benefits for your agency and their insured’s! • 24/7 Online Quoting access, account status verification, activate your own quotes immediately! • Creative Producer compensation options ready to provide you additional income!
Stetson Insurance Funding, LLC 6450 Transit Road, Depew, NY 14043 Phone: (866) 856-1112 Email: sales@stetsonfunding.com www.stetsonfunding.com • Stetson is a Ryan Specialty Group (RSG)
company that provides financing for RT policies and to Independent Agents, nation wide. • Competitive financing for all of your agency billed commercial lines business, including cannabis. • Customized rates, terms, reporting and revenue programs to meet all of your agency’s needs. • Experienced, versatile team available to facilitate all of your finance requests—after hours features including chat queues and automated phone systems. • Our e-Complete offering allows your agency to effectively turn agency billed items into direct bill by eliminating your need to collect the down payment.
Southern Access Capital, LLC 2231 Arlington Ave. South, Birmingham, AL 35205 Phone: (800) 806-1244 Email: info@southernaccesscapital.com www.southernaccesscapital.com • Experienced Professionals - Providing Great Service - Competitve Rates • Licensed in Alabama, Mississippi, and Louisiana (Personal & Commercial Lines). • No Premium Requirements - No Long Term Contracts - Easy Account Management
Standard Premium Finance 13590 SW 134th Ave., Ste. 214, Miami, FL 33186 Phone: (800) 592-7753 or (305) 232-2752 Email: Robert@standardpremium.com www.standardpremium.com
Stonemark 8501 Wade Blvd., Ste. 620, Frisco, TX 75034 Phone: (800) 955-0083 Email: service@stonemarkinc.com www.stonemarkinc.com • Cannabis and Personal Lines Financing • Online Payments & Account Status – make payments or review insureds’ accounts, including payment history, 24/7 • Online Quotes system gives agents the option of producing finance quotes and finance contracts anytime
· Personal and commercial lines. · No minimum, no maximum premiums. · Our personal service and attention to detail make the difference. · ACH, EFT and credit card payments and down payments. www.insurancejournal.com
November 1, 2021 INSURANCE JOURNAL | 45
Premium Finance Directory Thrifty Financial Services, Inc.
US Premium Finance
1691 Main St., Springfield, MA 01103 Phone: (800) 919-0015, Fax: (800) 736-5177 Email: thriftyfin@aol.com www.thriftyfinancial.com
280 Technology Pkwy, Ste. 200, Norcross, GA 30092 Phone: 1 (866) 246-9691, Fax: 1 (866) 246-9692 Email: customerservice@uspremiumfinance.com www.USPremiumFinance.com
• The premier premium finance provider for • SERVICE: Knowledgeable network of experts Western Premium Finance, LLC Massachusetts insurance agents for over 25 years. delivering the best customer experience in the • Seamless quoting integration with SinglePoint rater industry 555 Eldorado Blvd. Ste 200, Broomfield, CO 80021 • TECHNOLOGY: User-friendly software with 24/7 Phone: (303)-252-0020 from Boston Software - requiring zero duplicate data entry for the agent. access to quoting and your customer database Email: brigitte@westernpf.com • Unmatched technology and services proven to • VALUE: Flexible terms and competitive rates to www.westernpremiumfinance.com boost the customer experience for both insureds maximize the profitability of your business and agents. • Flexible terms, competitive rates, customized programs for niche markets such as cannabis; instant quote capability through our cloud based platform • Chartered and headquartered in Broomfield Colorado we are self-funded and currently licensed for commercial insureds in 23 states • Premium Loyalty Program that will reward our partner agents and their producers with generous BENEFITS PACKAGES!
“I regularly refer to Insurance Journal for industry trends, and to provide customers w/ developments that impact their business.” Karl Henley - EVP at SeibertKeck Insurance Partners & Satisfied Insurance Journal Subscriber
Thanks to Karl for the kind words and thank YOU for reading. Our journalists take pride in serving the industry. If this publication is valuable to you, please consider upgrading your subscription at www.insurancejournal.com/pro
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My New Markets Misc. Excess Professional Liability
Market Detail: Maven means one who is
an expert or connoisseur in their field. Just as you are a Maven in your profession, at Balance Partners, our Maven team is here to focus on the unique exposures of your professional clients. In an ever-evolving market where capacity restrictions continue, we are able to provide excess limits to meet your client’s needs. Product Offering: Follow Form; Can sit over PL/GL Combo. Minimum Premium: $2,000 Available limits: Minimum $2 million; Maximum $4 million Carrier: Fortegra, non-admitted, A- (Excellent) Category VIII rating by A.M. Best States: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming Contact: Crystal Jacobs at 512-923-6278 or email: cjacobs@balanceuw.com
Processing & Manufacturing
Market Detail: BevCap Management LLC
offers coverages for processing and manufacturing firms. Target industries include but are not limited to: Manufacturing (Food & Beverage, including alcohol; Wood Products; Electrical Equipment & Components; Textiles and Metals); Professional Services; Agriculture; Printers; Wholesale Distribution (Grocery, Alcohol, Industrial Supplies); Food Service; Retail (C-store, Restaurant, Grocery). QCS Insurance Company is a member-owned group captive insurance company offering WC, GL/Products, Product Recall, Auto, and Umbrella. Available Limits: $200,000 Minimum Limit Carrier: Travelers, admitted States: All 50 states and District of Columbia Contact: Matthew Bossier at 225-229-5540 or email: matthew@bevcapmanagement. com
Workers’ Compensation
Market Detail: Work Comp Now is a resource for agents to obtain bindable workers’ compensation quotes for any risk. Instant quoting platform (very easy to use). Risk appetite to name a few: High Ex Mod; Construction; Transportation; Medical; Manufacturing; Staffing and more. Very competitive commission program with an 86% retention rate. Available Limits: $1,000 Minimum Carrier: Not disclosed. Admitted, A rating by AM Best States: All 50 states and District of Columbia
Contact: Ralph Mencia at 904-224-1061 or email: ralph@wcinsnow.com
Small Business
Market Detail: Builders & Tradesmen’s Insurance Services Inc. (BTIS) offers coverage for a wide range of Small Business needs. We provide General Liability, Non-Profit Package and Specialty Products through USLI, an A++ rated company that supports its products with financial strength and stability. No ACORD applications are required, and quick quotes are available by phone, web, email or chat. Sample Classes for Non-Profit: Arts & Culture; Community Associations; Houses of Worship; Property Managers; Tech Professionals; Youth Sports; and many more. Sample Classes for Commercial General Liability: Apartments/Condos; Beauty/Nail Salon/Barber Shops; Childcare Residential; Grocery/Retail; Restaurants/ Liquor; Truckers; Vacant Building; and many more. Part of the Amynta Group, BTIS has always pushed the boundaries of technology through adopting or developing systems early in order to stay ahead of the wave; yet still has a small business attitude and believes in building and fostering solid relationships through communication and genuine concern for customers. Offers a wide range of commercial lines and are focused on developing and implementing cutting-edge technology to provide individual service, exceptional value, ease of use and rapid turnaround times. Carrier: USLI, admitted and non-admitted, A++ rating States: All 50 states and District of Columbia Contact: Barron Hess at 855-359-5529 or email: bhess@btisinc.com
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NOVEMBER 1, 2021 INSURANCE JOURNAL | 47
Idea Exchange: The Wedge How to Hold Producers
Accountable for Activity & Results
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et’s talk about producer accountability. The number one thing producers need to be held accountable for is By Randy Schwantz their activity. But naturally, accountability is a tough situation. It’s those sweaty palms, lump in your throat, and difficult conversations no one ever wants to experience — from either party. But the problem becomes more complex when you don’t deal with it because the failure to hold your people accountable is the biggest reason producers don’t meet (or exceed) goals.
Most agency owners struggle with producer accountability, but here’s a simple framework and analogy to help you think about it differently. One day, I was driving to the airport in Dallas, Texas. At the time, the fastest way to get there was to take the tollway roads. It’s pretty much 20 miles straight of “put the pedal to the metal and just go.” As you get on the tollway, there’s a speed limit of 70 mph even though everybody’s usually driving at 80-85 mph. Well, given that it was a beautiful spring day, I rolled the top down on my Porsche 911 and hit the road with my suitcase in the back. I vividly remember driving in a pack of about five or six
cars when we all came around this big curve with a highway patrol holding a radar gun. Immediately, he turned on his sirens, pointed at me, and told me to pull over, so I did. Then, he walked out of his car and came up to my window to ask, “Where are you going?” I pointed to my bag and replied, “Headed to the airport, sir.” He asked, “What’s your hurry?” and I told him, “Nothing, I’m just driving.”
‘Most agency owners struggle with producer accountability, but here’s a simple framework and analogy to help you think about it differently.’ Casually, he asked me for my driver’s license and my insurance. I reached over to the glove box, grabbed everything, and handed it to him. The state trooper went back to his car and did his thing. About three or four minutes later, he came back with my driver’s license and insurance certificate. Then he handed me the ticket and said to me, “Drive safe.” I was fuming but I knew it was my fault. And here’s why. When I was 16, I took driver’s education and they taught me about the law in the state of Texas. They explained to me that when you come up to an intersection, there’s a light. Green means “go,” yellow means “caution,” and red means “stop.” When there’s a sign stop sign, that means “stop.” There’s a speed limit and you aren’t allowed to exceed that limit. And then, as part of my driver’s education, we spent several months practicing it. So when I finally took my driver’s test and written test I passed both with flying colors. Lastly, they made me sign my new
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driver’s license, which then became my contract with the state of Texas that I understood the law. And I didn’t realize it back then, but I had three steps of accountability. Number one is that you now have a “Contract.” Secondly, as I’m driving down the freeway, the police officer had a radar gun. As a result, he could “Count” how fast I was going – precisely 82 mph. With that, he pulled me over so he could write me a ticket. Lastly, after the citation, there were three potential “Consequences” in this scenario. First, I could just pay money out of pocket and let it go on my record. Next, I could pay a lawyer to get it off my record. That means paying more money out of my pocket, but it’s not on my record. Or number three, I spend five to seven hours in front of a computer doing driver’s education. And those were my “Consequences.” So, here’s the major takeaway: There INSURANCEJOURNAL.COM
are three C’s of accountability to hold producers accountable for their activity. Number one, you’ve got to have a “Contract.” This means there is something in writing that both parties sign off on. Number two, you’ve got to be able to “Count” some type of metric. And number three, you’ve got to have “Consequences.” I you’re missing any of the three – contract, count and consequence – you’re going to keep spinning your wheels trying to hold your producers accountable. My only goal is to help you apply these concepts, frameworks, and ideas to build a team of producers that will build the agency of your dreams. The real question is, how far will you take it? Schwantz is the CEO and founder of The Wedge Group. He’s also the author of the book Agency Growth Machine. Phone: 214-446-3209. Email: randy@thewedge.net.
Advertisers Index Applied Underwriters www.auw.com 2, 3, 52 Frenkel & Company www.cosmeticinsurance.com 48 Insurbanc www.insurbanc.com 37 INTACT One Beacon www.intactspecialty.com 9 JenCap Holding LLC www.jencapholdings.com 5 JM Wilson www.jmwilson.com S4, M2 M.J. Hall & Company www.mjhallandcompany.com W1 Monarch E&S Insurance Services www.monarchexcess.com W3 Nationwide Mutual www.nationwide.com 25 Pacific Gateway Insurance Services www.pgiainsurance.com W4 Philadelphia Insurance Companies www.phly.com 7 Shelly, Middlebrooks & O'Leary www.shellyins.com S2 Staff Boom www.staffboom.com W2 Tejas American General Agency www.taga1.com SC1, S1 Texas Mutual www.texasmutual.com SC3, SC4
NOVEMBER 1, 2021 INSURANCE JOURNAL | 49
Closing Quote Top Reasons Insurers Decline Cyber Insurance
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nsurers make money by assuming the business risks of their customers for a fee. They make a profit only if the estimated By Pete Sfoglia aggregate cost of the risk for all their customers is less than the aggregate fees for assuming the risk. Companies seeking cyber insurance face technology-based security threats, so understanding technology is essential for insurers to make sound underwriting decisions. The problem is that insurers have been consistently behind their financial services peers in understanding leading-edge technology enablers. Many have no idea how to assess the financial, reputational, and regulatory risks they face and would rather walk away. Insurun has compiled a listing of the top reasons insurers decline cyber insurance based on over 100 companies we helped obtain coverage. Let’s look at the top four reasons insurers decline applications for cyber coverages.
governs its acceptable use and configuration.
The applicant has End of Life (EOL) systems. Okay, many
businesses have EOL systems. There’s nothing wrong with companies that have old systems they intend to replace. On the contrary, investment bankers and venture capitalists tend to view companies that actively retire their legacy systems as forward thinkers and innovators. EOL security issues come about when a company doesn’t have a schedule for retiring EOLs, or that the EOLs use older, more threat-vulnerable technologies, or both.
The applicant network security controls are too “low” of a maturity level to process credit card information for many customers. Aside from its soph-
omoric wording, this reason for decline provides the strongest indication of the insurer’s misunderstanding of even the most fundamental cyber security concepts. First, the HHS Cybersecurity Maturity Model has levels ranging from “initial” to “optimize.” Low is not one of
The applicant allows their employees to bring and use their personal computer to work (BYOD). BYOD
has become a widely accepted business practice as companies like IBM, Citrix, and SAP have all built products around using and securing BYOD. However, like other business enablers, BYOD is a security weakness only in the absence of a cyber security policy that
50 | INSURANCE JOURNAL | NOVEMBER 1, 2021
them. Second, holding PII falls under data security, not network security. Third and most egregious, this finding implies that the applicant “processes” payment card data when, in fact, it uses a third party like Stripe for this purpose. At no point in this process is payment card information captured by Stripe stored or processed by the applicant. Even if it could somehow find a way to capture this information, it would be useless as it was already encrypted at the point of sale.
The applicant uses a third-party cloud service provider. While
it may be true that companies don’t have a traditional boundary network nowadays, they most definitely have a virtual network. VPN technology has enabled networks to grow beyond conventional boundaries and into homes, third-party service providers, and customers. But be careful. While AWS, Microsoft or Google may be handling important “stuff,” they are not securing it and cannot be relied upon to do so out of the box. AWS offers only rudimentary physical security and failover capabilities as part
of its Shared Responsibility Model. Everything else falls square upon the applicant. The challenge here is two-fold. Insurers make underwriting decisions based on technologies they don’t fully understand, while applicants don’t fully understand cybersecurity frameworks. Therefore, applicants cannot apply them to their IT infrastructures. The solution would be a method in which applicants can prove to insurers that their cybersecurity posture meets the security control requirements of one or more widely accepted standards. This requires that the applicant engage a qualified, unbiased third party to perform a detailed review of their cybersecurity posture against frameworks like the NIST 800171 - “Protecting Unclassified Information in Nonfederal Information Systems and Organizations.” After the examination, the third party renders a security “attestation” report to the applicant that interested parties like regulators, banks, and insurers review and then make better, more accurate, and more objective underwriting decisions. Cybersecurity applicants are likely to face more, not less, pressure from third parties to prove they adhere to cybersecurity practices, rendering ongoing cybersecurity and cybersecurity attestation services critical parts of their businesses. Sfoglia Ph.D. is the executive vice president and co-founder of Insurun. He can be contacted at Pete@insurun.com. INSURANCEJOURNAL.COM
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