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Opening Note
Ergonomic Hazards
The federal Occupational Safety and Health Administration (OSHA) must do more to address ergonomic hazards at warehouses and delivery companies, where the number of injured workers in the growing sector are on the rise, according to a new report.
The Government Accountability Office (GAO) conducted a report on workplace safety in e-commerce workhouses and last-mile delivery companies. The office reviewed the types and causes of injuries and how OSHA identifies and addresses ergonomic hazards in these workplaces.
To quickly fill orders, e-commerce warehouses and delivery companies use technology to increase productivity and monitor worker performance. Questions have been raised about whether this use of technology, along with performance expectations, increases the risk of injuries.
The GAO was asked to review how technology affects worker safety at e-commerce warehouses and last-mile delivery companies. The office reviewed federal laws, regulations and guidance, data from the Bureau of Labor Statistics from 2018 through 2022 on injuries and OSHA inspection data. The office also interviewed headquarters officials and staff at six area offices, and it conducted non-generalizable surveys of workers and interviewed 15 stakeholder groups and five employers.
The results: Three major hazards were found to be the cause of most of the injuries and illnesses experienced, including falls, slips and trips; objects or equipment; and overexertion. Overexertion was found to be the most frequent cause of injury, with nearly 60,000 estimated serious injury cases for last-mile delivery, and more than 60,000 for general warehousing respectively.
The transportation and warehousing sector had the highest serious injury and illness rate of all 19 sectors in 2022. OSHA cited last-mile delivery and warehouse employers for over 2,500 workplace violations between the fiscal years of 2018-2023. Eleven of these citations were related to ergonomic hazards, the report shows.
The GAO report states that efforts by OSHA to address ergonomic hazards in warehouses and last mile-delivery are limited due to problems such as outdated guidelines and insufficient training.
‘The transportation and warehousing sector had the highest serious injury and illness rate of all 19 sectors in 2022.’
GAO recommendations included having better data when musculoskeletal disorders occurred, more training on how to assess ergonomic hazards, a review and changes to OSHA’s internal and publicly available guidance that compliance officers and employers use to identify, assess and address ergonomic hazards, among other recommendations.
To read the full report, and other recommendations, visit: https://www.gao.gov/products/ gao-24-106413
Andrea Wells V.P. of Content
Chairman of the Board Mark Wells | mwells@wellsmedia.com
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News & Markets
Natural Disaster Losses Below Average Through Q3, Despite Higher Frequency: Report
Although 2024 has seen significant global natural catastrophe activity, economic costs were slightly below average through the third quarter, according to Gallagher Re’s latest Nat Cat report.
The total economic loss from natural perils in the first three quarters of 2024 was at least US$280 billion, lower than the recent 10-year Q1-Q3 average of US$309 billion, said the report titled Gallagher Re Natural Catastrophe and Climate Report: Q3 2024.
The private insurance market and public insurance entities covered at least $108 billion of these losses, driven by a higher frequency of low to mid-size events, particularly in regions with higher insurance coverage.
Non-peak perils are driving the bulk of global insured losses through Q3 as the annual total tops $100 billion for the seventh time since 2017, the report said.
“The above average insured losses con-
tinued to be driven by a higher frequency of low/mid-size events (losses at US$2 billion or lower), especially in parts of the world with higher insurance coverage,” the report said.
Weather and climate-related disasters accounted for most insured losses, with the U.S. bearing more than 71% of the
year’s insured losses through September, surpassing the region’s decadal average. When focusing solely on weather and climate-related disaster costs (excluding earthquakes, volcanoes, and other non-atmospheric events), the economic cost was at least $264 billion, prior to earcontinued on page 12
Former Triple-I Exec Says He Was Fired After Testifying in Bullying Case Against CEO
By Chad Hemenway
Aformer
employee
of the Insurance Information Institute is suing his former boss and the organization’s owners on allegations of discrimination and retaliation.
Michael Barry, who worked at Triple-I for more than 17 years and was a senior vice president, said in a lawsuit filed in the Supreme Court for the State of New York that Sean Kevelighan, chief executive of Triple-I, fired Barry after he tried to protect a coworker being bullied and harassed by Kevelighan.
Barry, former chief communications officer, is suing for past and future wages as well as compensatory and punitive damages. The lawsuit names Kevelighan and Triple-I parent The Institutes as defendants.
According to the lawsuit, Barry in 2023 testified during an internal investigation against Kevelighan regarding a “heated and abusive verbal exchange” with a gay employee in June 2023 during which Kevelighan allegedly used homophobic slurs and harassed the employee. The suit said The Institutes hired an attorney to investigate Kevelighan’s “behavior during
the exchange and on other occasions.”
After his testimony, Barry said, he was given a substandard performance rating by Kevelighan that prevented Barry from collecting an annual bonus for the first time during his employment with Triple-I. Barry was fired March 6, along with another employee who also testified against the CEO, according to the suit. Bonuses were announced on March 7.
The Institutes is a nonprofit whose mission is to educate risk management and insurance professionals. Its brands include Triple-I, CLM, Risk & Insurance, Insurance Accounting & Systems Association, Insurance Thought Leadership, and Insurance Research Council. The Institutes did not respond to requests for comment.
Sean Kevelighan
10 MILLION
The approximate number of pounds of meat and poultry products made at an Oklahoma plant being recalled because they may be contaminated with listeria bacteria that can cause illness and death. BrucePac of Woodburn, Oregon, recalled the roughly 5,000 tons of ready-to-eat foods after U.S. Agriculture Department officials detected listeria in samples of poultry during routine testing. The recall includes 75 meat and chicken products.
The number of insurance fraud and related charges to which Karen Marie Dondanville, 56, a former insurance broker from Mission Viejo, California, has pleaded guilty, according to the California Department of Insurance. She is accused of collecting premiums from 32 victims over a span of eight years and failing to place insurance coverage. Dondanville was ordered to pay $335,349 in restitution to the victims.
152,180
The number of property insurance claims from Hurricane Milton that had been filed in Florida as of Oct. 14, representing some $1.9 billion in estimated insured losses, according to the Florida Office of Insurance Regulation.
$500,000
The amount in penalties the U.S. Department of Labor’s Occupational Safety and Health Administration investigators proposed after finding life-threatening hazards at a Nebraska grain cooperative, where workers faced risks of fire and explosions due to the company allowing a buildup of combustible dust and failing to maintain effective dust collection systems. OSHA’s opened an investigation in March 2024 in response to a complaint of unsafe working conditions at Legacy Cooperative’s Hemingford grain elevator.
Declarations
NFIP Grace Period
“By extending the grace period for renewing policies, we are giving our policyholders some breathing room and demonstrating that the National Flood Insurance Program stands with them at time of tremendous heartache and difficulty.”
— Said Jeff Jackson, interim senior executive of the NFIP, announcing a grace period for policyholders in states hit by Hurricane Helene who had flood coverage that lapsed before the storm hit. There normally is a 30-day grace period after NFIP policies expire when policyholders can renew and still be covered during the grace period. The agency is extending that until Nov. 26; Helene struck Florida’s Gulf Coast on Sept. 26.
Catastrophe Budgets Strained
“Given that many primary insurers are already close to 2024 catastrophe budgets based on first-half catastrophe losses, we believe the potential losses from Hurricane Milton, combined with other weather-related losses so far, could fully exhaust their 2024 catastrophe budgets. This will affect underwriting margins and earnings but not capitalization.”
— S&P Global Ratings, in a report issued hours before Hurricane Milton made landfall, estimated the catastrophe budgets of 16 rated property/casualty insurers aggregates at about $40 billion, while year-to-date catastrophe losses have already reached $26 billion.
Subsidizing Work?
“If someone who’s working full-time needs food stamps, doesn’t that mean that we as taxpayers are subsidizing the difference between what their employer should be paying them so that they could afford food and what they actually are paying them?”
— Said Joe Sanberg, a wealthy investor, anti-poverty advocate and proponent of California’s Proposition 32, which would raise the state’s current minimum wage of $16 to $17 for the remainder of 2024 for employers with at least 26 employees, increasing to $18 per hour starting in January 2025. The measure’s opponents say it would be hard for businesses to implement, particularly small employers with thin profit margins.
Michigan Concert Deaths
“Live Nation did not have a common-law duty to monitor plaintiffs’ campsite and discover the risk posed by the generator.” — A Michigan appeals court said, ruling that concert promoter Live Nation isn’t responsible for the deaths of three young men who succumbed to carbon monoxide poisoning from a generator while camping at a Michigan music festival in 2021. Victims’ families alleged the small campsites at Faster Horses contributed to hazardous conditions. But the court, in a 2-1 opinion, said blame doesn’t rest with Live Nation, which managed the weekend country music event.
$11K Surprise
“You could imagine our surprise when the state of Texas settles for just that. … I can’t tell anyone what we wouldn’t have settled for as the county, but, you know, my lawyers are pretty damn good and they’re pretty aggressive, and I’m more than confident that $11,000 would not have been sufficient.”
— Harris County Attorney Christian Menefee said about the $11,413 settlement the Texas Commission on Environmental Quality reached with K-Solv, a chemical distribution and maritime services company, over an April 2021 chemical fire that sent more than 165,000 pounds of 43 different pollutants into the atmosphere. The county had estimated a maximum penalty of $1.175 million.
Roundup Trial
“We disagree with the jury’s verdict, as it conflicts with the overwhelming weight of scientific evidence and the consensus of regulatory bodies and their scientific assessments worldwide.”
— Bayer said in a statement after a Pennsylvania jury determined the company must pay $78 million to a Pennsylvania man who said he got cancer from using the company’s Roundup weedkiller. The jury awarded $3 million in compensatory damages and $75 million in punitive damages to plaintiff William Melissen. Bayer had previously won 14 of 20 trials over Roundup.
News & Markets
continued from page 8
ly October’s arrival of Hurricane Milton (in the fourth quarter), which Gallagher Re said is lower than the decadal average of $286 billion.
Most Expensive Event
In Q3, the most expensive individual event was Hurricane Helene, which struck the U.S. in late September and is expected to cost public and private insurers between $10 billion and $15 billion alone.
“The recent landfalls of Milton and Helene in the United States — coupled with the significant third-quarter impacts from catastrophic flooding events in Europe, Asia and Canada — underscore the escalating volatility and intensity of weather and climate events,” commented Steve Bowen, Gallagher Re’s chief science officer.
Additionally, three other Atlantic hurricanes — Beryl, Debby and Francine
— combined to cause approximately US$8 billion in industry losses, Gallagher Re continued. Notably, Debby’s remnant rainfall led to a near multi-billion-dollar flood loss in Montreal, Canada — marking one of the costliest natural catastrophe events on record for the Canadian insurance market.
From Q1 to Q3 2024, weather and climate events accounted for $103 billion, or 95%, of insured natural catastrophe losses, slightly lower than the decadal average of 97%. The U.S. continued to drive a major portion of global insured losses, as the aggregate toll from severe convective storm (SCS) events topped $50 billion for the second consecutive year, the report added. Other regions with higher-than-average insured losses included the rest of North America (primarily Canada) and the Middle East. Elsewhere, industry losses have remained largely manageable.
“After an unexpected lull in Atlantic
hurricane activity during the peak months of August and September, there was an expectation that the remainder of the season might experience an increased level of development,” Bowen said.
Hurricane Milton was the fifth hurricane to make landfall in the U.S. this season, which has seen the second highest number of U.S. landfalls on record.
“It was also the 10th major hurricane (Category 3+) to strike the continental U.S. since 2017 after it went 11 consecutive seasons without one (2006-2016). This remains a peril where a single event can dominate annual industry losses,” Bowen said.
Colorado State University, in partnership with the Gallagher Research Centre, has been examining the increasing trend of hurricane rapid intensification (RI) in the Atlantic Ocean and other global basins, which has been steadily escalating in the past four decades. Earlier this year, their observations highlighted the growing influence of how climate change is enhancing the warming trend in the world’s oceans and driving more extreme behavior with tropical cyclones.
“The reality is that the insurance industry is now having to adjust to the rapidly changing behaviours of natural catastrophe weather events due to a warming climate,” explained Dr. Iain Willis, head of the Gallagher Research Centre. “We’re already seeing the effects of climate change more clearly now, and the insurance industry needs to make the risk modelling of these hazards is keeping pace with their changing frequency and impact.”
Other key takeaways from the report include:
• Near-average losses for the global insurance industry
• Hurricane Helene was the costliest industry event through Q3 2024
• 51-plus billion-dollar economic loss events
• 28-plus billion-dollar insured loss events (19-plus multi-billion events)
• Warmest Q1-Q3 for the world on record dating to 1850
• Major humanitarian toll from flood and drought events.
News & Markets
State Residual Markets See Policy Count Double in 5 Years: AM Best
State-sponsored residual property markets have seen in influx of risks come in since 2018, with some states growing by more than 200%.
According to insurance industry ratings firm AM Best, the policy counts of personal and commercial property Fair
Access to Insurance Requirements (FAIR) Plans overall have nearly doubled since 2018, with most of the growth occurring after 2020.
The underwriting profitability ratios for the primary market have worsened due to weather-related losses, inflationary pressures and increased reinsurance costs, leading many admitted insurers to reconsider their property exposures. The combined ratio for private homeowners insurers nearly reached 111 in 2023. This has driven the rapid increase of risk into the residual market, particularly for personal lines, AM Best said in a recent report.
Driving the overall doubling in policy counts for state-sponsored plans is Georgia, Louisiana, Florida,
California, Washington and North Carolina — the only states that have seen policies go up since 2018. The policy count in the residual markets in Georgia, Louisiana, and Florida shot up more than 200%. Policy counts in many other FAIR Plan states have declined at least 10% since 2018.
“Further storms, such as hurricanes Helene and Milton, that cause widespread destruction will likely dampen the risk appetite of insurers providing homeowners coverage in affected states such as Florida, Georgia, and North Carolina,” AM Best said.
Thirty-three states and the District of Columbia offer some kind of FAIR Plan for homeowners and business that qualify. Each state plan has different eligibility requirements. Seven states — Alabama, Florida, Mississippi, New York, North Carolina, South Carolina and Texas — also have counterpart “Beach and Windstorm Plans” to provide coverage against hurricanes and other severe storms.
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Business Moves
National
Marsh McLennan, McGriff Insurance Services
Marsh McLennan announced an agreement to acquire McGriff Insurance Services for $7.75 billion, funded by cash and debt financing.
U.S. retail broker McGriff is an affiliate of private-equity backed TIH (formerly Truist Insurance Holdings).
After closing, McGriff’s team of 3,500 or so employees, as well as CEO Read Davis, will join Marsh McLennan Agency and operate from existing locations. The transaction is expected to close by the end of the year, pending regulatory approvals.
Charlotte, North Carolina-based McGriff, founded in 1886, specializes in commercial property/casualty — including small business, cyber and management liability — surety, employee benefits, alternative risk transfer programs and personal lines insurance to businesses and individuals in the U.S.
In May, Truist Financial Corporation completed a sale of its remaining stake in TIH, the 10th largest insurance brokerage in the U.S., to an investor group led by private equity firms Stone Point Capital and Clayton, Dubilier & Rice. TIH insurance units now include CRC Insurance Services, Crump Life Insurance Services and AmRisc.
With the sale, TIH announced the formation of a board of directors that included Dan Glaser, former CEO of Marsh McLennan and operating partner at CD&R, as chairman. Richard R. Whitt,
former co-CEO of Markel Group; Julio Portalatin, former CEO of Mercer; and Ross Buchmueller, former CEO of PURE Insurance, serve as independent directors.
WTW, Tranzact, GTCR and Recognize
WTW has agreed to sell its direct-to-consumer insurance distribution business, Tranzact, to the private equity firm GTCR and Recognize, a technology services investment platform.
With the sale of Transact, WTW is exiting the direct-to-consumer sector, according to the companies’ announcement. In a statement, WTW CEO Carl Hess said the transaction sharpens WTW’s strategic focus on its core business-to-business and business-to-business-to-consumer offerings and simplifies its portfolio.
Headquartered in Fort Lee, New Jersey, Tranzact provides direct-to-consumer marketing, sales, servicing and technology capabilities for Medicare health and life insurance plans.
Andy Nelson, president of Tranzact, and the existing management team will continue to lead the business and partner with GTCR and Recognize. Nelson has been a senior executive with Tranzact since 2003 and president since 2016.
The sale is expected to close by the end of 2024, pending regulatory approvals.
East
AssuredPartners, Halstead Insurance Agency
Global insurance broker AssuredPartners has acquired Halstead Insurance Agency,
a Fitchburg, Massachusetts-based agency offering personal and commercial insurance.
The Halstead team will remain under the operational leadership of agency president Anthony P. Trapasso, Jr. and agency vice president, Anthony P. Trapasso III, in Assured Partners’ Northeast Region, which is headed by Lauren Yurick, regional president.
Terms were not disclosed.
The agency was founded in 1966 by Robert L. Halstead Sr. The agency was acquired by his son-in-law, Anthony Trapasso Jr., in 1989. Working alongside his current team of his son, Anthony Trapasso III, his two brothers-in-law, Michael and Kevin Halstead, son-in-law Michael Alfego, and a team of 16 insurance professionals, have all contributed to the growth of the family business.
In addition to its Fitchburg location, the agency has an office in Sterling.
Based in Orlando, Florida, AssuredPartners offers industry-specific insurance coverages. With a team of over 10,000 professionals, it serves clients in offices across North America, England, Ireland, Belgium and Scotland
Midwest
Xceedance, Millennium Information Services
Xceedance acquired Millennium Information Services, a property inspection and data analytics company based in Chicago.
With the acquisition, the Xceedance Americas team adds nearly 200 team members and a nationwide contractor network of more than 1,300 inspectors, strengthening its underwriting support and analytics capabilities for insurers and managing general agents (MGAs).
Xceedance said the acquisition accelerates its expansion in personal lines and provides a foundation to offer inspection and data analytics solutions to commercial carriers and MGAs.
Millennium conducts more than one million residential, commercial, and farm inspections annually and works with more than 80 insurance carriers and MGAs.
Brown & Brown, The Canopy Group
Brown & Brown acquired the assets of The Canopy Group, a multiline insurance agency focusing primarily on personal lines and commercial property/casualty for small businesses.
Based in Le Sueur, Minnesota, The Canopy Group serves over 16,000 customers throughout Minnesota. Paul Borchert and Jeff McDonald will continue to lead The Canopy Group operations from their offices in Minnesota.
Hub International, Associated Insurance Group
Hub International Limited (Hub) acquired the assets of AIG Agency Inc. (d/b/a Associated Insurance Group), located in Maryland Heights, Missouri.
Terms of the transaction were not disclosed.
Associated Insurance Group is an independent insurance agency providing commercial and personal property/ casualty insurance solutions. It is the second agency to join Hub in the St. Louis, Missouri-area over the past year.
South Central
Alera Group, Insurance Underwriters
Alera Group acquired Insurance Underwriters Ltd., a Louisiana-based insurance agency offering risk management and insurance solutions including business insurance, surety bonds, personal insurance and employee benefits.
IUL provides customizable insurance solutions designed to keep businesses competitive and uses their proprietary Risk Aware 365 consultative and diagnostic process to enhance the client risk profile.
IUL has offices in Metairie and Covington, Louisiana.
Bowen, Miclette & Britt Insurance Agency, M Surety Services
Bowen, Miclette & Britt Insurance Agency LLC (BMB) has completed the acquisition of M Surety Services, a provider of contract surety bonds.
BMB said the acquisition further strengthens its position in the surety bond market, following a series of strategic
growth initiatives within this sector.
M Surety Services will maintain its current operations in The Woodlands, Texas, becoming a branch of BMB’s expanding regional footprint.
Hub International, WestStar Bank
Hub International Limited (Hub) and WestStar Bank (WestStar) announced the sale of the assets of El Paso, Texas-based WestStar Insurance Agency Inc. (WestStar Insurance) to Hub.
Terms of the transaction were not disclosed.
WestStar Insurance focuses on business insurance, employee benefits, and personal insurance products to customize protection for their clients. The WestStar Insurance team will join Hub Texas.
Southeast
Highstreet Insurance Partners, Mitchell Agency
Michigan-based Highstreet Insurance Partners acquired the Mitchell Agency, headquartered in Largo, Florida, near St. Petersburg.
The Mitchell Agency and its eight employees will be under the direction of Highstreet’s Gulf Regional President Vin Stazzone.
Mitchell Agency has been in business for more than 70 years, offering business, home and flood insurance products.
Alkeme, Surry Insurance
California-based insurance brokerage
Alkeme has acquired Surry Insurance, one of the oldest insurance agencies in North Carolina.
Surry, with offices in Dobson, North Carolina, was founded some 85 years ago and has specialized in educational and business clients in the region. Yogi Wright and Zach Wright are principals at Surry. Alkeme was founded in 2020 and is now ranked by Insurance Journal as one of the largest agencies/brokerages in the United States.
McGriff, Amity Benefits
Retail insurance brokerage McGriff, headquartered in Charlotte, North
Carolina, announced it has acquired Amity Benefits, an employee benefits brokerage based in Tampa, Florida.
Amity, founded in 2017, has specialized in the auto dealer space. Brian Howard is CEO of Amity. Amity will now operate as part of the South region for McGriff.
Terms of the deal were not disclosed.
West
Inszone, First West Insurance Agency, ISU Francis-Pinney Insurance Services
Inszone Insurance Services acquired First West Insurance Agency in Huntington Beach, California.
Originally established in 1968 as Shearer Insurance, the firm merged in 1979 with First West Insurance Agency.
Owners Phil and Kristen Shearer will remain on board for a short period during the transition before retiring. The First West Insurance Agency team will continue to provide service from Inszone’s Huntington Beach location.
Inszone also has acquired ISU Francis-Pinney Insurance Services Inc. in Roseville, California.
ISU Francis-Pinney Insurance Services evolved through several mergers, including All-Cal Insurance and the John A. Francis Agency.
Sacramento, California-based Inszone is an insurance brokerage firm that provides property/casualty insurance and employee benefits services.
Crest Insurance Group, Alliance Insurance Agency
Crest Insurance Group acquired Alliance Insurance Agency LLC in Colorado.
Crest’s Colorado operations center around its Denver hub, expanding to Longmont and Fort Collins. The Alliance deal adds Arvada to the footprint and adds 20 employees to the Crest organization.
Crest is an insurance brokerage that provides property/casualty and employee benefits insurance products and services nationwide.
Tucson, Arizona-based Crest Insurance Brokerage has offices across Arizona, California, Colorado, Nevada and Wyoming.
People
National
Alera Group President Jim Blue will become the firm’s chief executive officer, effective Jan. 1, 2025.
Blue will succeed Alan Levitz, who will become Alera Group’s executive chairman.
Alera said Blue’s extensive experience in the insurance, benefits and financial services sectors, including his previous role as CEO of Marsh & McLennan Agency New England, positions him as an ideal leader for Alera Group’s next phase of growth.
Alera Group is based in Deerfield, Illinois.
Milwaukee, Wisconsin-based insurance technology provider Zywave named Martin Simoncic chief executive officer and added Christian G. Kasper as chief financial officer.
Simoncic most recently served as president of PROS Holdings, a software-as-aservice (SaaS) solutions company using artificial intelligence.
Kasper has been CFO for six companies, including three cloud-based software companies. He was most recently CFO of EnterpriseDB Corporation, a software platform for managing database analytical and AI workloads.
Zywave is owned by private
equity firms Clearlake Capital Group and Aurora Capital Partners.
The National Association of Professional Insurance Agents (PIA) named Michael Skiados as CEO.
Skiados has more than 20 years of experience running membership, education, marketing and operations for large associations. He most recently served as managing director of membership strategy and engagement with The American Institute of Architects.
PIA, in partnership with its nationwide network of affiliates, provides services, education, advocacy and support for independent insurance agents.
American International Group Inc. (AIG), headquartered in New York City, named Keith Walsh as executive vice president and chief financial officer. Walsh, based in New York, will lead AIG’s global finance organization.
Davis as a senior production underwriter overseeing the Virginia and District of Columbia territory.
Most recently, she was in the role of assistant property/ casualty manager.
Walsh has over 25 years of finance leadership experience, joining AIG from Marsh McLennan, where he served as chief financial officer of Marsh. He previously served as vice president and head of investor relations for Marsh McLennan Companies.
East
The MEMIC Group, based in Portland, Maine, hired Scott
Davis, based in Virginia, joins MEMIC with over two decades of experience in multiline insurance and underwriting. His past roles include account executive officer at Travelers Insurance, senior commercial lines underwriter at FCCI Insurance and executive commercial lines underwriter at Utica National Insurance.
Gregg Monte joined Alliant Insurance Services as executive vice president within its mergers and acquisitions vertical.
Monte, who is based in New York City, has two decades of industry experience. Before joining Alliant, he served as an executive vice president at WTW.
Midwest
JM Wilson, headquartered in Portage, Michigan, promoted several team members in its home office.
Arianna Rozanski was promoted to assistant property/ casualty underwriter.
She joined JM Wilson in 2023 as a property/ casualty technician. Rozanski supports underwriters with new and renewal property/ casualty risks, working with independent insurance agents and company underwriters in Ohio, Pennsylvania, West Virginia, Virginia and the eastern U.S.
Kristin Bolhuis was promoted to property/casualty manager. She works with carrier underwriters and independent insurance agents in Michigan and Texas. She began her career at JM Wilson in 1990 as an assistant life and health underwriter. She left to spend time on the agency side of the industry until 2015, when she returned as a property/casualty underwriter.
Brendan Hagan was promoted to fleet transportation underwriter. He is responsible for underwriting new and renewal fleet transportation risks, working with carrier underwriters and independent insurance agents in all states that JM Wilson writes. Hagan joined JM Wilson in August 2023 as an assistant fleet transportation underwriter.
Alyssa Walsh was promoted to senior property/casualty underwriter. She underwrites new and renewal commercial risks, working with carrier underwriters and independent insurance agents in Michigan and Texas.
Grange Insurance Company named Cheryl McRae Lebens
Jim Blue
Martin Simoncic
Christian Kasper
Michael Skiados
Keith Walsh
Scott Davis
Kristin Bolhuis
Arianna Rozanski
Brendan Hagan
Alyssa Walsh
chief financial officer, effective Jan. 1, 2025, following Terri Brown’s planned retirement at the end of the year.
Brown’s career in the property/casualty insurance industry spans 35 years with eight of them at Grange Insurance.
Lebens has been with Grange for 12 years and has served in several leadership roles within the organization, including president of personal lines for the past three years.
With nearly 30 years of experience in the insurance industry, Lebens has also previously held various finance leadership positions at Nationwide Insurance and Safeco Insurance.
Grange is based in Columbus, Ohio.
South Central
Rokstone, the international speciality (re)insurance MGA and part of the Aventum Group headquartered in Austin, Texas, appointed Ben Baker deputy head of U.S. casualty and Alex Fitzpatrick senior underwriter.
Baker joins from Convex, where he has spent four years as a class underwriter, U.S. casualty. He previously served as an underwriter at Liberty Specialty markets and Novae, following a year’s broking experience with Marsh. Fitzpatrick has over 10 years of experience in U.S. casualty, joining Rokstone from Apollo. Before that, he served as an
underwriter at Novae and Starr.
IMA Financial Group, headquartered in Denver, named Teniqua Davenport as Texas market leader, employee benefits, on its Dallas-Fort Worth and Houston leadership team.
With more than 15 years of leadership experience in benefits administration, financial services and risk management, Davenport manages P&L and owns vendor/partner relationships throughout Texas.
She most recently served as director, employee health benefits and client services with Marsh McLennan, where she got her start as an account executive in 2012.
Marsh McLennan Agency named Matt Stadler, president and CEO of Marsh McLennan Agency’s Southwest region, as president of the firm effective Jan. 1, 2025.
Stadler will be based in Dallas and has 20 years of employee benefit and property/ casualty insurance. He joined MMA in 2015 as executive vice president upon the acquisition of MHBT Inc., and was named president of MMA Texas in 2019 and CEO of the Southwest region in 2023.
Stadler succeeds Bill Jeatran, who will become vice chairman of Marsh McLennan Agency on Jan. 1.
Jeatran joined Marsh
McLennan Agency in 2011 upon the acquisition of RJF Agencies Inc., a Minneapolis, Minnesota-based agency he led for 25 years. He was named president of Marsh McLennan Agency in 2017.
Rea has more than 20 years of experience leading IT organizations in the insurance industry.
Also on Jan.1, Rob Bridges, president of Marsh McLennan Agency’s Southwest region, will become CEO of the Southwest region, succeeding Stadler. He brings more than 25 years of insurance experience to the role having started his career as a technology underwriter at Chubb Insurance before moving to Wortham Insurance. Bridges is based in Austin.
West
Sertis, headquartered in Reno, Nevada, appointed Kurt Meister as senior vice president, distribution partnerships. Meister has more than 36 years of experience in the insurance industry, including underwriting leadership, program management and broker relations. Previous roles include chief sales officer at Distinguished Programs; senior vice president, specialty division business development and marketing director at Distinguished Specialty; vice president, hospitality division P&L leader at National Specialty Underwriters; and senior vice president at Aon.
Aspire General Insurance hired Sam Rea as chief technology officer.
Before joining Aspire, Rea was CTO for the Peak6 InsurTech portfolio of companies, which included an agency franchise business, an MGA, a BPO business for insurance carriers, an SaaS product policy administration platform and a national flood insurance processor.
Aspire is based in Rancho Cucamonga, California.
Venbrook Group LLC, headquartered in Woodland Hills, California, named Christina Oakes executive vice president of the company’s private risk practice division with the opening of a new West Coast office.
Oakes has more than 12 years of insurance industry experience. Most recently, Oakes was a personal risk specialist at USI. In her new role, she will be building out the practice and crafting risk management solutions for the company’s private risk client group of high and ultra-high-net-worth individuals. Oakes is based in Los Angeles.
The Workers’ Compensation Insurance Rating Bureau of California (WCIRB) has promoted Tony Milano to executive vice president and chief actuary.
Milano began his career with the WCIRB in 2005 as an actuarial researcher and was promoted to vice president of actuarial services in 2012.
Ben Baker
Alex Fitzpatrick
Teniqua Davenport
Matt Stadler
Bill Jeatran
Rob Bridges
Sam Rea
Closer Look: Commerical Lines Leaders
Commercial Lines Leaders
Top 50 Commercial Lines Agencies
About the Commercial Lines Leaders: The 2024 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 2023 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.
Ranked by Total 2023 Commercial Lines P/C Revenue
1
2
4
5
6
7
8 EPIC Insurance Brokers & Consultants
9 NFP
10 Risk Strategies Co.
11 Alera Group Inc.
12 IMA
13 Higginbotham
14 PCF Insurance Services
15
16 Hilb Group
17 World Insurance Associates LLC
$1,338,436,056 $10,820,000,000
$1,040,635,914 $11,931,452,553 $2 ,731,289,283 16,567 Grand Rapids, Michigan
$758,407,000 $5 ,250,000,000 $854,622,000 3, 297 San Francisco, California
$754,747,181 $4 ,935,000,000 $860,795,882 7,829 New York, New York
18 Insurance Office of America Inc. $262 ,114,766 $2 ,556,397,518 $279,740,453 1,536 Longwood, Florida
19
$211,325,000 $2 ,059,713,000
34
35
36
37
38
39
40
42
43
44
46
48
50
Anaheim, California
Ladera Ranch, California
Spotlight: Claims
Severity of Ransomware Attacks Rose 68% in First Half of 2024, Report Shows
Ransomware claims severity spiked by 68% to an average loss of $353,000, according to a new report by a cyber insurance provider.
Coalition published its 2024 Cyber Claims Report: Mid-Year Update, which details emerging cyber trends and their impact on policyholders through the first half of 2024.
The frequency of using ransomware as an attack strategy decreased in the half, but there was a spike in the severity and demand amounts, especially those associated with the Play and BlackSuit ransom variants, the report shows.
Funds transfer fraud (FTF) saw a notable decrease in frequency (2%) and severity (15%), according to the report.
The report also reflected an increase in material cyber risk aggregation in the first half of the year. Attacks on Change Healthcare and CDK Global resulted in widespread third-party business disruption to larger small-to-midsize businesses and mid-market companies.
Nearly 23% of healthcare businesses with more than $100 million in revenue were impacted by the Change Healthcare attack, as were 11% of those organizations with between $25 million and $100 million in revenue. Separately, nearly 75% of auto dealers with more than $100 million in revenue were impacted by the CDK Global ransomware event, the report notes.
Findings in the report include:
• Ransomware drove a 14% increase in overall claims severity, with an average loss amount of $353,000.
• Business email compromise (BEC) was the leading cyber event. BEC frequency increased 4% and accounted for nearly one-third of all claims
• FTF continued a steady decline. After nationwide fraud losses reached $10 billion in 2023, FTF initial severity decreased
15% to an average loss of $218,000.
• Exposed login panels tripled a business’ likelihood of attack. Businesses using web-accessible applications were 3.1 times more likely to experience a claim.
• Claims severity among businesses with $100 million and more in revenue rose
140% in the period to a historic high, with an average loss amount of $307,000, the report shows. Businesses with $25 million to $100 million in revenue increased 23% to an average loss of $129,000, while businesses with less than $25 million in revenue fell 4% to an average of $73,000.
Special Report: Best Agency to Work For
USI Insurance Services Valhalla, New York
USI a ‘Well-Oiled Machine’ in Year 30
By Allen Laman
Athirtieth birthday marks a key milestone in a person’s life.
It’s the age when crashing on your friend’s couch is no longer an acceptable sleeping arrangement, and when every bend of the back becomes accompanied by a sigh or a grunt.
It’s also a time to take stock of the past and look to the future.
When USI Insurance Services opened in 1994, the Valhalla, New Yorkbased brokerage firm had $6.5 million in revenue and 40 associates.
USI (which stands for Understand, Service and Innovate) now brings in more than $2.7 billion in revenue and employs over 10,000 associates across approximately 200 offices nationwide.
Appreciation from employees responding to Insurance Journal’s 2024 Best Agencies to Work For survey has earned USI the Bronze award for the East region this year. In the survey, many USI team members praised the firm’s professional and collaborative culture, as well as the brokerage’s focus on growth — both as a firm and for its employees.
“USI is just a very well-oiled machine that keeps moving in a positive direction,” an employee wrote. “Day in and day out, people reach out to me on wanting to get hired at USI.”
When asked why she
believes USI is a great place to work, Kim Van Orman, the insurance brokerage’s SVP and chief people officer, said USI attracts and retains “talented and passionate individuals,” adding that the firm has “a unique culture that is focused on personal and professional development, employee recognition, diversity, corporate social responsibility, and success.”
She later added, “We create this environment through thoughtful employee programming, and we do it because we believe our industry-leading workplace culture provides long-term success for both employees and the clients we serve.”
Van Orman explained that two areas that set USI apart from other firms are the brokerage’s “continual investment in innovation and unique people-focused programs.”
Together, she said, the programs “have created an unparalleled employee experience and industry-leading culture that prioritizes our team members and their families in and out of the workplace.”
Employees value the effort. In their survey responses, two team members said that the brokerage’s culture is “second to none,” and another said that USI “will be my last employer.”
Many more heaped praises on a workplace atmosphere that they described as supportive and cohesive.
“Management within the organization helps to remove barriers and find ways to achieve success,” a team member said. “The organization is driven by having the entire team perform at a high level. It is truly a team atmosphere with everyone helping each other to benefit the organization.”
Many employees also highlighted “USI Gives Back,” a program in which each of the firm’s offices participates in local community service events every year. A team member said the initiative “isn’t just a publicity ploy,” and added that they are “proud to be with a company that cares.”
Employees also pointed to the firm’s Summit Awards program, which acknowledges employees who go above and beyond.
“The recognition comes with a generous reward, which not only motivates me but also inspires all of us to strive for excellence,” a survey respondent said. “Knowing that hard work and dedication are celebrated pushes me to give my best every day, and it’s
incredibly rewarding to be part of an organization that values its employees in this way.”
USI may be celebrating its 30th anniversary this year, but the firm has a more than 150-year legacy of industry experience and expertise gained through its agency partnerships — some of which have been serving their local communities since the 1860s, according to Van Orman.
“I am incredibly grateful to our exceptional team of professionals throughout the country for their dedication to USI,” Van Orman said. “Our people are at the heart of our organization, and the fact that they nominated USI for this award is a strong testament to our firm-wide commitment to creating a different and better employee experience here at USI.”
A USI team celebrates its USI Gives Back community service campaign.
USI SVP & Chief People Officer Kim Van Orton
Special Report: Best Agency to Work For
Midwest
Employees’ Needs Are Heard and Valued At The Bulow Group
By Jahna Jacobson
At The Bulow Group, work-life balance is a core value that benefits employees on both sides.
“We are super flexible as an agency,” said one Bulow Group employee who nominated their agency as one of the best in Insurance Journal’s 2024 Best Agencies to Work For survey. “There is a forward-thinking culture that encourages us all to work hard at improving ourselves as we all grow together as a company.”
Culture is everything within the Tinley Park, Illinois-based agency, agreed another nominator. “(The company) strives to provide employees with the work/life balance that everyone hopes for,” they said. “The owners work to keep personal relationships with all staff. To understand their wants and needs, and you see them work harder to try and make sure everyone gets what they want.”
And knowing what’s valuable to employees is as simple as listening to what they have to say, said The Bulow Group CEO Mike Bulow.
“We just really believe that everybody is a valued team member, and communication is key, whether you are a manager, partner, head of client service or CFO,” Bulow said.
That employees’ needs are heard, valued and met is one of the many reasons why the agency has been named Insurance Journal’s Midwest 2024 Bronze award winner. In response to employee
needs and the agency’s rapid growth, the team is preparing to move into its new state-ofthe-art offices, which include a full-service gym, a commercial kitchen and many high-tech upgrades. Other services, such as a monthly visit from a barber, are also slated to simplify work-life balance for employees.
“Instead of downsizing and feeling more alone and remote, we’re welcoming everybody back,” Bulow said. “We’ve built an environment that is so awesome people want to come back.”
The agency, which celebrated 11 years in business
in October, holds weekly meetings open for employee conversations and suggestions and an annual meeting that gives everyone a voice on all aspects of the business.
“Some of our best ideas have come out of those meetings,” Bulow said.
One such idea was the company’s new unlimited PTO program, which gives employees more flexibility in their downtime and work hours.
The new PTO program “shows they trust their employees to work hard and enjoy time off when they have it,” one employee said. “It makes employees not have to stress in the back of their mind as to what the year might bring for them.”
In addition to the new PTO program and cutting-edge tech, nominating employees cited little perks that make a difference, such as free weekly lunches and a well-stocked breakroom. The workplace support and benefits drive employees to do their best and
exceed their goals.
“I would say the most impactful thing about The Bulow Group is the support from our owners,” they added. “They will be ‘in the trenches’ with us when things are difficult, which I think is very rare to get the owner of your company battling to succeed with you, hand in hand.”
Across-the-board open communication means problems are addressed quickly, and improvements can be swiftly implemented.
“Our agency is fast-paced and growing constantly,” they added. “Ideas are listened to and a lot of ideas of the employees become the reality. We don’t have red tape that stops us from making changes, especially ones that benefit everyone.”
And it’s only getting better, employees agreed.
“Each and every year, ownership makes it a point to listen to the employees on how we can get better and make everyone’s lives better,” said one employee who has been at the company for over a decade. “Employee requests are implemented each year, and the perks of working at Bulow Group improve EVERY year. I genuinely enjoy coming to work every day and feel like it’s a second home.”
The Bulow Group Tinley Park, Illinois
The Bulow Group at Happy Times.
Mike Bulow
Special Report: Best Agency to Work For
South Central
Medlin and Associates Inc. Plano, Texas
SMA Gives Employees Freedom to Succeed
By Jahna Jacobson
Scarbrough, Medlin and Associates Inc. has built its success on a foundation of trust.
“I never needed to be pushed or made to work,” said Rod Medlin, Scarbrough, Medlin & Associates Inc. (SMA) CEO. “My theory is to find people who are self-starters and work because they like to and want to. ... Over time, that management style has brought unique and different people I have known and grown to trust,” he said.
The freedom to succeed on their own terms, knowing the team has their back, makes SMA, headquartered in Plano, Texas, Insurance Journal’s South Central region Bronze winner in the 2024 Best Agencies to Work For survey.
“I like that you are free to do your job without micromanaging,” said one nominating employee. “I like the open-door policy to upper management, and upper management is very approachable if you have questions or concerns.”
Rod Medlin leads that charge, employees say.
“Our fearless leader has a great sense of humor, is kind and interested in helping the employees to be successful,” said a survey respondent. “We have the right tools to get the job done and to help grow our book.”
That includes keeping up with all the changes in the rapidly evolving industry, Rod Medlin said. “I never sold an account over $250,000 without
sitting across the table from a client, and now agents are selling millions over email,” he said.
While personalized contact and the techniques that made him successful are still important, the next generation has a different approach.
Staying excited about the changing industry is part of the agency’s longevity. “I still remember carbon paper and telex machine,” Rod Medlin said, laughing. “For me, it
has taken some bright young people to make me turn loose, and I have, and it has worked, and the autonomy makes all the people happy.”
Going the extra mile is one timeless attribute Rod Medlin brings to the table every day, said another employee. “Our CEO Rod Medlin has, on more than one occasion, woken up at 5 a.m. on a Saturday morning to drive three hours and simply support his producer in a 30-minute meeting that had very little agency income.”
Several nominators shared the sentiment.
“The management and experienced employees will go far beyond the call of duty for their fellow workers and will do anything to help them personally succeed,” one said.
Account Executive Alex Medlin, Rod Medlin’s son, grew up in the office and has seen “a lot of different generations of employees while crawling under my dad’s desk,” he laughed.
“Everyone is their own small business within the small business, and we allow them to run theirs as they see fit,” Alex
Medlin said. “They have autonomy over their small business, and we’re here for them, and we all have a common goal.”
Alex said the agency is like a baseball team, with his father as the manager. “You are in the batter’s box alone to swing, but a supporting cast is also standing behind them.”
It’s a delicate balance to strike between giving employees the independence they need while proactively offering enough support.
“This company gives you the freedom to get your work done however you please, as long as work is getting completed, of course,” said another nominating employee. “Whether you want to work from home, work in the office, or even rent an RV and travel while getting your job done (we have one employee who actually does that!).”
Those efforts have earned the trust and loyalty of the next generation of employees.
“I will never leave Scarbrough Medlin,” said one employee in their survey response. “I have been in the industry for 20 years and this place and these owners are hands down the best people to work for,” they said. “I guess the best way to say it is that I never feel undervalued, and that means a lot in day-to-day interactions.”
Scarbrough,
The SMA team is there for clients and each other.
Alex Medlin
Rod Medlin
Special Report: Best Agency to Work For
Southeast
Brightway Insurance Ponte Vedra Beach, Florida
Employees Enjoy Many Paths for Growth, Advancement at Brightway
By William Rabb
The people at Brightway Insurance, based in Ponte Vedra Beach, Florida, near Jacksonville, seem to have taken employee satisfaction and performance to a whole new level.
Each employee is asked to make sure, before they leave the office each day, that they have made someone smile, laugh or feel valued.
“Our goal is to make over 3,000 positive impacts in 2024, and if we hit that target, the entire team and their spouses are going on a cruise in 2025,” explained Chris Huebener, equity partner at the 15-employee agency.
The incentives have paid off. Based on a survey of team members and their comments, Brightway has been named Insurance Journal’s 2024 Best Agencies to Work For Bronze award winner for the Southeast region.
“The company fosters a supportive and collaborative environment where everyone feels valued and empowered,” commented one employee on the IJ survey. “There’s a strong emphasis on professional development, with opportunities for training, mentorship, and career advancement.”
With regard to the agency being nominated by its employees for the award, Huebener said: “I’m incredibly honored, especially since this recognition comes directly
from the team. Our goal is to create an environment where no one ever wants to leave.”
It all starts before the team members are hired. Each applicant must go through a 21-step hiring process. The word is out, and each open position receives more than 300 applicants, allowing Brightway to maintain its team of top-notch producers and other employees.
The agency, founded in 2006 and one of many Brightway franchises in Florida, also has developed eight pathways for growth, “ensuring our team members are rewarded for high performance and never feel capped in their earning potential,” Huebener explained.
‘Our goal is to create an environment where no one ever wants to leave.’
The group also helps employees develop “life plans” to focus on personal dreams and goals before they even discuss business with the leadership. The agency also created a position known as “executive of belonging,” whose role is to surprise the team with fun initiatives that foster a sense of belonging, Huebener said. And benefits packages have been improved every year.
The employee focus at Brightway may have something to do with its origins — in the restaurant business, no less. Agency owner Billy Wagner was a restaurant manager for several years but left for a career in insurance. Huebener also worked at the restaurant and when it closed down a few years later, he joined Wagner as business partner at Brightway.
That was almost two decades ago. The agency has grown steadily since then, not just through employee satisfaction, but also with an emphasis
on meeting clients’ needs, Huebener explained. Most team members are trained for 120 days so that they become experts in educating, adding value and building trust with clients, he said.
“We validate this through monthly secret shopping of our own offices,” Huebener noted.
The good vibes have proven to be important in what has to be one of the most challenging times in the Florida property insurance market – with relentless hurricanes, rate increases from carriers and shrinking capacity from some major insurers.
“Carrier capacity is a big challenge right now, but we’ve responded by strengthening our relationships with carriers,” Huebener noted. “We’ve been proactive, going on road shows to meet with them and asking how we can help them achieve their goals. This approach has helped us secure more capacity and options for our clients.”
His advice to other agencies’ principals: Listen intently and respond creatively to your team. Always seek ways to show your team that they’re valued.
Brightway staff members with Jacksonville in the background.
Special Report: Best Agency to Work For
West
Heritage Insurance Agency Chico,
California
It’s a Family Affair at Heritage Insurance Agency
By Don Jergler
It’s a family affair at Heritage Insurance Agency — and not just because a husbandand-wife team run the firm.
Steve Mora, the principal and CEO, who runs the Chico, California-based agency along with his wife Kelly, principal and chief marketing officer, have created an atmosphere in which employes, even those new to the firm, say they feel they’re part of a family.
That atmosphere can include everything from hanging out together to taking time to learn more about one another to even having leaders step in to make tough phone calls to customers on behalf on an employee who’s having a low-energy day.
Being part of a family was a major theme from employees who nominated the firm for Insurance Journal’s 2024 Best Agencies to Work For award. Heritage took home Best Agency West – Bronze.
“As cliche as this sounds, Heritage really feels like a second home and not in the ‘I spend all my free time here way,’” wrote one employee on a nominating form for the award. “Steve and Kelly truly care about us as if we were a family member, they continue to hire people with great personalities and expansive knowledge. The friendships that Heritage has brought me will be lifelong. Steve and Kelly are consistently open to helping us grow personally and professionally, providing us with plenty of learning opportunities.”
Another employee wrote that being at Heritage feels like “finding my forever job!”
“I feel like my voice is heard, my ideas are listened to, I feel appreciated for my hard work and I am compensated for it too! I don't have a lot of family I am close to and honestly this place and the people I work for feel like home and family!
I don't know how they do so much for us and still make a profit, but they manage to do so very well. Working hard feels better when it's appreciat-
ed, and I think that is the secret to their success!” the employee wrote.
The firm is small but growing, with 25 employees, an annual revenue of $3 million and specialties that include farm and agribusiness.
The family atmosphere they’ve fostered is part of the leadership’s ability to harness the diverse strengths that people bring to the workplace, according to Kelly Mora. “We believe in leveraging each member’s unique capabilities to foster a collaborative and dynamic approach to leadership,” she said.
Steve Mora said managers and employees spend a lot of time getting to know each other, how each person likes to work, how they think, how they learn best (flowcharts or shadowing), how they prefer to communicate. “It’s really meeting our team on their level,” he said. “It socially allows us to work much better together. We try to create intentional time and intentional space for doing more than just the technical, so we have a high level or trust with one another.”
That includes group lunches, volunteering at civic events
in the community and a coed softball team. “You spend enough time together and you develop this level of respect, and it does feel like a family,” he said.
It also includes the rough days, such as when a manager may need to take over a difficult part of an employee’s job.
Steve said he has stepped in and made difficult calls to customers getting canceled or rate hikes on behalf of employees who may have had other difficult duties that day.
“We’re trying to be very mindful of the drain that that’s putting on them emotionally,” he said.
That mindset was echoed in Kelly’s advice to other firms that want to build a family environment and happy employees.
“Invest in your people. Build a culture that fosters growth, celebrates achievements, and supports one another during challenges,” she said.
“Encourage open communication and provide opportunities for professional development,” Kelly added. “Recognize and celebrate your team’s achievements, and always be open to feedback — it’s crucial to understand the evolving needs of your team,” she said.
This group photo was taken at Heritage Insurance Agency's recent 10-year anniversary dinner party.
Steve Mora, principal, and Kelly Mora, principal and CMO, of Heritage Insurance Agency.
News & Markets
California’s Cost of Treating Injured Workers 10% Below Other States in Study
Workers’ compensation medical payments per claim in California were 10% below the median state of a 17-state study sample for claims with experience through March 2023, a study from the Workers Compensation Research Institute shows.
The WCRI study, CompScope Medical Benchmarks for California, 25th Edition, examined medical payments, prices and utilization in California compared with 16 other states. The report analyzed claims data through March 2023, and gives insights into the pandemic’s impact
on non-COVID-19 workers’ comp claims during its first three years. The comparison of 17 states accounts for 60% of all workers’ comp benefits paid nationwide.
California’s ranking on medical payments per all paid claims reflects offsetting factors, according to Sebastian Negrusa, WCRI’s vice president of research.
California had a larger share of claims in which workers with injuries missed more than seven days of work than the average state, but medical payments for those claims are some of the lowest of the states studied, he said.
The report also examines how these metrics have changed over time, including:
California saw little change in payments per claim for most key professional services from 2017 to 2022, with the exception of recent growth in office visits payments.
Prices paid for professional services rose from 2020 to 2022, but that growth was largely offset by utilization decreases.
The decrease in utilization of medical services primarily included major surgery, facility services and inpatient care.
The WCRI is a not-for-profit research organization based in Waltham, Massachusetts.
Man Banned From California’s Workers’ Comp System Charged for Billing Nearly $100M
Aman banned for life from the California workers’ compensation system after being twice convicted of fraud was charged with billing nearly $100 million as part of an extensive workers’ comp fraud scheme.
David Fish was charged along with a San Diego-based neurosurgeon and two other co-conspirators in connection with the scheme.
The charges follow a three-year investigation by the Orange County District Attorney’s Office into Fish, who is accused of continuing to control clinics and providers who would see patients, refer them to specific providers to receive illegal referral payments and then unlawfully bill workers’ comp insurers.
Fish, 55 of Laguna Niguel, Martin Brill, 78 of Los Angeles, and Robert Lee, 61 of Rancho Mirage, formed Southern California Injured Workers, a management
company that offered medical management services.
The codefendants, along with San Diego neurosurgeon Dr. Vrijesh Tantuwaya, also created a medical group called Injured Workers Medical Group, the main client for SCIW. Dr. Tantuwaya was named the owner and CEO of the medical professional corporation.
Using the medical group, SCIW reportedly controlled patient referrals to a limited network of providers that contracted with SCIW to pay for the patient referrals. In three years, the defendants reportedly billed nearly $100 million dollars to numerous workers’ comp carriers, and were illegally paid referral fees from providers of services
such as diagnostic testing and compound pharmacies.
The four were charged with 13 separate felony counts, which include violations of Labor Code 3215 (referral of clients for compensation), Penal Code 182(a) (1) (conspiracy to commit a crime), Penal Code 549 (false and fraudulent claim) and Penal Code 550 (b)(3) (insurance fraud). If convicted, Fish faces maximum sentence of 18 years and four months in prison. Brill faces maximum of 12 years and four months in prison, Tantuwaya faces 13 years, four months in state prison and Lee faces 12 years and four months in prison.
Deputy District Attorney Kelly Albright of the Insurance Fraud Unit is prosecuting the case.
BUILD BETTER COVERAGE WITH COMPREHENSIVE CONSTRUCTION RISKS
News & Markets
California City Part of Community-Based Flood Insurance Initiative
The City of Isleton will take part in a community-based flood insurance initiative for as part of a two-year $200,000 grant to provide payouts to residents if floodwaters reach a pre-determined depth.
The pilot project is headed by the California Department of Insurance, funded by the California Department of Water Resources and implemented by the City of Isleton’s Delta Geologic Hazard Abatement District.
Isleton, a small city in the SacramentoSan Joaquin Delta, is prone to flooding and lies within a 100-year floodplain.
“We have seen the devastation that climate-induced flooding can have in California in such places like Pajaro, Tulare Lake, and most recently in San Diego County,” California Insurance Commissioner Ricardo Lara stated. “We need to help our communities be more resilient to climate change and protect them from the devastating effects of flooding.”
DWR administers portions of the National Flood Insurance Program on behalf of the Federal Emergency Management Agency, which enables property owners in participating communities to purchase insurance as protection against flood losses in exchange for state and community floodplain management regulations that reduce future flood damages.
DWR has dedicated $100,000 in this year’s budget and plans to deliver another $100,000 next year for the pilot program.
The Delta GHAD is the first special district in the state to design a community-based flood parametric insurance product.
This community-based insurance product would be separate from and augment existing insurance coverage that Isleton residents may have through the NFIP.
The initiative is intended to provide a small but meaningful insurance payout residents could use flexibly to survive the aftermath of a major flood. It could be used to address structural damage to property, or it could cover costs associated with evacuation such as lodging, food, and transportation, or even business or job interruption, according to the CDI.
My New Markets
Community Association Directors and Officers Insurance
Market Detail: Community Association Insurance Solutions LLC offers a Community Association Directors and Officers with Employment Liability Insurance Program (D&O with EPLI) for both the associations you insure and their community management company. The products are available for nonprofit habitational community associations including homeowners’ associations (HOAs), townhomes, residential/ commercial condominiums (condos), and residential/commercial planned unit developments (PUDs). Common classes: residential condo and townhome associations, homeowner associations, retail associations, office/industrial parks, property owner associations, cooperatives, mobile home parks (not in California); planned unit developments. Restricted classes (ineligible): rental associations, condo hotels, timeshares. D&O products details: Admitted in all states offered; limits up to $5 million; defense costs coverage for breach of contract claims; coverage for non-monetary claims; automatic coverage for the property management company; defense outside the limit available in most states; full prior acts coverage; developer can be on board (can’t be in control).
Available Limits: Up to $5 million. Carrier: AM Best A++ and AM Best A+ rated national carriers.
States: Available in most states plus District of Columbia. Not available in Nevada.
Contact: Gary Deck; gary@caislive.com; 916-212-8310.
Renters Legal Liability
Market Detail: Renters Legal Liability LLC provides a property damage liability policy, RLL, that is sold directly through insurance agents, to the owner/ management company. Renters Legal Liability provides property management services to the apartment industry, student housing, senior housing, assisted living, military housing, condominiums, co-ops and HOAs. The Property Damage Liability Waiver (PDLW) is a risk-transfer
program that allows multi-family property providers to manage risk and assist in mitigating losses caused by residents’ negligent acts. The PDLW waives five perils for accidental, resident-caused fire, smoke, explosion, water discharge and sewer backup. Services include online monitoring of units with the PDLW or HO-4/renters insurance policies, customer support and training. Proprietary software, database, monitoring and reporting systems manage the process. The PDLW is able to interface with most property management software for a seamless, simple operational daily exchange of information on the community and corporate level. Owners/managers are able to dramatically control their property/ casualty loss ratios. Many current clients have realized 5% - 15% savings on annual premiums from property P/C carriers. The PDLW is available throughout the United States.
Available Limits: Not disclosed. Carrier: Hudson Specialty Insurance Company; non-admitted; rated A+ XV. States: Available in all states plus District of Columbia.
Contact: Paul J. Kaliades; paul@rllinsure. com; 201-345-5272.
HO- 6 Condo Unit Owners Policy
Market Detail: Coastal Insurance
Underwriters is offering a new HO-6 Condominium Unit Owners Policy. Coastal Insurance Underwriters is a Florida-based managing general underwriter that specializes in service, ease of doing business through automation and finding unique solutions for challenging markets. Highlights: Real-time fully automated quoting and policy issuance and pay online; A rated carrier-Lloyds of London; total insurable value (TIV) available up to $500,000; occupants may be owners, tenants or short-term rentals (2 night minimum); trusts, LLCs and condominium associations available as additional insureds; online quick quote technology; ISO forms; direct bill — no payment fees. Has pen; appointment required.
Available Limits: TIV available up to $500,000.
Carrier: Non-admitted; A rated - Lloyds of London.
States: Available in Alabama, California, Florida, Georgia, Tennessee, Texas. Other states to follow.
Market Detail: Star Mutual RRG offers competitive and stable commercial auto liability rates for transportation companies. Highlights: agency online instant quoting and servicing portal; high deductible options for fleets; federal and state filings. Transportation classes covered: short and long-haul trucking, general freight, dry vans, cargo vans, refrigerated goods, car haulers, flatbed, last mile delivery, owner-operators, small and large fleet. Payment options: direct bill only — credit card, ACH. Discounts available: pay in full, CDL experience, new trucks, qualified safety scores. Retail and wholesale agents are welcome to apply; has pen; appointment required. Available Limits: Auto liability limits up to $1 million.
Carrier: Star Mutual RRG; admitted; rated A (Exceptional) by Demotech Inc. and B+ (Good) by A.M. Best.
States: Available in Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Minnesota, Missouri, Nevada, New Jersey, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming. Contact: Star Mutual RRG; agents@ starrrg.com; 855-569-7827.
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Special Report: Agency E&O
By Andrea Wells
Wtake umbrage if a carrier decides it’s best to forgo trial.
insurer,” according to IRMI’s definition.
hen it comes to agency errors and omissions liability there’s nothing more important than playing it safe. One proven way is ensuring that everything is documented properly. But because there is always the threat of an E&O allegation turning into a large jury verdict, agents need to think about what it means to “play it safe” in managing the risk of going to trial.
“Insurance agents often come into these claims wearing their ‘righteous indignation hat,’ saying, ‘I did nothing wrong, so I will fight it to the end.’ But that can be very counterproductive,” Winans said.
“First, sometimes the agent doesn’t clearly see their own responsibility, and even if they’re right, that may not be the way a jury’s going to see it.”
While social inflation isn’t always a big subject when discussing E&O claims, it’s still there “lurking,” says Elizabeth Whitney, JD, head of professional liability US, senior vice president, Swiss Re Corporate Solutions.
Whitney understands why an agent may not want to settle if they feel they’ve done nothing wrong. “It’s because we are insuring reputations; that is part of what we do,” she said.
“I won’t get into go the details, but we recently had a case that we were round tabling and the underlying facts were horrific,” she said. “Even though we don’t think the agency had any blame in the proper insurance not being placed, we were still really concerned about a claim like that going to a jury.”
That concern and the unknowns of taking a case before a jury are always on the minds of underwriters, she says. “Even in claims that aren’t horrific from a human standpoint, just more of a concern over a financial loss, can be scary because you just don’t know how it’s going to turn out with a jury,” she said.
Whitney said insurers still try E&O cases. “We still win cases,” she added. “We won a case in Florida a couple weeks ago, but we are really thoughtful in what we try and how we try it.”
Whitney noted that different E&O policies read differently on the consent to settle clause. For example, if the carrier recommends a settlement but the agency refuses to consent to the settlement amount, then the agency will be on the hook if a jury verdict results in a higher amount than originally offered in the settlement.
“So I say, ‘Yes, we really should settle this for $1 million,” and you say, ‘No, we go to trial,’ then carrier will be on the hook for that $1 million, but anything beyond that is going to be on the insured,” she explained.
Winans says in American litigation, justice is not always done. “Even if you’re right, it could cost you a lot of money,” he said.
continued on page 30
Why Change in E&O Carriers
Of course, an agent can choose not to give consent to a settlement offer, she added. “But if I’m an agent hearing from my carrier to settle, I have to stop and think, why are they saying that? What have they seen? What do they know that I don’t know?” she said. “And at the end of the day, if you get a $10 million verdict against you, whether you were right or wrong, it’s not going to matter that much next time you try to go get agency E&O insurance.”
Deciding whether to settle is a business decision in a lot of ways, she added.
According to Winans, it’s definitely a business decision for the agency because not only does their E&O policy have a policy limit, but it’s also likely to contain a “hammer clause” forcing the agency to put some “skin in the game.”
Brent Winans, vice president of Clear Advantage Risk Management, who has served as an expert witness in more than 150 insurance agent E&O cases in 21 states, advises agents not to
A coinsurance hammer clause is often found in professional liability policies and calls for “a sharing of defense and indemnity costs (between the insured and the insurer) incurred after the insured refuses to consent to a settlement proposed by the
Risk Management Steps Implemented in Past Three Years
Recent E&O Restrictions, Exclusions or Underwriting
Special Report: Agency E&O
continued from page 29
Agency E&O Claims Trends to Watch
By Andrea Wells
Special relationships, fiduciary duties, the hard market and disasters, are areas of exposure that agencies need to watch over when it comes to agency E&O, the experts say. Here’s why.
Special Relationships
One area that is getting extra attention in agency E&O risk is determining the nature of an agency’s relationship with the client.
“Whether it is easy or difficult for a policyholder’s attorney to establish an agent/ insured special relationship in
No. 1 Reason Agencies
your state, the key point is that, in all but four states, agents have a greater responsibility to special-relationship clients than to others. So it is important for agents to try to determine who those clients are,” Winans wrote in an article for IRMI nearly 10 years ago. Now, he says, agencies are facing more E&O allegations where the agent has been accused of having a special relationship with a client that required them to advise the client about coverages that they should have had but didn’t.
In most states, an insurance agent’s basic duty is to procure the coverage that the insured
has specifically requested.
“The insurance agent may think that in order to be a good agent, you should be advising your insureds about what coverages they should purchase. They may say they should do that, but the law generally does not require them to do that,” Winans explained. Except when it comes to special relationships.
can be a “special relationship” and that opens the door to a greater duty of care for the agent.
“The law generally says you are supposed to get the insured the coverage that they requested or tell them in a timely fashion if you cannot,” he said. But some states are saying that an agent-client relationship, under certain circumstances,
“Obviously the insured was relying on your advice. The insured asked you for advice. You provided them with advice. So they came to trust you to be somebody they could count on to give them the advice they needed about their insurance. So, if you’re in that kind of a situation, agent, and you advise them on this, this, and this, but you did not tell them that they should have flood insurance, or you never offered to sell them a personal umbrella policy, even though
you had a umbrella policy on their business … those kinds of things … Then, agent, you had a duty to advise them, and you failed in that duty,” he said. Now a plaintiff’s attorney is able to put forward and win the argument, he said, because there was a duty to advise. “That broadens the agent’s responsibility a great deal.”
What makes a special relationship? Winans says there’s no uniform list to determine a “special relationship,” but courts tend to seek evidence that shows the insured relied on the agent to be an adviser, not a salesperson.
Agencies need to think about which clients in their book of business might be considered as having a “special relationship” and manage that exposure. Winans said, “The opposing attorney might argue, ‘Obviously the insured was relying on your advice. They had all of their coverages with you for 20 years. The insured asked you for advice. You provided them with advice in many areas, as your emails show. So, they came to trust you to advise them on their insurance needs. But you never recommended that they buy a personal umbrella policy, even though you wrote an umbrella policy on their business,’” he said.
Whitney said another area that is related to special relationships and seems to be popping up recently in claims is a fiduciary duty allegation.
“We’ve seen this for a long time in lawyer’s claims, but we haven’t seen it so much in agents,” Whitney said. “Usually you have your negligence claim, but we’re seeing the plaintiff’s attorneys pick up more and more on
this fiduciary duty allegation, which kind of ties in with an order taker state versus a more broader definition,” she said. “We’ve seen across the country courts are saying that if you have a special relationship, then you’re no longer just an order taker. You’ve done something to increase the duty.”
Fiduciary allegations go hand in hand with that, she added. “Whenever there’s a fiduciary duty allegation, it just makes it a little harder to defend,” she said.
Disasters and Hard Market
Catastrophes, such as recent Hurricanes Helene and Milton, have always brought up agency E&O allegations. Add that to the longest hard market in recent history and there’s a bit of worry on the minds of underwriters.
There are always claims post catastrophe, Whitney said. “I’m less concerned about Milton because it did the normal hurricane thing and then went straight across Florida,” she said. “Florida agents are very in-tune to this exposure. There will be claims, there always are but less concerned with Milton in Florida than I am with Helene in North Carolina.”
As of late October, Hurricane Milton claims already were about twice as many as reported for Hurricane Helene, which made landfall on September 26. However, the storm surge and subsequent flooding that Milton delivered was nowhere near that of Helene.
“The flooding that occurred in Asheville and Western North Carolina was just horrific and those are places where I’m not sure that everybody was offering flood coverage,” she said, because it’s “not an area that
usually gets hit by those sorts of storms.” That’s an event that agency E&O underwriters are watching very closely in the regions most heavily affected by flooding — western North Carolina, Eastern Tennessee, Northwestern, South Carolina, and Georgia — she said.
with Agency E&O Terms, Conditions and Limits
“You were insured at $500,000, but your house is now worth $700,000, so you’re typically underinsured just by inflation,” she said. “And then with a cat, that’s when it’s going to become apparent or really any E&O claim.”
Amanda Juratovic, Big I’s Professional Liability AVP of E&O Operations, says inadequate limits are a key issue in preventing agency E&O allegations post-disaster.
“Post cat claims definitely rise, and that’s in large part due to inadequate limits being maintained, which becomes an issue when your house is destroyed,” she said. In recent years, this exposure has been compounded by inflation.
Increased Agency E&O Limit at Last Renewal
Juratovic advises agencies to be proactive every time they’re renewing accounts. “Make sure that whatever limits they’ve offered are enough based on the new value of a home,” she said. “You cannot just operate in a vacuum and renew, renew, renew, renew every year. You need to be making sure those limits are adequate,” she said, especially now where flooding happens in locations that historically did not flood.
Increased Placement of Policies in E&S Market
E&O Claims History of Respondents
Number of Agency E&O
Special Report: Agency E&O
continued from page 31
The hard market, too, “breeds” both frequency and severity in agency E&O claims, Juratovic says. “But there is a way to mitigate exposures,” she said, “and that just really goes back to documentation.” If the documentation is in the client file, signed that they were offered coverage but chose not to purchase, that’s usually enough to protect the agent.
E&O Limits Purchased $2
things tough on agents when it comes to property coverage, Whitney noted. Agencies nationwide are facing the difficult task of remarketing property policies as carriers increase rates and re-evaluate underwriting criteria.
The hard market can make
One way to manage the E&O risk when remarketing and moving policies is to make sure agencies are matching the right coverage by implementing a “match test,” advises John
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. Price
Limits Purchased
Important Issues When Selecting E&O
Claims handling experience experience with the carrier
Burns, sales executive at PIA Northeast. “I had a policy here, now I’m shopping it, and the agent found a cheaper policy, but didn’t realize there wasn’t a certain endorsement on it,” he explained. So, the insured previously had coverage but moved the policy and now doesn’t have the same coverage. “Always make sure you are reading the policy because I hate to say this but sometimes there’s a reason another policy
Why Premiums Increased
is cheaper,” he said.
Carrier insolvencies are a big concern in a hard market; make sure the agency is adequately disclosing the risks of placing business with a non-admitted carrier, Whitney said. “That is super, super important.”
It’s important, too, to ensure there is a strong, supportive agency culture. “People should feel like they have someone that they can talk to if it’s getting too much,” she said.
Most Important Issues When Selecting E&O
Direct
Agencies with Risk Management Plan to Mitigate E&O During Natural Disasters
Where Agency E&O Was Purchased
Why Premiums Increased
Agency E&O Buyers Report Higher Premiums
By Andrea Wells
Fewer agencies reported increases in premium on their agency errors and omissions renewal policies from 2023 to 2024, according to Insurance Journal’s annual Agency E&O survey, which polls buyers of the coverage on pricing and trends on current market conditions.
Some 73.1% of respondents saw an increase in their agency E&O renewal premium in 2024. That’s up from 63.5% of respondents who saw increases in E&O renewal premiums in 2023, and higher than the 70.5% who reported increases in the 2022 survey.
another increase at their next renewal. That’s slightly higher from 66.2% in 2023 survey but still up from 68.6% in the 2022 survey.
More than a third (37.7%) of survey respondents said the increase in premium was due to agency growth/expansion/ acquisition while another 46.7% said the increase came from a rate increase from the agency’s E&O carrier.
The owners and buyers of agency E&O coverage responding to IJ’s survey see the upward trend on pricing continuing at renewal. The survey found that 69.0% predict
Survey Demographics
Only 5.7% said the increase was due to the agency’s own claims experience while just 4% reported the increase was due to changes to underwriting risk factors (other than growth). Some 4.1% noted the increase in premium was due to changes in their policy such as higher coverage limits; that’s down from 8.1% who reported higher coverage limits as the reason in the 2023 survey.
As the hard market contin-
ues, more agencies reported placing business in the excess and surplus lines market. More than half (52.6%) reported placing more E&S business than one year ago when 47.3% reported placing more E&S business.
This year, 39.2% of respondents reported a recent change to agency E&O policy
deductibles. That’s down from 52.7% of agencies reporting changes in the 2023 survey.
Insurance Journal’s Agency E&O Survey collected nearly 200 responses from agency owners and agency E&O buyers nationwide via an online survey in September and early October 2024. Contact Andrea Wells at: awells@insurancejournal.com.
Satisfaction with Agency
Why Change in E&O Carriers
What
Welcome to Insurance Journal’s 2024 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.
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Agile Premium Finance
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General Agents Acceptance Corporation
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Phone: (949) 470-9674, Fax: (800) 568-5462
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SIUPREM, Inc.
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• 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.
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Geopolitical Conflict Could Cost Global Economy $14.5 Trillion Over 5 Years: Lloyd’s
By L.S. Howard
The global economy could be exposed to losses of US$14.5 trillion over a five-year period from the threat of a hypothetical geopolitical conflict causing widespread disruption to global trade patterns and supply chains, according to a report published by Lloyd’s, the insurance and reinsurance marketplace.
With more than 80% of the world’s imports and exports — around 11 billion tons of goods — at sea at any given time, the closure of major trade routes due to a geopolitical conflict is one of the greatest threats to the resources needed for a resilient economy, said Lloyd’s in its Geopolitical Conflict scenario — the fifth installment in its systemic risk series. It noted that “Understanding the vulnerability of shipping routes is critical to protecting economies in the event of disruption.”
The economic impacts of the geopolitical conflict scenario stem primarily from severe damage to infrastructure in the conflict region and the need for realignment of global trade networks due to the enforcement of sanctions and the effects of compromised shipping lines, Lloyd’s said.
The impact on businesses would depend on the region where they are located and factors such as involvement in the conflict, as well as reliance on international trade and the goods that would be delayed or lost due to the supply chain disruptions, the report stated. “Europe for example, which is heavily reliant upon other
industrially advanced states for supplies like semiconductors for car and electronics manufacturing, could stand to lose up to US$3.4 trillion,” Lloyd’s said.
“One thing is clear, when a crucial supply chain pinch point is blocked, the effects are felt immediately, and ramifications can be long-lasting,” said Lloyd’s, pointing to the incident in 2021 when the Ever Given container ship ran aground in the Suez Canal, blocking international trade for six days.
“This single event halted the flow of over 12% of the world’s trade flows through the region. Shockwaves were felt long after the ship had been refloated and continued its journey. Lloyd’s List estimated that Ever Given held up $9.6 billion in trade for every day the canal was blocked and caused an estimated 60-day shipping delay,” the report noted.
Lloyd’s said the sectors most at risk from geopolitical conflicts are:
• Manufacturing. With a shortage of raw materials, producer countries may not receive payment for goods and importing countries will not be able to use the materials to create new products.
• Semiconductors. No single country has end-to-end dominance over the production and supply segments that result in
finished semiconductor chips. Interruptions to the semiconductor supply chain can cause supply shortages and price inflation of the end product.
• Healthcare. Supply chain interruptions could hinder access to critical medical equipment reliant on global supply chains. Increased costs and reduced confidence could stall investment in large projects and new equipment.
• Transportation. Conflicts can impact the movement of goods as ships and airfreight are prevented from travelling through the conflict zone. No-fly zones and sanctions may prevent the movement of goods and people, and cause transport companies to lose revenue or close.
Lloyd’s said risk owners can take steps to insulate their organizations from the impacts of geopolitical conflicts, including:
• Data collection: Understanding the flow of goods in individual supply chains, how customers react, and how third parties affect an organization’s supply chain is a good way to understand where potential weaknesses and/or opportunities lie.
• Contingency planning: Broadening the range of suppliers, finding alternative locations for manufacturing and operations, and developing
a system of redundancy can help maintain business continuity. “Building strategic stockpiles where reasonable may also help mitigate the fallout from a breakdown in the ‘just in time’ supply chain.”
• Act responsibly: Global companies with teams in local hubs are responsible for supporting their staff, and to an extent the wider community, said Lloyd’s, noting that protocols should be in place to evacuate or cease operations in the event of geopolitical conflict.
• Digital network resilience: A regular regiment of offline or external backup processes can keep most information secure and up to date. “[S]imilarly, contingency and business recovery plans allow companies to find ways to carry out their operations while still offline, for example through another network server.”
Insurance as Safety Net
Insurance can be a safety net amid the chaos and uncertainty of geopolitical conflicts, Lloyd’s affirmed.
The value of insurance extends “to the compounding secondary impacts of geopolitical conflict, including downstream delays and interruptions by impacted trading partners and suppliers,” Rebekah Clement, Lloyd’s corporate affairs director, said in a statement. “Examples of insurance covers which can help businesses protect themselves against these impacts include political risk insurance and contingent business interruption, as well as dedicated war risk insurance.”
Lloyd’s acknowledged that war has long been viewed as a nearly uninsurable risk. “The war exclusion is almost as old as the insurance industry itself. Companies and individuals faced with a known risk may be able to purchase a separate war risk insurance policy however, and as demonstrated in response to the Ukraine war, specific coverages can be arranged through cross-sector collaboration to support the safe passage of vital exports and relief efforts.”
The report discussed some of the coverages available for geopolitical risk exposures:
• Political risk insurance. Assets and funds located in politically volatile regions can be vulnerable in the event of
unrest. Political risk insurance provides protection against losses from government actions like expropriation, currency inconvertibility, confiscation, contract breaches, and political violence.
• Credit insurance. Political unrest brings frozen funds, asset seizures and shipment delays, which may result in non-payment or non-fulfilment of contracts by trading partners or suppliers. Credit insurance supports more than $3 trillion of global trade from losses due to non-payment of commercial debt, which help businesses protect their capital and cash flow.
• Contingent business interruption (CBI) insurance. As businesses rely on other companies for raw materials,
components, or products, geopolitical conflicts create “a knock-on effect down the supply chain, especially if alternative suppliers are unavailable.” “CBI insurance protects businesses from costs associated with declining turnover, loss of profit, and accrued charges caused by disruptions from third-party suppliers or customers, which impact the business’s ability to produce products or deliver services as usual,” Lloyd’s said.
• War-on-land insurance. Assets located within conflict zones and overland transportation routes are vulnerable during geopolitical conflict, but there are solutions available, Lloyd’s indicated.
“In May 2024, Willis Towers Watson partnered with
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Ukrainian insurer, VUSO, to launch the first London-backed facility offering war-on-land insurance, providing critical coverage and certainty for businesses transporting goods overland in Ukraine.” Lloyd’s said such coverage helps “to alleviate supply chain and trade stressors as goods are protected during the journey to their intended destination.”
The geopolitical conflict scenario was produced in partnership with the Cambridge Centre for Risk Studies. Other scenarios in the series have covered extreme weather events leading to food and water shock (July 2023), cyber attack (October 2023), global economic stagnation (January 2024), and volcanic eruption (May 2024).
Spotlight: Commercial Auto
Legal System Abuse Hammers Truck Insurance
The U.S. trucking industry has been shaken to its foundations. A welter of external challenges catalyzed the failure of approximately 88,000 trucking firms in 2023. That is 10% of the nation’s trucking companies. The chief culprit was a steep rise in operational costs, led by increased driver salaries and lawsuits, resulting in a sharp uptick in truck insurance costs. These challenges powered a vicious cycle of squeezed margins and inflation in the cost of goods transported
by trucks. If the rise in operational costs is not brought under control, all Americans will bear the brunt of the trucking industry’s woes in the form of higher prices for all manner of goods transported by truck.
By Jerry Theodorou
The trucking industry is among the nation’s largest economic sectors. It generates $941 billion in gross freight revenues and employs 8.4 million workers. It transports 73% of all U.S. freight, measured by weight.
The trucking business is also highly competitive, with hundreds of thousands of players, ranging from tiny independent owner/operators with one or two trucks, to regional shippers, as well as publicly traded long-haul trucking giants with
tens of thousands of drivers and power units.
Trucking’s ultra-competitiveness is reflected in its slim profit margins, ranging from 2% to 6%, less than half S&P 500 company margins. With such thin margins, a sizable increase to expenses can squeeze a trucking carrier into unprofitability, and it has.
Commercial Auto Insurance
Commercial auto insurance is the insurance product for vehicles that are not private passenger automobiles. With the exception of New Hampshire, all states require trucking companies to carry insurance for third-party bodily injury liability and third-party property damage liability.
In addition to 18-wheeler tractor-trailers and box trucks, buyers of commercial auto insurance are bus companies, livery (taxi and limousine companies), and special-function vehicles such as dump trucks, garbage trucks, cement mixers, tow trucks, et al.
One of the most significant operational challenges for commercial auto is truck driver wage inflation, driven by a shortage of drivers. Truck driver salaries have historically been relatively low, averaging $55,990 per annum, below the $59,384 all-jobs national average. The driver shortage has been pressuring truck carriers to increase wages at rates higher than inflation. A second challenge
squeezing truck carriers is legal system abuse in truck accident litigation, which has led to ballooning courtroom awards, stoking an increase in commercial auto liability insurance costs.
Some lawsuits resulted in awards in the tens of millions of dollars; some have even exceeded $100 million.
For example, in a crash involving a Werner truck where police determined that Werner and its driver were not negligent, Werner was compelled to settle for $150 million. This came on the heels of another suit against Werner where the jury delivered a $91 million award.
Is Social inflation to Blame?
In recent months there have been several studies released analyzing whether social inflation has been driving liability insurance claim trends. Two of the most recent are by Swiss Re and the RAND Corporation.
Social inflation is the phenomenon of civil litigation awards outstripping rise in the consumer price index.
RAND’s analysis of litigation trends, verdicts and insurance claims presents data-based evidence consistent with the expected effects of social inflation.
For those without the time to read the entire 104-page study, its main findings are:
• The annual number of new tort case filings per capita rose approximately 10% between 2012 and 2019 in 19 states for which data were available (the analysis concluded with 2019 data because 2020 and subsequent years were anomalously impacted by Covid, distorting trend).
Worst-performing 2023
Best-performing 2023
Source: S&P Capital IQ Pro
‘A second challenge squeezing truck carriers is legal system abuse in truck accident litigation, which has led to ballooning courtroom awards, stoking an increase in commercial auto liability insurance costs.’
• Plaintiff win rates rose considerably over the study period across all case types.
• Inflation-adjusted awards per plaintiff rose an average of 7.6% Compound Annual Growth Rate between 2010 and 2019.
• Inflation-adjusted severity for high limit policies rose at faster rates than lower-limit policies.
A review of the 2023 underwriting performance of commercial auto insurers bears witness to how unprofitable commercial auto insurance was for insurers. A combined ratio above 100% means losses and expenses outstripped
premium. Commercial auto’s combined ratio has been below 100% in only one of the past 12 years.
The Road Ahead for Commercial Auto
Because the commercial auto insurance product continues in the red, steps need to be taken, mainly at the state level, to restore stability to the commercial auto market. These should include:
• Introducing caps on pain and suffering and punitive damage awards
• Restricting phantom damages
• Exploring the impact of third-party litigation funding on commercial auto.
The good news is that there have been some positive developments in the tort environment for truck accident litigation:
• Pain and suffering awards limited to $5 million in Iowa
• Use of seatbelt admissible as evidence in Indiana
• Disclosure of third-party litigation funding in Montana
• Comparative negligence, lower statute of limitations and restrictions on phantom damages in Florida.
Progress in such initiatives will be good for trucking firms, for insurance providers and for all of us consumers buffeted by inflation.
Movement in the opposite direction — increases in operational costs borne by trucking companies — will have consequences that will extend far beyond the trucking industry.
Theodorou is the author of The R Street Blog on Insurance Journal.com, which presents the work and viewpoints of the free market think tank R Street Institute in Washington, D.C., where he serves as the director of the Finance, Insurance and Trade Policy Program. Prior to R Street, Theodorou was a director of insurance research at Conning in Hartford, Connecticut, and previously worked for American International Group (AIG) in a variety of global underwriting, operations and strategy roles.
Idea Exchange: Regulation
States Lead the Way on Better Insurance Markets
By Andrew Mais, Jon Godfread, Scott White, & Elizabeth (Beth) Kelleher Dwyer
Most homeowning Americans consider their home their most valuable asset. This means that the changes happening in the property insurance market — which safeguards this asset — are critically impacting Americans and their financial security.
While the market remains robust overall, challenges such as inflationary pressures, rising construction costs, litigation, and more severe and frequent natural disasters are casting shadows over the property insurance landscape. These factors not only affect insurance costs but also how many insurers are doing business in your area, ultimately influencing consumer satisfaction.
How can we address these issues facing a $152 billion market that underpins America’s economic health? One critical factor is the creativity, ingenuity and collaboration of the states themselves.
The effectiveness of the U.S. state-based insurance regulatory framework in safeguarding consumers and ensuring market solvency is rooted in states’ ability both to act collectively when needed on national issues and to adapt and innovate
to unique local circumstances and market conditions. America’s 56 insurance commissioners and their teams are working to ensure that climate-related risks are appropriately addressed and also to strengthen the insurance market and the economy at large. Nearly 11,000 insurance regulators are supporting efforts to both expand coverage and lower risk, making coverage more attainable for consumers and markets more stable.
Consumer Education and a Call to Action
Informed consumers make better decisions. That’s why helping homeowners understand their insurance policies and coverage is so important and a core component of what insurance regulators do every day. These educational efforts focus on informing the public about key insurance principles, terms and consumer rights. Commissioners are also taking steps to help consumers reduce losses and speed up recovery from natural disasters to keep insurance accessible all around the country.
Policyholders can also take action before they have a loss. In fact, there are creative state-based pre-disaster mitigation efforts that are geographically specific that provide opportunities for consumers
to improve their property’s resilience to extreme weather and help mitigate their risk — and qualify for insurance premium discounts.
For example, the California Safer From Wildfires program provides premium incentives for reducing wildfire risk through home hardening. Starting next year, the Strengthen Oklahoma Homes Program will provide grants to homeowners to outfit their home to the Insurance Institute for Business & Home Safety (IBHS) Fortified standard for roofs that can withstand high winds and hail. Homeowners who qualify could be eligible for insurance discounts of up to 42% on the wind portion of their premium. Kentucky’s Department of Insurance has established a similar grant program for homeowners in the state who fortify their homes to the IBHS standard. And the Louisiana Fortify Homes program offers up to $10,000 in grants for homeowners to upgrade their roofs to better withstand hurricane-force winds.
Measures such as improved building codes, risk assessments and disaster preparedness plans can mitigate the economic strains imposed by weather-related events on consumers and insurers alike. These are all steps toward ensuring that property insurance is accessible, even in parts of the country that face more severe weather events or natural disasters than lower risk areas.
Fair Pricing and Consumer Protections
Amid inflation and rising costs, fair pricing remains a cornerstone of the state-based regulatory philosophy. State insurance regulators scrutinize insurers’ financial performance and insurance pricing to ensure the rates being charged are reasonable for the risks insurers absorb on homeowners’ behalf. At the same time, we recognize the need for insurers to charge adequate rates to cover losses and remain solvent — the balance is delicate. Insurance costs reflect the underlying cost of claims, which include construction materials, underlying home values, the
cost and availability of labor, the impact of litigation, and other factors. Put another way, insurance claims reveal the cost of replacing or repairing the things we insure, which in turn is reflected in the price we pay for coverage.
State insurance commissioners ensure claims are handled promptly and fairly, safeguarding consumer rights and maintaining a transparent marketplace. When disputes arise, state insurance departments offer mediation and investigation services, advocating for fairness and accountability and rooting out fraud. By regulating with a forward-looking approach, they encourage healthy competition among insurers, which can lead to more creative, efficient and consumer-friendly insurance solutions. This competitive landscape is what ultimately keeps premiums reasonable and drives insurers to improve their offerings.
Financial Stability of Property Insurance Markets
Ultimately, the goal of insurance is to provide financial security, a mission that has become increasingly challenging and even more important with the unpredictability introduced by economic volatility, climate risk and increasing frequency and severity of natural disasters.
State insurance commissioners are instrumental in guiding insurance practices that accommodate these changes while
maintaining market stability.
Insurers are also no longer relying solely on historical loss data to predict future losses — many now leverage sophisticated catastrophe models that factor in severe weather, the density and construction quality of housing, and other economic variables.
To keep pace, regulators have created the Catastrophe Modeling Center of Excellence within the National Association of Insurance Commissioners’ Center for Insurance Policy and Research to evaluate catastrophe model usage. Risk assessment is a foundational tool to identify potential economic and insurance market disruption and can be applied to support policy and legislative action to reduce the risk.
Homeownership is not just a primary asset for many Americans today but also a way to create wealth that can be passed on to the next generation. This source of wealth is caught in the crossfires of rising inflation and the increasing frequency and severity of natural disasters.
Insurance pricing and availability exists at the intersection of these escalating forces, and state regulators work every day to ensure that despite these pressures, consumers are treated fairly, and U.S. insurers remain strong, solvent and competitive.
Andrew N. Mais is Connecticut Insurance Commissioner and NAIC President; Jon Godfread is North Dakota Insurance Commissioner and NAIC President-Elect; Scott A. White is Virginia Insurance Commissioner and NAIC Vice President; and Elizabeth (Beth) Kelleher Dwyer is Rhode Island Department of Business Regulation Director and NAIC Secretary-Treasurer.
Andrew Mais
Jon Godfread
Scott White
Elizabeth (Beth) Kelleher Dwyer
Idea Exchange: The Marketing Connection
Digital Transformation in Insurance Marketing
How to Leverage Technology to Drive Growth and Engagement
The insurance industry has historically been slow to adopt new technologies — often relying on traditional outreach, marketing and client management methods. However, digital transformation has taken hold across the sector in recent years, radically reshaping how insurance companies engage with their audiences, manage marketing campaigns and drive growth. This shift isn’t just a trend; it’s necessary in a competitive marketplace where customer expectations are higher than ever.
By Anita Nevins
As an insurance marketing expert, I’ve seen firsthand how wholesalers, carriers, retail brokers and insurtechs leverage digital marketing strategies, automation and data analytics to stay ahead. Let’s dive into this transformation’s core elements and how they create new opportunities across the insurance ecosystem.
The Power of Digital Marketing Strategies
Traditional marketing methods — direct mail, print ads and in-person events — still have their place, but digital tactics are increasingly supplementing them. Digital marketing can target specific audiences, track real-time engagement, and optimize campaigns for more significant ROI.
Content Marketing and SEO
The foundation of many successful digital marketing campaigns is content that resonates with target audiences. Insurance companies are building thought leadership through educational blogs, webinars, white papers and podcasts. By addressing the pain points of their audiences, insurance professionals can position themselves as experts and problem-solvers.
Search engine optimization (SEO) is equally crucial. A solid online presence
helps potential clients find insurance companies for specific services. Whether a wholesaler specializing in hard-to-place risks or an insurtech offering an innovative SaaS solution, optimizing content for search engines ensures it reaches the right people.
Social Media Engagement
Social media isn’t just for brand awareness — it’s a tool for direct engagement. Insurance professionals are using social platforms to share insights, highlight services and build connections. With personalized targeting, paid social campaigns can reach specific segments, amplifying the message to relevant audiences.
Automation: Streamlining Marketing and Sales
Automation is one of the most transformative technologies in insurance marketing. With marketing automation tools, companies can streamline processes that once took hours or days, freeing up strategy and creative development time. The ability to automate workflows has had a massive impact on lead generation, client engagement and retention.
Lead Nurturing & CRM Integration
When integrated with marketing automation, customer relationship management (CRM) systems allow insurance companies to nurture leads in a personalized way. For example, if a retail broker shows interest in a particular line of coverage, automated follow-up emails with tailored content can keep them engaged without manual effort. These systems also track user interactions, enabling data-driven adjustments to marketing strategies.
Wholesalers and MGAs should be using CRM systems to monitor broker interactions and tailor outreach based on their needs. Automation helps insurance professionals manage communication
across multiple channels, ensuring no lead is left behind. The efficiency gains are considerable, allowing smaller teams to execute large-scale campaigns.
Drip Campaigns and Behavioral Triggers
Automation also enhances email marketing through drip campaigns — sequences of pre-written emails sent to prospective clients at strategic intervals. Behavioral triggers, such as clicks or downloads, can adjust the content and timing of the next email, ensuring the message is always relevant. This nurturing is vital in the long sales cycles typical in commercial and specialty lines insurance.
Data Analytics:
Driving Smarter Decisions
Digital transformation in marketing isn’t complete without the power of data ana-
lytics. Insurance professionals can access vast amounts of data, from customer demographics and claims history to online behavior and social media interactions. Analyzing this data can inform marketing decisions, allowing companies to understand their audience better and refine their strategies.
Predictive Analytics for Personalized Marketing
Predictive analytics uses historical data and algorithms to forecast future customer behaviors. For example, by analyzing which policy types a broker typically places or which coverages a client renews year after year, insurance professionals can anticipate their needs and suggest tailored solutions. This level of personalization is now a key differentiator in marketing.
Real-Time Campaign Optimization
With digital marketing, real-time analytics allow for quick course corrections. If a particular social media ad or email campaign isn’t performing, companies can
pivot immediately by adjusting messaging, targeting or creative assets. This level of agility wasn’t possible with traditional marketing methods, where results might take weeks or months to evaluate.
Data analytics empower insurance entities to measure ROI more accurately, comparing the effectiveness of different channels, messages and formats. For instance, a broker might find that webinars bring in more qualified leads than paid ads, leading them to allocate more resources to content production.
The Role of Insurtechs
Insurtechs are playing a critical role in accelerating digital transformation in insurance marketing. These companies are disrupting the underwriting and claims processes and offering new tools to help traditional players modernize their marketing efforts.
Insurtech platforms often have built-in marketing tools like automated email systems, data analytics dashboards and social media management solutions. By
integrating these solutions with legacy systems, established carriers and brokers can benefit from the latest advancements without overhauling their infrastructure.
Conclusion: Embracing the Future of Insurance Marketing
The digital transformation of insurance marketing is far from over. As technologies evolve, insurance companies will have even more powerful tools at their disposal. By adopting digital marketing strategies, leveraging automation, and utilizing data analytics, the insurance industry can connect with a broader audience, improve client engagement and drive sustained growth. Those who embrace these changes will be best positioned to thrive in the future — delivering value to their clients and entire organizations.
Nevins is the founder and Co-CEO of Direct Connection Advertising & Marketing. She manages the company and is heavily involved in strategy and planning for the agency’s clients. Website: www. directconnectionusa.com.
Idea Exchange: Ask the Insurance Recruiter
Viral Work Trends Insurance Agencies Will See More in 2025
Doesn’t it seem like every week there’s a new article, hashtag, or viral video about workplace trends? It can be confusing to keep them all straight. Here are the trends that seem to generate the most interest and engagement from insurance professionals.
‘Prepare The Others’ P.T.O.
Employees who are denied PTO requests have given this acronym a new meaning. Yahoo’s recent article, “Gimme a Break! You’ve earned some time off. So why won’t your boss let you take it?” talks about the friction between companies and employees fueled by increased requests for time off
when one party is understaffed, and the other is overworked.
How this impacts insurance agencies: CSRs and account managers tell my team all the time that they want to leave their employer because the agency is perpetually understaffed. The pressure of working more than one desk is exhausting, not only leading to work/life imbalance, but also to more PTO requests being denied.
As this trend continues, we expect to see more surges in resignations by insurance professionals, especially during the times of the year when PTO requests peak.
#PayTransparency
Also known as #SalaryTransparency,
there is a big TikTok account called @ SalaryTransparentStreet dedicated to interviewing people on the street to ask for their job titles, salary, and location. Even more recent is the #PaydayRoutine trend where people share their salaries and living expenses (rent, student loans, food, etc.).
How this impacts insurance agencies:
By Mary Newgard
What would you do if one of your employees shared their compensation on social media? If you’re a Baby Boomer or Gen X-er
this might sound crazy, but to Millennials and Gen Z-ers, people between 18 and 43 years old, it’s a topic many don’t see a problem being public knowledge.
Quiet Quitting/Quiet Firing
Quiet Quitting (for employees) and Quiet Firing (for managers) is essentially psychological withdrawal. Gallup’s May 2023 poll, “Is Quiet Quitting Real?” says, “Quiet quitters make up at least 50% of the U.S. workforce — probably more.”
Their additional research showed, “When employees receive meaningful feedback at least weekly, they are nearly half as likely to be watching for a new job,” (Quiet Firing, Gallup, November 2022).
How this impacts insurance agencies:
It’s my opinion that for a lot of insurance agencies these issues are two sides of the same dysfunctional coin. If you notice absenteeism climb, it’s a sign your employee could be Quiet Quitting. When a manager lacks the interest or motivation to develop or mentor an employee, they could be Quiet Firing.
Long story short, insurance professionals are part of the 50%-plus category of U.S. employees quiet quitting. It’s closer to your doorstep than you think.
Dry Promotions
When employees are given a bigger title and increased responsibility without a raise, they’re being dry promoted.
How this impacts insurance agencies: This happens all the time to account executives. As the senior person at the top of the client service pyramid, it’s their plate that agencies naturally add management/ team leadership duties to — often without a raise. The combination of a massive workload and flat earnings leads to burnout and resignation.
If you’ve given one of your employees a Dry Promotion, then my advice is to do the following immediately: Set up a meeting. Acknowledge and apologize. How you got to this place probably happened over time and was unintentional, but with your awareness today comes a need to remedy the situation.
Ask your employees if they like their workload. If they do, then a raise will rem-
edy the situation. If they don’t, scale back and perhaps still consider an additional short-term bonus in consideration of past achievements. Remember, it’s always cheaper to give that money to a current employee as a retention strategy rather than to lose them to a much more costly new hire and recruiting process.
Newgard is partner and senior search consultant for Capstone Search Group, a national recruiting firm dedicated to the insurance industry. For questions and comments, email: asktherecruiter@csgrecruiting.com.
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Idea Exchange: Minding Your Business
Owner Compensation Performance Based — Part 2
Last month we discussed the three components of owner compensation that we recommend. These include the management piece, production component and how to split up the profits all based on the performance of each owner.
By Catherine Oak
This month is an example of how to do
the numbers using an actual case.
Agency Profile
For purposes of this sample let’s assume a firm has three owners with $1,500,000 in total revenues. Approximately 90% of the book of business is from property/casualty accounts. The firm was able to generate a 10% before tax profit margin for the past year. The firm will retain $50,000 in profit for future capital expenditures. Therefore, the owners’ bonus for this year will be
Table 1. Owner Compensation Components
$100,000 (a profit of 10% on $1,500,000 in revenues less $50,000).
Based on the size of the firm they have set aside 5% of revenues or $75,000 for a strategic management fee.
Table 1 shows the ownership split, each owner’s management role and the amount of new commissions and their current book of business. The production component will be 40% new and 30% of the renewal book of business for commercial lines and employee benefits only.
The $100,000 profit is then split on a prorated basis for each of the four criteria: equity, management, new production, book of business.
Owner 1, for example, is responsible for 20% of the management ($15,000 fee divided by $75,000 total fee), so that owner earns 20% of the $25,000 bonus for management.
Owner 2 is responsible for 30% of new business production, so that owner earns 30% of the $25,000 bonus for new production. Table 2 summarizes the results of the profit distribution.
Table 2. Profit Distribution
For Part 1 of this two-part article, see the October 7 issue of Insurance Journal Magazine at: https://www. insurancejournal. com/magazines/
Table 3 summarizes the information included in Tables 1 and 2. Each owner receives three components for their compensation based on the their relative contributions to the overall operation of the firm.
Table 3. Summary of Compensation
Owner Management Fee Production Profit Split Total (40% new, 30% renewal )
Owner 1 $15,000 $110,000 $30,833 $155,833
Owner 2 $30,000 $132,000 $36,111 $198,111
Owner 3
$30,000 $68,000 $33,056 $131,056 Total
Summary
Having an equitable owner compensation plan is important in order to make sure that all owners feel they are adequately compensated for their contributions to the agency. Many agencies in the past did not have such a methodology and it often caused problems. This methodology is easy to implement and follow and should provide harmony in the agency.
Oak is the founder of the international consulting firm, Oak & Associates, based in Bend, Oregon and Sonoma, California. Oak & Associates specializes in financial and management consulting for national and international insurance agencies, including valuations, mergers and acquisitions, clusters, sales and marketing planning, as well as perpetuation planning. Phone: 707-935-6565. Email: catoak@gmail.com. Website: www.oakandassociates.com
Closing Quote
Navigating the Fee Maze
By Mark Robinson
Today’s insurance regulatory landscape can be a tricky one, particularly when it comes to charging fees. For property/casualty insurance brokers and agents, understanding permissible fee structures is crucial to maintaining compliance and avoiding penalties. With state laws varying widely and evolving regularly, even a minor oversight can have significant consequences.
The Regulatory Landscape
Each state independently regulates the circumstances under which a producer can charge a customer a separate fee for procuring an insurance policy. Often, this fee is in addition to the commission paid by the insurer, though in some cases, it may replace commission-based compensation.
Some states prohibit any fees not explicitly included in the insurer’s rate filing or policy, while others permit fees with specific limitations — such as restricting them to brokers (not agents), allowing them only for certain policy types (e.g., commercial lines), or capping the fee amount. Additionally, states that permit fees typically require producers to adhere to strict written disclosure or agreement standards.
Broker vs. Agent
In states like California, the rules differ significantly between brokers and agents. Brokers, who represent the insured, may charge a reasonable broker fee but must meet statutory bonding and licensing requirements. By contrast, appointed agents in California are prohibited from charging any fees not included in the insurer’s rate filing. Similarly, New York allows licensed brokers to charge reasonable fees for policy placement, while agents are restricted to insurer-filed fees. Texas, however, permits agents — whether appointed or not — to charge fees, subject to certain conditions.
Fee Limitations
Several states impose specific limits on fee amounts. In New Jersey, agents may charge no more than $20 per policy year, with some exceptions. Connecticut caps fees based on policy type, such as a $35 limit for private passenger auto policies. In Arkansas, the total of fees plus commission
cannot exceed 20% of the gross policy premium. Louisiana imposes caps on personal lines, including a $25 fee limit for standard homeowners and auto insurance policies.
Commercial vs. Personal Lines
Fee allowances depend on the type of policy in some states.
Iowa, for instance, permits fees for commercial lines but not for personal lines. Pennsylvania is similar, prohibiting fees for personal lines but allowing them for commercial lines, except that no fee can be charged for commercial applications.
Kentucky and Maine restrict fees to commercial lines when the client meets minimum asset, revenue, or premium size requirements, among other conditions.
Disclosure & Agreement
Transparency is paramount in states that permit fees. Brokers and agents must ensure clear, written disclosure of any fees in line with state-specific requirements.
For example, in California, personal lines fee agreements must include a signed, insurance department-approved broker fee agreement that outlines all fees, including endorsement and payment processing fees, for the policy term.
Texas mandates specific disclosure language explaining commission calculations, while Indiana requires a pre-approved DOI disclosure form stating the fee amount, calculation basis, and confirmation of commission from the insurer. Indiana also prohibits fee variation among customers.
Best Practices for Compliance
Given the complexity and variability of state regulations, brokers and agents must have a thorough understanding of the legal frameworks governing fees. To minimize compliance risks, they’d be wise to:
• Maintain transparent, detailed fee agreements with insureds, ensuring fees are itemized separately from premiums.
• Adhere to statutory and regulatory caps on fees where they exist.
• Consult with legal counsel when entering new jurisdictions or developing fee structures to ensure state-specific compliance.
• Invest in regular training and updates on regulatory changes to keep current with evolving laws.
Robinson is founding partner of Michelman & Robinson LLP, a national law firm headquartered in Los Angeles. Mark can be contacted at 310-2995500 or mrobinson@mrllp.com.
CONGRATULATIONS
TO OUR AD STUDY WINNERS
Insurance Journal commissioned Signet Research, Inc. to conduct its annual Ad Recall & Readership Study, which measured the memorability of all full and half-page ads in the July 1st issue. The study is provided as a free service to our advertisers, who receive a personalized report with memorability score and verbatim reader comments. We’d like to congratulate the winning companies and thank the readers who provided feedback!
