IBAMAG.COM ISSUE 8.07 | $12.95
BROKERS ON MGAs 2017
FIVE-STAR CARRIERS 2020
2019
FIVE-STAR CARRIERS Brokers name the most reliable carriers in the industry
READY TO FACE THE STORM
How to prepare workers’ comp clients to weather natural disasters
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NO MARGIN FOR ERROR
Could brokers find themselves on the hook for E&O litigation due to COVID-19?
EFFECTIVE CLAIMS HANDLING Expert strategies for managing pandemicrelated claims
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ISSUE 8.07
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CONTENTS
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UPFRONT Lorem ipsum
STAR RIERS 20
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04 Editorial
The pandemic and civil unrest are on a crash course with hurricane and wildfire seasons
06 Statistics
Key data that should be on your radar this month
FIVE-STAR WHOLESALE 08 News analysis When businesses find themselves BROKERS & MGAs SURVIVING THE FEATURES
without pandemic-related coverage, will brokers take the blame?
STORMS
20
What could an active hurricane season mean for a workers’ comp market already reeling from the impact of the pandemic?
A closer look at COVID-19’s impact on the workers’ comp sector
14 Technology update
FIVE-STAR CARRIERS
Brokers reveal which carriers are excelling on rates, product range, automation, quote turnaround and more FEATURES
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RISKY BUSINESS INDUSTRY ICON
AmTrust CEO and chair Barry Zyskind on how the insurer’s focus on small business has paid off big time
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This month’s big movers, shakers and new products
12 Workers’ comp update
SPECIAL REPORT
PEOPLE
10 Intelligence
Aaron Parker of MJ Insurance on how his agency’s focus on risk management has set it up to take on COVID-19
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How insurers can use technology to create a more personalized experience
19 Opinion
Five key tools for fighting modern insurance fraud
FEATURES 45 Change your life with deliberate elimination
How to boost productivity by paring down to the essentials
PEOPLE 48 Other life
Picking a tune with insurance executive and banjo player Ryan Collier
FEATURES
CLAIMS IN THE TIME OF COVID-19 How to manage workers’ comp and liability claims stemming from the coronavirus outbreak
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INNOVATIVE&SOLUTION-DRIVEN E&S is at the heart of what we do, from developing new ways to increase speed, ease and efficiency for our partners, to solving the most complex challenges. Let us show how we can put the very best of E&S together for you. nationwide.com/bESt
E&S/Specialty | AM Best rating of A+ (Superior), FSC XV | Fortune 100 company Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. Š 2020 Nationwide ESC-0268M2 (05/20)
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UPFRONT
EDITORIAL
The makings of a perfect storm
A
perfect storm is brewing in the United States, and its winds of adversity are pummeling the insurance industry from all angles. The dominant force remains the COVID-19 pandemic, which has caused immense financial struggle, a surge in unemployment and a rash of litigation that will likely haunt the industry for years to come. Clashing with the storm COVID-19 has created are several other gales that are no less potent in nature: political uncertainty in the lead-up to the 2020 presidential election, ongoing international trade wars and a world economy that’s on track for the worst recession in nearly a century, according to the Organization for Economic Cooperation and Development. Over the past month, the US has also seen protests and demonstrations in all 50 states following the death of George Floyd, an African American man who was killed by a Minneapolis police officer.
While the COVID-19 pandemic and civil unrest are the headline issues at present, it’s important to remember that the US is also steamrolling toward the peak of wildfire and hurricane seasons Some of these storms are within our control – for example, we can influence politics by voting in the 2020 election – but others are much more capricious, especially when Mother Nature is involved. While the COVID-19 pandemic and civil unrest are the headline issues at present, it’s important to remember that the US is also steamrolling toward the peak of wildfire and hurricane seasons. Forecasters with the National Weather Service’s Climate Prediction Center announced in May that there’s a 60% chance of an above-normal Atlantic hurricane season in 2020. That would be problematic in normal times, let alone during a global pandemic. One positive is that US insurers have proved beyond any doubt their ability to react and respond quickly to natural catastrophes. Over the past few years, the industry has invested in innovation around data analytics, catastrophe modeling, claims technology, loss control services and tailored insurance products designed to help Americans weather any storms. These solutions will be more important than ever in 2020. With the world preoccupied by COVID-19 and other socioeconomic issues, it will be up to the insurance industry to get America ready to face the future storms that will undoubtedly blow in. The team at Insurance Business America
www.ibamag.com MAY 2017 EDITORIAL
Managing Editor Paul Lucas Editor Bethan Moorcraft Journalists Alicja Grzadkowska, Ksenia Stepanova, Camilla Theakstone, Mia Wallace News Writers Lyle Adriano, Terry Gangcuangco, Roxanne Libatique, Gabriel Olano Staff Writers Ellen Burkhardt, Tom Goodwin, Kasi Johnston, Ryan Smith Copy Editor Clare Alexander
CONTRIBUTORS Dennis Toomey, Aytekin Tank
ART & PRODUCTION Designer Joenel Salvador Production Manager Alicia Chin Production Coordinator Kim Kandravy Traffic Manager Ella Dayandante
SALES & MARKETING Vice President, US Market Cathy Masek Vice President, Sales John Mackenzie Media Sales Manager Desiree McCue Global Head of Media Marketing Adrijana Monevska
CORPORATE Chief Executive Officer Mike Shipley Chief Operating Officer George Walmsley President Tim Duce Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil
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WSIA
UPFRONT
EDITORIAL
SOME THINGS WORK BETTER TOGETHER. Like working with a Wholesale & Specialty Insurance Association member to find a custom solution to a nonstandard risk. WSIA members will help you craft cost-effective, innovative solutions for your specialty and nonstandard risks. Combining the strength of the former AAMGA and NAPSLO organizations, WSIA members are your source for expert solutions.
find WSIA members at
wsia.org
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UPFRONT
STATISTICS COVID-19 LEADS TO RATINGS DOWNGRADES
0.5%
Global economic growth projected by Euler Hermes for 2020, down from 2.5% in 2019
4.5%
Amount the firm expects international trade contracts to decline in 2020
14%
Euler Hermes’ projected increase in business bankruptcies for 2020
COMPOSITE INSURANCE PRICING CHANGE
Global Q1 2018 1% Q2 2018 2% Q3 2018 2% Q4 2018 2% Q1 2019 3% Q2 2019 6% Q3 2019 8% Q4 2019 11% Q1 2020 14%
United States Q1 2018 -1% Q2 2018 0% Q3 2018 0% Q4 2018 0% Q1 2019 1% Q2 2019 5% Q3 2019 6% Q4 2019 10% Q1 2020 14%
COMMERCIAL INSURANCE PRICES RISE WORLDWIDE Globally, commercial insurance prices were up 14% for the first quarter of 2020 – the tenth consecutive quarter of price increases, according to Marsh. The increases were mostly driven by jumps in property insurance and financial and professional lines; in the US, for instance, financial and professional liability insurance rates increased by 23%. The COVID-19 pandemic had a relatively minor effect on pricing in the first quarter, Marsh said, although it expects to see a more significant impact in the remaining quarters of 2020.
Latin America Q1 2018 1% Q2 2018 0% Q3 2018 1% Q4 2018 1% Q1 2019 2% Q2 2019 1% Q3 2019 5% Q4 2019 7% Q1 2020 6%
PREPARING TO RETURN TO WORK At least half of financial services firms are developing COVID-19 contingency plans for the next three months or more, according to a recent survey by Deloitte, and most are basing their reopening plans around job function and/or geography.
FINANCIAL SERVICES FIRMS’ TOP STRATEGIES FOR RETURNING TO THE OFFICE 70% 60%
64%
50% 40%
18
Countries that received ratings downgrades from Euler Hermes in the first quarter of 2020 Source: Euler Hermes Country and Sector Risk Ratings, Q1 2020
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60%
54%
49% 35%
30% 20% 10% 0%
10% Restart based on role or function
Restart based Decrease Enhance cleaning Provide additional Unsure/cannot on geography workplace density protocols employee support discuss
4% Other
Source: COVID-19 Return-to-the-workplace Strategies, Deloitte
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CYBER GWP TO MORE THAN DOUBLE
UK Q1 2018 0% Q2 2018 1% Q3 2018 2% Q4 2018 1% Q1 2019 3% Q2 2019 6% Q3 2019 12% Q4 2019 14% Q1 2020 21%
The rapid development of technology means growing exposure to cyber risks – and a greater need for cyber coverage. Munich Re projects that global gross written premiums for cyber will reach $20.2 billion by 2025, more than double the $7.3 billion level expected this year.
Asia Q1 2018 -2% Q2 2018 0% Q3 2018 -1% Q4 2018 0% Q1 2019 0% Q2 2019 4% Q3 2019 5% Q4 2019 6% Q1 2020 6%
GLOBAL CYBER INSURANCE MARKET GWP Actual
$22bn
Projected
$20bn $18bn $16bn $14bn $12bn
Continental Europe Q1 2018 -1% Q2 2018 -2% Q3 2018 -2% Q4 2018 2% Q1 2019 2% Q2 2019 2% Q3 2019 4% Q4 2019 7% Q1 2020 8%
$10bn
Australia/ New Zealand
$8bn
Q1 2018 12% Q2 2018 14% Q3 2018 14% Q4 2018 16% Q1 2019 16% Q2 2019 18% Q3 2019 19% Q4 2019 21% Q1 2020 23%
$6bn $4bn $2bn $0
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Munich Re Cyber Risks Report
Source: Marsh Global Insurance Market Index Q1 2020
ENERGY FIRMS RETHINKING BENEFITS IN WAKE OF COVID-19 Between COVID-19-related shutdowns and plummeting energy prices, the global energy industry has been hit hard by the pandemic, which has forced many in the space to re-evaluate the benefits provided to workers.
ENERGY COMPANIES’ PLANS FOR HEALTH AND WELLNESS BENEFITS Cut benefits (plan designs and/or employee subsidy) to achieve cost savings 7.3% Target operational efficiencies to provide same level of benefits at a lower cost 28.3% Enhance benefits to attract and retain key talent 1.6% No changes 48.7%
MISSED OPPORTUNITIES FOR CAPTIVE AGENTS The largest captive insurance carriers are failing to capitalize on their proximity to millions of buyers, according to a study by MomentFeed, which provides proximity search optimization (PSO) services. MomentFeed suggested a few things captive agents can do to better generate local leads.
RESPONDING TO REVIEWS
90
< 50%
Proportion of reviews responded to by most local captive agents
88%+
Proportion of reviews responded to by agents with successful PSO strategies
Don’t know 14.1%
SOCIAL MEDIA POSTS
Average number of posts made by captive agents on local social media pages
110 to 122
Recommended number of posts agents should make per year for good PSO
Source: Mercer Energy Spot Poll: COVID-19 & Low Oil Prices Source: Insurance Proximity Search Optimization Report Card, MomentFeed
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UPFRONT
NEWS ANALYSIS
COVID-19 sparks E&O concerns As the insurance industry reckons with the full impact of the coronavirus pandemic, could brokers find themselves exposed to litigation?
AS THE COVID-19 crisis continues to unfold, the insurance industry’s focus is slowly shifting from the immediate effects of the pandemic to its longer-term implications. One top concern is the industry’s exposure to litigation and the impact that class action lawsuits might have on both the finances and reputation of insurance companies. There are several factors that could drive coronavirus-related litigation against the insurance industry, several of which are
the United States – understandably so, as business continuity losses for small firms could total as much as $383 billion a month, according to an estimate from the American Property Casualty Insurance Association. Josh Wirtshafter, an associate based in the New Jersey office of global law firm Kennedys, says many of these claims stem from the significant impact lockdown has had on businesses in the US. “As for our claims landscape, it has been
“Clients are now going to be turning to their broker and asking whether there is cover, and if there isn’t cover, why not?” Richard Booth, RPC already playing out. These factors include the capacity of a claim to make or break a policyholder’s business (and the prominent media attention around this issue), the adequacy of coverage and advice given to policyholders, and the financial sturdiness of insurers. Business interruption (BI) coverage has been at the heart of many pandemic-related disputes and several class action lawsuits in
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pervasive,” he says, “spanning almost all lines of insurance, with an obvious and natural spotlight on BI coverage, and resulting in thousands of lawsuits, including numerous class actions and a petition for multidistrict litigation regarding the availability of BI coverage for COVID-19-related claims.” The factors that make the coronavirus pandemic such a high-stakes scenario for
insurers and policyholders could also have reverberating consequences for insurance brokers. Although COVID-19-related claims against brokers have been far fewer in number, they are trickling in and have resulted in several lawsuits. “These lawsuits generally allege that brokers failed to accurately communicate to their policyholders the scope of coverage purchased and/or did not procure policies that … cover BI losses arising from viruses or even from a pandemic,” Wirtshafter says. “That, of course, begs the question as to whether such coverage was even available.” Matthew Kramer, EVP of professional liability at Arch Insurance, stresses that “agents and brokers [must] be aware of the exposures they face on a daily basis. As evidenced recently with the pandemic, unexpected exposures can come to light very quickly. However, if the broker is listening to their client’s needs and is educated and aware of the availability of coverage in the market-
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THE GLOBAL ECONOMIC IMPACT OF COVID-19
-4.9%
The International Monetary Fund’s global growth projection for 2020 due to the COVID-19 pandemic
9.2% to 10%
Projected 2020 unemployment rate for OECD countries
13% to 32%
The World Trade Organization’s projected decline in global trade for 2020
23%
Decline in global stock markets between late January and late March Sources: International Monetary Fund; OECD; World Trade Organization; World Economic Forum, based on the MSCI All Country World Index
place, they can potentially avoid liability.” Kramer also notes that allegations against agents and brokers can arise from misalignment between the client’s expectations and what was ultimately delivered.
Kennedys, adds: “Some policyholders may argue that their broker breached an ongoing duty to advise them to review their insurance programs during the window of opportunity between the first reported case of
“Some policyholders may argue that their broker breached an ongoing duty to advise them to review their insurance programs” Fleur Rochester, Kennedys “Clients are now going to be turning to their broker and asking whether there is cover, and if there isn’t cover, why not?” says Richard Booth, a senior associate at global law firm RPC. “The risk to the broker is that they will be exposed to criticism that they haven’t properly advised their clients about the scope of cover within [these] policies.” Fleur Rochester, London partner at
COVID-19 … and the market’s widespread refusal to provide relevant extensions or endorsements as the potential scale of the pandemic grew clearer.” Paul Castellani, another London partner at Kennedys, adds that “where policyholders suffer a loss to which their insurance cover does not – or does not adequately – respond, it is inevitable that they will look at the
role their broker played in placing the insurance and advising them on what cover they required.” Going forward, brokers will no doubt be careful to present policyholders with the full array of business interruption cover available in the market and record those discussions. “In the future,” Rochester says, “it will not be possible for brokers to say there was no breach of duty because they could not be expected to anticipate a pandemic of this magnitude.” Kramer adds that the best way for brokers to mitigate exposure is “through clear communication and documentation with their clients. One of the easiest allegations to make is a client stating that if they were aware of coverage, they would have bought said coverage. A broker must be transparent about what they have access to and the affordability of certain coverages. They must get responses from clients in writing in an effort to protect all parties.”
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UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Baldwin Krystyn Sherman Partners
Rosenthal Brothers, Trinity Benefit Advisors, Russ Blakely & Associates
The trio of acquisitions will expand Baldwin Risk Partners Group’s reach in real estate insurance and employee benefits
Carlyle Group and T&D Holdings
Fortitude Group Holdings
The deal to acquire 76.6% stake in Fortitude from AIG has been valued at around $2.2 billion
Gallagher
CRES Insurance Services
Las Vegas-based CRES specializes in E&O insurance and risk management services for the real estate sector
Hippo Insurance
Spinnaker Insurance
Hippo will continue operating as an MGA following the transaction, and a portion of its premiums will be underwritten by Spinnaker
The Hilb Group
Freedom Insurance Center
Fort Myers-based Freedom Insurance Center focuses mainly on homeowner’s and auto policies in Florida
Worldwide Facilities
Royal Oak Underwriters
Royal Oak Underwriters is an E&S wholesaler that operates in several Eastern states
The Hanover launches new product for tech businesses
The Hanover Insurance Group has launched Hanover Technology Professional and Cyber Advantage, an integrated E&O, cyber and risk management product for tech firms. Designed to address the risks faced by tech companies, the product can be customized to meet the needs of businesses of any size, from startups to multinational corporations. It offers liability coverage for errors & omissions, cyber and privacy security, personal injury, and media and content, as well as a range of firstparty cyber coverage options for issues like cyber extortion and data and systems restoration.
Gallagher snaps up real estate specialist
Gallagher has acquired Las Vegas-based insurance and risk management firm CRES Insurance Services. Founded in 1996 and led by president and CEO Steven Sargenti, CRES designs, markets and services comprehensive E&O insurance and risk management offerings for real estate companies and professionals across the US, particularly in the Southwest. After the deal is finalized, the CRES team will continue to operate from its current locations in Las Vegas and San Diego under the supervision of Kevin Garvin, Gallagher’s head of North American affinity operations. “CRES’s specialized expertise and product offerings to real estate agents complement and expand our strengths in that market,” said Gallagher chairman, president and CEO J. Patrick Gallagher Jr. “I am very pleased to welcome Steve Sargenti and his associates to our growing global team.”
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AmTrust Exec rolls out commercial crime offering
AmTrust Financial Services’ AmTrust Exec division has launched a new commercial crime product designed for a wide range of medium-sized and large businesses. The product covers losses from employee and third-party theft of money, securities and other property, including employee theft (without manifest intent), computer and electronic funds transfer fraud, fraudulent impersonation, and clients’ property. Melissa Schwartz, previously the fidelity and crime product leader for Liberty International Underwriters, joined AmTrust in January to lead the commercial crime product offering.
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PEOPLE Marsh introduces cover for delivery drivers
Marsh, in collaboration with Arity, AXA XL’s mobility data and analytics company, has launched Marsh deliveryPRO, an insurance product designed to help US businesses meet the increased demand for same-day delivery. The usage-based product is priced by mile, allowing businesses to pay for only the coverage they need, and acts as primary auto coverage when the driver is on a delivery. Premiums are based on the number of miles driven for the delivery; the product also offers pay-per-claim third-party claims administration and claims consulting services.
Axon creates crisis management division
Axon Underwriting Services has formed a crisis management division to offer product recall and food-borne illness and contamination coverage to US-based clients. The new division complements Axon’s existing suite of specialized insurance products and expands its underwriting capabilities to offer contaminated product recall, consumer goods product recall, and restaurant food-borne illness and contamination insurance. Axon’s Randy Hampton said the move “reflects our strategic approach to meet the needs of a product recall market eager for reliable and innovative underwriting solutions.”
Starr unveils usage-based aviation insurance
Starr Insurance Companies has introduced Starr Gate, a general aviation policy for pilots who rent aircraft. The policy includes usage-based pricing, allowing pilots to pay for coverage based on when they’re flying. The program also includes access to CloudAhoy, a cloud-based analytics tool that can help pilots improve their skills and potentially get a discount on premiums. “Starr Gate is better aligned with a pilot’s skills and flight time,” said Starr Aviation SVP Jim Anderson. “With CloudAhoy data, we can write coverage in high definition. It’s customized insurance that can make you a better pilot.”
NAME
LEAVING
JOINING
NEW POSITION
Belinda Bates
EY
Zurich Insurance Group
Senior risk consultant for climate change, commercial insurance
Heather DePiero
Newfront Insurance
The Liberty Company
Associate director of business development
Bruce Eisler
N/A
Aspen Insurance
Chief underwriting officer and US CEO
Nick Hildenbrand
N/A
AmeriLife Marketing Group
Principal
Chris Howard
WNC Insurance Services
Zurich Insurance Group
Head of accident and health, US
Michael Leahey
N/A
Axis Re
Head of agricultural reinsurance
Tim Mann
Conifer Insurance
Hastings Mutual Insurance Company
Chief claims officer
Andrew Robinson
Oak HC/FT
Houston International Insurance Group
CEO
Eric Seyfried
Aon Risk Services
AXIS Insurance
Head of cyber, US open market
Tami Stevenson
N/A
Crawford & Company
Senior vice president and global general counsel
Aspen Insurance makes C-suite appointment
Aspen Insurance has appointed Bruce Eisler as chief underwriting officer and CEO of Aspen US. Eisler joined Aspen in 2010 and has held several management positions, including head of US financial and professional lines and global head of professional liability. A lawyer and current member of the Pennsylvania Bar, Eisler entered the insurance industry as claims counsel for Cigna Property & Casualty. He later moved to AIG, where he handled professional liability claims. He also held various roles with Reliance National, ACE USA and Liberty International Underwriters, where he was senior vice president of professional liability underwriting.
Zurich creates climate change advisory role
Zurich Insurance Group has appointed Belinda Bates to the newly created role of senior risk consultant for climate change for commercial insurance. Bates will work with Zurich’s global natural hazards practice leader, Amar Rahman, and underwriting teams to further develop the company’s climate change resilience services. Prior to joining Zurich, Bates was a consultant in financial risk management at EY. She holds a PhD in natural hazards modeling from the Swiss Federal Institute of Technology at Lausanne.
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UPFRONT
WORKERS’ COMP UPDATE NEWS BRIEFS Bold Penguin adds AmTrust Financial Services to its platform
Insurtech provider Bold Penguin has added AmTrust Financial Services’ workers’ compensation insurance to its exchange platform, giving agents and brokers greater access to AmTrust’s workers’ comp options for more than 350 business classes. “As the largest commercial insurance exchange, we’re laser-focused on connecting agents and carriers in record time,” said Bold Penguin founder and CEO Ilya Bodner. “Our integration with AmTrust will strengthen our workers’ compensation offerings for our platform users.”
Sapiens brings predictive analytics to workers’ comp
Insurance software provider Sapiens Americas has partnered with artificial intelligence company CLARA Analytics to improve its workers’ compensation offering. Sapiens will integrate CLARA’s predictive analytics tool for workers’ comp claims with its CoreSuite for Workers’ Compensation to improve the customer experience and offer access to in-depth analysis. The combined offering will help simulate the costs and benefits of existing early intervention programs and facilitate interventions for workers who are most likely to benefit from them.
California sees spike in workers’ comp claims due to COVID-19
Thanks to changes in California’s workers’ comp regulations, thousands of state residents have filed workers’ comp claims due to COVID-19 infection. Last December, California passed new rules that made it easier to prove on-the-job injury. In March, the state also created a COVID-19 injury category for workers’ compensation claims, retroactive
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to December. As the state’s number of coronavirus cases increased and shutdown orders kept most people at home, claims began to surge. California reported 2,251 workers’ comp claims in March and 2,677 in April. However, only 85 workers’ comp claims had been filed in the first three weeks of May.
Employers Holdings CEO announces retirement
Workers’ comp insurer Employers Holdings has revealed that its longtime president and CEO, Douglas Dirks, plans to step down on April 1, 2021. The Employers board of directors has initiated a search process to identify his successor. Dirks has served as CEO of the company for 27 years and has overseen several key developments, including Employers’ privatization in 1999 and its demutualization and IPO in 2007. Dirks also oversaw a strategic expansion initiative that enabled Employers to provide workers’ compensation insurance to small businesses nationally.
California orders workers’ comp insurers to reduce premiums
California’s insurance regulator has called for workers’ compensation insurers to reduce their premiums. Effective July 1, the regulation affects 50 workers’ comp insurers in the state and is retroactive to California’s March 19 stay-at-home order; it will expire 60 days after the order is lifted. Officials cited lower risk factors, which have decreased as millions of employees work from home due to the pandemic, as the primary reason for the new regulation. “Workers’ compensation premiums should reflect that many employees are performing less risky duties,” said California insurance commissioner Ricardo Lara.
Workers’ comp takes a hit from COVID-19 From decreased premium to new regulations, the pandemic has put up numerous hurdles for the segment Businesses around the world have sustained significant financial losses due to the COVID-19 pandemic – and the insurance industry is no exception. Of the various lines of commercial insurance, workers’ compensation has taken one of the biggest hits, says Mark Walls, vice president of communications and strategic analysis at Safety National. “Payroll dropped across the country as businesses were shut down,” he explains. “Since premiums are tied to payroll, this means that overall premiums for the industry will be down in 2020 compared to prior years.” He adds that insurers’ investment incomes have also been hamstrung by the federal government’s recent rate cuts. It’s not just income that has been affected, though. According to Walls, presumption laws, which determine whether an individual contracted COVID-19 in the course of their employment, have also gained more prominence across the country since the onset of the pandemic. Prior to the outbreak, it was rare to see a communicable disease covered by workers’ comp. But now, regulators and legislators are mandating an expansion of coverage beyond what was contemplated in underwriting to allow for pandemic-related claims.
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No group raises as many difficult questions about workers’ comp coverage as healthcare staff and essential workers on the front lines of the pandemic. While front-line workers carry a lot of exposure, Walls believes they are still entitled to compensation, with a few important caveats.
“It is impossible for the insurance industry to adequately underwrite the risk of a global pandemic” “Workers’ compensation is designed to cover injury risks that are specific to the employment, not global pandemics,” he says. “If workers’ compensation is going to be expected to cover these losses, then premiums need to be adjusted accordingly.” In order for workers’ comp insurers to cover front-line workers’ claims, Walls believes there needs to be a governmentfunded backstop similar to the Terrorism Risk Insurance Act, since “it is impossible for the insurance industry to adequately underwrite the risk of a global pandemic.” Walls also points out that thousands of COVID-19 claims were accepted without question before any pandemic-related presumption laws were in place. “If the occupation created a greater risk than the general public, then those claims are being accepted,” he says. While the pandemic has already forced major changes to the insurance industry, Walls says it’s still too early to predict the overall impact of the coronavirus crisis. “Once we see the cost of the claims,” he says, “there needs to be a discussion about future pandemics and how the industry can effectively underwrite and collect premiums to account for these new exposures.”
Q&A
Thomas Warsop CEO ONE CALL
Years in the industry 25+ Fast fact Warsop’s career has taken him all over the world – he and his family have lived in more than 20 cities
Keeping employees safe Why is it important for companies to have a solid return-to-work strategy? To minimize the spread of COVID-19 and maintain employee safety, companies must take many precautions. From conditioning and strengthening programs for furloughed employees with physically demanding jobs to health screenings, contact tracing, PPE and social distancing requirements, the list is long. Not all companies require the same setup – and not all know exactly what they need. It’s important to develop a consultative strategy to help organizations meet the unique needs of both the physical and operational environment of the company. The goal should be to return your workforce safely and with minimal disruption to operations. In addition, there’s a whole new workforce to consider: remote employees. Many of these employees are working from home for the first time. When COVID-19 hit, they had to adapt quickly – many of them are still working from dining room tables and couches, and many will be working from home permanently.
What are the most common injuries employees face while working from home? Unfortunately, we expect to see a lot of injuries resulting from repetitive-motion jobs – think typing and sitting in front of a computer for extended periods of time. Understanding ergonomic principles is key. Bad posture can lead to weak muscles, resulting in muscle tears, decreased circulation and scar tissue formation. These symptoms eventually show themselves as common cumulative trauma disorders such as tendonitis, carpal tunnel syndrome and sprains or strains.
What are the biggest employee-related problems companies will have to contend with once they reopen? Upon return to work, employees want to feel safe, and there are many things to take into consideration. For instance, one of our durable medical equipment and complex care partners, PN Medical, did an investigation that found wearing masks improperly can cause breathing issues, which can lead to an increased heart rate, anxiety, headaches, dizziness and fatigue. So, even when employees are simply trying to keep themselves safe, there are important factors to consider to prevent long-term negative health effects. These effects can be mitigated with relatively straightforward actions.
Are companies that are transitioning into permanent work-from-home arrangements still obligated to provide employees with workers’ comp coverage? Absolutely. It is the responsibility of the employer to provide workers’ compensation insurance, regardless of where their employees are performing their duties. With a bit of patience, education and thoughtful planning, we can all make working from anywhere safer and more rewarding.
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3/07/2020 4:14:28 AM
UPFRONT
TECHNOLOGY UPDATE
Personalizing the consumer experience Customers want insurance coverage that truly suits them. Technology can help insurers make it happen
personal and lifestyle-focused data if it results in lower premiums. In addition, 45% of respondents said they’re comfortable with wearable devices, and 43% are comfortable sharing the information from those devices with an insurer in exchange for benefits. “Insurers, armed with this information, can deliver more personalized customer experiences and allow for tailored products and digital self-service, creating benefits for both the customer and the insurer,” Krishnamachary says.
“The best-in-class insurers will strive to elicit an emotional connection in digital interactions” There is strong demand from consumers for insurers with a good digital presence, according to a new study by DXC Technology. Around 43% of the study’s 2,000 respondents said they prefer to file insurance claims through digital channels. Consumers’ trust in their insurers isn’t quite as high, however. Only two out of five respondents said they trust insurers to have their best interests at heart, and 43% believe that half or fewer of claims are successfully paid, even though the actual figure of successfully paid claims is closer to 90%. To truly win customers’ trust and loyalty,
NEWS BRIEFS
it’s not enough to use just any technology, says Sudhar Krishnamachary, VP of insurance sales at DXC Technology. “Our research shows that many consumers want insurers to improve the digital experience with more personalized service than what they are seeing today in every digital channel of interaction.” Personalizing insurance means creating an experience specific to a customer’s needs. Technology can help with that – the industry has already begun using wearables and telematics to track customer data. DXC Technology found that 87% of survey respondents were comfortable sharing
Commercial drone insurance platform launches
Insurtech company Precision Autonomy has launched a new online platform for commercial drone insurance. Backed by Old Republic Aerospace, the platform offers enterprise-level drone insurance via an online quoting process that takes less than 60 seconds. The coverage features high liability limits, medical liability, TRIA coverage and optional war coverage. It will initially be offered only in Arizona, California, Colorado, Florida, Georgia, Illinois, New York, North Carolina, Ohio, Virginia and Washington.
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He also believes that those insurers that leverage digital innovations to create a seamless and approachable human experience will become industry leaders. “We believe human-centered design capability will play a key role in humanizing customer journeys enabled more and more by digital tools,” Krishnamachary says. “As customers engage with or via digital interfaces, the quality of the engagement will be driven by human factors such as empathy, connection and personification. The best-inclass insurers will strive to elicit an emotional connection in digital interactions, similar to the traditional approach of in-person insurance sales and service.”
Lloyd’s introduces new API to improve data flow
Lloyd’s of London has rolled out a new API designed to enable the frictionless flow of electronic placement data for submissions and quotes between carriers and brokers using Lloyd’s Placing Platform Limited (PPL) or any other proprietary platform. Part of the Future at Lloyd’s initiative, the new API was developed in collaboration with PPL, LIMOSS and several brokers and underwriters, and “will enhance and simplify the flow of electronic placement data across the market,” according to Lloyd’s COO Jennifer Rigby.
www.ibamag.com
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3/07/2020 4:16:35 AM
Q&A
Trevor Burgess CEO
Flood insurance purchasing made easy
NEPTUNE FLOOD
Years in the industry 2 Fast fact Before moving into the insurtech space, Burgess was a managing director at Morgan Stanley and the CEO of NYSE-listed fintech C1 Bank
How does Neptune Flood’s AI-driven flood modeling work? Neptune’s AI is a reactive artificial intelligence machine that makes it easy to buy insurance by allowing for instant risk selection, pricing and disaggregation. When an agent or customer enters in an address, our AI gets to work calling on over 50 data sources – some external and some based on our own models. That data then drives the yes/no decision and the disaggregation to ensure that if all the models are wrong, no one reinsurance partner has too many risks in any one location.
What are the challenges in producing accurate flood risk models? There are three primary challenges to modeling flood. First, the market is defined by the NFIP, which still has about 90% market share. As the NFIP is an entitlement program that is not required to charge actuarially accurate rates, our main point of comparison for pricing risk is fundamentally flawed. The second challenge is computing power. Neptune uses vast amounts of cloud computing power to enable our artificial intelligence. I’m not sure it would have been commercially reasonable to do so even a few years ago. Finally, there is no loss data – well, the NFIP has it, but they will not share it – so we are largely modeling theoretical risk until we can build up our own loss history. Flood is unique this way – almost every other peril has a widely available loss data set.
Insurtech develops parametric product for pandemics
Machine Cover, an insurtech that creates parametric insurance products, is developing what is believed to be the world’s first parametric-based pandemic insurance. Citing the “critical gap” the COVID-19 outbreak has revealed in pandemic-related coverage, Machine Cover is designing the product as an optional add-on to a business’s existing commercial policy. If the policy is triggered as the result of an agreed parametric measure, the business will receive an automatic payout without needing to make a claim.
You recently launched a commercial flood insurance product. How is that different than modeling flood risk for residential properties? With commercial flood insurance, Neptune has had to take into account variations in building structures, the valuation of contents and how business interruption from flood can impact the ability of a small or mediumsized business to recover from a catastrophic flood.
Why did you choose to launch your commercial flood insurance product to nonresidential businesses first? Main Street businesses are reeling from COVID-19, and Neptune prioritized development to help these businesses save money versus the NFIP as we head into hurricane season. The forms for our second phase – adding commercial buildings where people sleep – are just a few weeks behind.
Do hotels, apartments and condos add another layer of complexity to modeling flood risk? Taller buildings do have different risk profiles in a flood, and the legal issues when there are condominium associations in place require specialized forms to make sure these unique businesses have the right coverage. Every Neptune policy meets the requirements for mandatory bank acceptance, meaning our policies are at least as good as the NFIP’s and can be better with optional coverages, such as business interruption insurance, not offered by the NFIP.
Guy Carpenter enhances terrorism modeling
In a bid to enhance Sunstone, its proprietary terrorism modeling product, reinsurance specialist Guy Carpenter has partnered with Synthetik, a specialist in explosive-blast and weapons-effects modeling. Synthetik’s software will be incorporated into Guy Carpenter’s terrorism insurance loss model, including the addition of a 3D blast-load calculation model to cityscape models to provide virtual representations of business districts around the globe, which will allow Guy Carpenter to more accurately study clients’ exposures.
Travelers joins BrokerTech Ventures
Travelers has become the first carrier partner of broker-led investment group BrokerTech Ventures, whose 13 current broker members write a collective $30 billion in annual premium. “We represent a sizable annual premium with Travelers and have followed their leadership in terms of carrier innovation over the past several years,” said co-CEO Dan Keough. “We intend on strategically partnering with several additional insurance companies that have a passion for and focus on insurtech innovation.”
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3/07/2020 4:16:39 AM
PEOPLE
INDUSTRY ICON
SMALL BUSINESS IS BIG BUSINESS Barry Zyskind has been a leader at AmTrust Financial Services since its founding – and over the past two decades, he’s seen the insurer’s focus on niches and small business pay off
AMTRUST FINANCIAL SERVICES is currently one of the top workers’ compensation insurers in the US based on 2019 direct written premium, as well as one of the leading commercial carriers in the country. The journey to get there has spanned more than two decades – and Barry Zyskind, CEO and chair of the AmTrust board, has been there since the very beginning. After graduating from New York University’s Stern School of Business, Zyskind began working as an investment banker at Janney Montgomery Scott in New York. Two years into the job, another opportunity within the financial sector came his way. In 1998, Zyskind’s father-in-law, Michael Karfunkel, and his brother, George Karfunkel, both veterans of the real estate business, got the chance to buy a specialty niche insurance company from Wang Holdings. Michael asked Zyskind if he wanted to take part in the acquisition and then work for the firm; Zyskind agreed. “We wanted to build something successful and something big and something that would last for a very, very long time,” Zyskind explains. “The company we had acquired had a small niche – they insured electronics – so we started from there.” AmTrust’s continued focus on niche
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specialty P&C markets helped the newly formed company stand out from larger insurance carriers. The search for underserved niches eventually led AmTrust to the workers’ compensation arena and established its strength in small commercial business. “We’ve really stuck to our plans – we still insure electronics through our warranty business,” Zyskind says. “We also are one
and when you get [into the industry], you realize how important it is to the economy and how you can make difference.”
Insuring America’s backbone Specializing in small business insurance has paid off for AmTrust. More than 99% of businesses in the US are considered small, and they employ almost 50% of all workers
“We wanted to build something successful and something big and something that would last for a very, very long time … By staying focused and staying in our niches, we’ve continued getting better” of the largest small workers’ comp insurers in the United States. By staying focused and staying in our niches, we’ve continued getting better.” During his tenure at AmTrust, Zyskind has also come to realize the value the insurance industry provides. “It’s an underappreciated business,” he says, “but I think insurance companies play a critical role in the economy,
in the country, according to the Small Business Administration. That translates into a large client base. “Small business is something that we believe will be here for many generations to come,” Zyskind says, “and they’re always reinventing themselves, whether it’s a dentist, a doctor, a restaurant, a specialty retailer or a contractor.”
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PROFILE Name: Barry Zyskind Title: CEO and chair of the board Company: AmTrust Financial Services Based in: New York City Years in the industry: 22 Accolades: Named one of Forbes’ 20 most powerful CEOs under 40 in 2012
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3/07/2020 4:17:36 AM
PEOPLE
INDUSTRY ICON
AmTrust has likewise evolved over the years. In 2001, Zyskind wanted to diversify the company’s insurance offerings for small businesses and decided to get into workers’ comp. However, the decision was a controversial one, as the 1999 scandal involving Unicover and its failed workers’ comp business was still on everyone’s minds. “At the time, I was leading the company, and my father-in-law was the chairman, and I remember going to him and telling him that we wanted to get into workers’ comp,” Zyskind recalls. “At first he told me that he didn’t think it made sense, and I came back with the plan, and ultimately he said, ‘If you want to do it, do it.’ It was something where
its presence around the world, as well as its teams’ expertise. In 2016 alone, AmTrust completed 14 acquisitions. However, its growth strategy has since shifted. “Acquisitions have played a critical role,” Zyskind says, but he notes that over the last two years, “we’ve really focused on making sure that systems and people are marching in the right direction. We’ve transitioned from a company that did a lot of acquisitions and became very large to a company looking to principally grow [organically].” One of the current areas Zyskind and AmTrust are paying close attention to is the E&S marketplace, which is seeing more activity amid a harder market. “We feel good
“Before COVID-19 hit, we were seeing a lot of momentum, and we’re continuing to see the momentum, so we feel good about where we are” I had this strong feeling, and the more I learned about it, the more I wanted to do it.” AmTrust began by building a workers’ comp underwriting team in the US. Then, in 2002, it acquired the renewal rights to The Princeton Agency’s workers’ comp business, which helped to expand its footprint in the US and supercharge the new line of business.
Looking forward In the first few years after AmTrust’s founding, its leaders were focused on buying companies and books of business that offered something of value to the fledgling company. These acquisitions included buying the renewal rights to Associated Industries Insurance Company in 2004, which added to AmTrust’s book of business in Florida and, one year later, acquiring the renewal rights to Alea North America’s specialty middlemarket P&C business. The deal-making continued in the years that followed, which helped AmTrust grow
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about being able to take the things we’ve learned in the admitted market and apply them to the E&S market,” Zyskind says, “and also learn how to combine some admitted products with non-admitted products.” To help the company remain profitable and safeguard its success into the future, AmTrust launched the organization-wide AmTrust Forward program last year. The company’s leaders pinpointed AmTrust’s strengths and what was important moving forward, which involved selling some operations that didn’t fit into this plan. Today, the AmTrust plane is ready for takeoff, despite some turbulence brought on by the pandemic. “Before COVID-19 hit, we were seeing a lot of momentum, and we’re continuing to see the momentum, so we feel good about where we are, and we feel we’re focused,” Zyskind says. “AmTrust Forward is taking the best of what we’ve done in the past and positioning ourselves for 2020 and beyond.”
AMTRUST FINANCIAL SERVICES BY THE NUMBERS
1998 Year AmTrust was founded
34 Countries where AmTrust operates
5,600+ AmTrust employees
9,500+ Agents AmTrust works with
12 Brands under the AmTrust name
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3/07/2020 4:17:35 AM
UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email iba@keymedia.com
The evolving nature of fraud As fraudsters adjust their tactics in response to an uncertain world, there are five emerging trends insurers should be aware of, writes Dennis Toomey THE INSURANCE market was set to hit new highs in 2020. Then COVID-19 happened. That forecast – and the global economic outlook – is now far less certain. But while market growth projections are in a state of flux, the rate of fraud isn’t expected to slow down. Insurance fraud is anticipated to cause anywhere from $80 billion to $100 billion in lost revenue this year. As insurers seek to combat fraud, there are five key trends they need to keep in mind.
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4
The crucial role of consortiums
5
The increase in fraud variety
The value that consortiums offer the insurance industry is increasing. They provide a bird’s-eye view of transactions and shine a spotlight on suspicious activity across multiple carriers and lines of business. Currently, the maturity of insurance consortiums varies between regions and countries. Organizations like CANATICS in Canada are adept at analyzing cross-carrier activity and providing invaluable surveillance intelligence.
As more insurance products are introduced, the surface area for insurance fraud grows. Fraudsters seek to adapt and exploit the volume and variety that those products offer. For example, life insurance can be gamed by entering incorrect details on the application to avoid high premiums, while health insurance can be manipulated by masking existing or underlying conditions. In the US, workers’ comp insurance is subject to mod factor gaming: Higher sala-
The new era of fraud investigation
Modern fraud is transnational and agile. Not so long ago, fraud investigation was a labor-intensive process. Teams on the ground would go door to door to examine cases. Today, this process isn’t just inefficient – it’s insufficient. As fraud evolves, so must investigators. Today’s fraud fighters need nuanced skill sets and agile ways of working to be able to identify the scams and tactics modern fraudsters are adopting. But they must also strike a delicate balance. While investigators need to gather data and build a case that will result in criminal prosecutions, they must also consider today’s much more stringent privacy implications. In the age of GDPR and CCPA, it’s not just a new era for insurance investigation, but a new era for evidence collection, too.
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and connections between entities is vital to the counter-fraud engine of many insurers. Leading insurers are placing huge value on social media, employing dedicated teams of social media analysts. But while human expertise will always be critical, the uptake of automation and artificial intelligence is accelerating. There are several tools available to automate social media investigations. The challenge isn’t the availability of the technology, but the compatibility and stability of the platform.
that they need to manage their data differently to be able to identify and thwart fraud.
The significance of social media
Investigators must also acknowledge the central role that social media plays as a primary source of intelligence. Mining social media for information to uncover hidden relationships
“Today’s fraud fighters need nuanced skill sets and agile ways of working to be able to identify the scams and tactics modern fraudsters are adopting” 3
The necessary collapse of silos
Until recently, fraud scams were fairly rudimentary. Fraudsters would steal an identity, create synthetic IDs and execute criminal activity. It was a repeatable, linear and somewhat predictable process. Today, however, criminals are more subtle and nuanced. One area that insurers need to be particularly conscious of is silos. Whether they’re within departments or interdepartmental (i.e. between cyber and risk divisions), silos enable fraudsters to execute their scams. That’s why insurers are moving to embrace a 360-degree view of fraud and break down the silos. Accordingly, insurance carriers understand
ries are hidden, shell companies are created, and employee classifications are massaged to bring premiums down. Paradoxically, the one thing about fraud that never changes is the fact that it’s constantly changing. As this pernicious practice continues to evolve, carriers need a partner with a track record of anticipating trends and evolving faster than the fraudsters. Dennis Toomey is the global director of counter-fraud analytics and insurance solutions at BAE Systems. He has nearly three decades of experience and is a certified fraud examiner in the US.
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3/07/2020 4:18:16 AM
SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020 Brokers reveal which carriers are consistently providing top-notch service – and where they need to improve HOW HAS CARRIERS’ PERFORMANCE CHANGED? Carriers’ average scores increased this year across all but three categories: quick quotes, range of products, and product training and marketing support. The biggest gains this year came in the areas of underwriting expertise, competitive rates and commitment to the broker channel, although for the most part, carriers’ scores remained steady from 2019.
2018
2019
2020
10.0
9.0
8.0
7.0
6.0
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Commitment to the broker channel
Underwriting expertise
Claims processing
Range of products
Technology and automation
Product training and marketing support
Competitive rates
Quick quotes
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BROKERS ON MGAs 2017
Lorem
FIVE-STAR CARRIERS 2020
FIVEBR
2019
FOR THE seventh year in a row, IBA asked agents and brokers to name the top carriers in the industry by sharing how well they perform in eight categories. Brokers evaluated carriers on a scale of 1 (poor) to 10 (excellent) in the areas of underwriting expertise, technology and automation, claims processing, quick quotes, range of products, product training and marketing support, competitive rates, and commitment to the broker distribution channel. Compared to last year’s results, carrier performance has generally improved. Three categories (underwriting expertise, commitment to the broker channel and competitive rates) all saw fairly significant increases in carriers’ average score. However, two categories that enjoyed a bump in score in 2019 (range of products and quick quotes) suffered from a decrease this year. Overall, a total of 22 carriers managed to receive an average score of eight or higher in at least one category, earning them the title of Five-Star Carrier. Of those 22, five companies earned five-star scores in all eight categories, cementing their status as an All-Star Carrier.
HOW WELL DID CARRIERS PERFORM ON AVERAGE IN EACH CATEGORY?
WHAT ARE BROKERS LOOKING FOR IN A CARRIER? As was the case in 2019, competitive rates, underwriting expertise and claims processing continue to be brokers’ top three priorities when choosing a carrier, although range of products shot up in importance this year, tying with claims processing as brokers’ third biggest priority. Competitive rates
2020
2019
74% 88%
Underwriting expertise 55% 50%
Claims processing 41%
Commitment to the broker channel 8.57
49%
Range of products Underwriting expertise 8.31
41% 32%
Claims processing 8.26
Commitment to the broker channel 31%
Range of products 8.04
24%
Technology and automation 26%
Technology and automation 8.03
13%
Product training and marketing support 7.85
Quick quotes 25% 34%
Competitive rates 7.83 Product training and marketing support Quick quotes 7.77
9% 9%
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SPECIAL REPORT
FIVE-STAR CARRIERS FIVE-STAR CARRIERS BY CATEGORY Carrier
Commitment to the broker distribution channel
Underwriting expertise
Claims processing
Range of Products
Technology and automation
Product training and marketing support
Competitive rates
Quick quotes
AIG AmTrust Financial Auto-Owners Insurance Group AXA XL Chubb Cincinnati Insurance Companies Donegal Insurance Group Employers Mutual Casualty Company Erie Insurance Group Everest Re Group Liberty Mutual Markel Insurance Company Nautilus Philadelphia Insurance Companies PURE Insurance Safety National Selective Insurance Sompo International The Hartford Travelers Insurance Westchester Zurich Insurance All-Star Carrier 22
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BROKERS ON MGAs 2017
Lorem
FIVE-STAR CARRIERS 2020
FIVEBR
2019
FIVE-STAR CARRIER
Jeffrey S. Tagsold
AUTO-OWNERS INSURANCE GROUP Headquarters: Lansing, MI Year founded: 1916 Employees: 5,400+ Number of offices: 100+ Leadership: Jeffrey S. Tagsold, chair and CEO; Daniel J. Thelen, president; Michael D. Pike, executive vice president; William F. Woodbury, first vice president, secretary, general
counsel; Jonathan R. Riekse, senior vice president, personal lines underwriting; Mary S. Pierce, senior vice president, marketing and sales, life company operations; Denise G. Williams, senior vice president, HR and incentive travel; Theodore W. Reinbold, senior vice president and treasurer, actuarial and financial; Anthony Dean, senior vice president, IT; Andrea L. Lindemeyer, senior vice president, commercial lines underwriting; Jamie P. Whisnant, senior vice president, claims
Established in 1916, Auto-Owners Insurance Group is known for its exceptional financial strength and stability, as well as for its status as one of the nation’s largest insurers, writing more than 5.2 million policies annually. Auto-Owners is rated A++ (superior) by A.M. Best and is a Fortune 500 company. It has received numerous awards from national organizations for customer service and quality and is certified as a Great Place to Work. Valuing its team members and customers, along with honesty, hard work, prudence, loyalty, relationships, opportunities for associates, stability, consistency and profit, Auto-Owners is 100% committed to the independent agency system. “We consistently demonstrate that commitment by paying generous commissions and not competing against them by writing directly,” says Auto-Owners chair and CEO Jeff Tagsold. The company has experienced record growth over the past few years due to the improvement of its rates – a consequence of its consistent, profitable results, Tagsold says, adding: “We offer a wide array of products with competitive coverages and pricing, and great agency-facing automation, which allows them to do business efficiently with us.”
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BROKERS ON MGAs 2017
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SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020
FIVE-ST BRO
2019
COMMITMENT TO THE BROKER DISTRIBUTION CHANNEL
UNDERWRITING EXPERTISE Average carrier performance 8.31
Average carrier performance 8.57
FIVE-STAR CARRIERS FIVE-STAR CARRIERS
AIG
Markel Insurance Company
AIG
Liberty Mutual
AmTrust Financial
AmTrust Financial
Markel Insurance Company
Auto-Owners Insurance Group
Nautilus
Chubb
Philadelphia Insurance Companies
Cincinnati Insurance Companies
PURE Insurance Safety National
Employers Mutual Casualty Company
Selective Insurance
Donegal Insurance Group
Selective Insurance
Erie Insurance Group
Sompo International
Employers Mutual Casualty Company
Sompo International
Everest Re Group
Travelers Insurance
The Hartford
Liberty Mutual
Westchester (Chubb)
Erie Insurance Group
Travelers Insurance
Everest Re Group
Zurich Insurance
Auto-Owners Insurance Group AXA XL Chubb Cincinnati Insurance Companies
Although it saw the biggest increase in average score this year, commitment to the broker distribution channel continues to be a contentious category. Even though brokers gave their carriers higher marks this year than in 2018 and 2019, many still expressed strong dissatisfaction with their carriers’ commitment to the channel. “There is no relationship with the carrier; there needs to be a solid relationship to help agencies grow,” one broker said, while another complained about “terrible communication with underwriters.”
Nautilus Philadelphia Insurance Companies PURE Insurance Safety National
Brokers know that experienced, effective underwriters are crucial to delivering superior coverage and pricing it competitively – that’s why this category consistently ranks among their top three priorities when choosing a carrier. Overall, carriers saw a sizable increase in their average score in this category compared to last year, and many brokers voiced appreciation for their underwriters’ knowledge, talent, diligence and excellent communication. “Underwriters are very knowledgeable about their products and how they can best serve the client,” one respondent said, adding that their carrier’s underwriters “are tremendously talented across multiple disciplines.” Another said: “I can always rely on my underwriter for knowledge and expertise.”
“There needs to be a solid “Young underwriters need to learn relationship to help agencies grow” how to think out of the box” But other brokers sang their carriers’ praises in this area. “They have and continue to communicate clearly that we, the independent agent, are their only choice for distribution,” one broker said, while others praised their carriers as “exceptional partners” who are “very dedicated to their broker relationships.” As was the case in several categories, both the praise and complaints appear to stem from a single source: communication. “We haven’t seen much of our marketing rep, and it is very difficult to get in touch with them,” one broker said. “The communication with agents on some products has caused some tension,” said another. But once that communication is firmly established, things seem to fall into place for both parties. As one respondent put it: “They are very committed to the independent agent, which is very important to us.”
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Suggested improvements include further training and more stability in the form of an assigned underwriter, as well as a desire for less conservative, more flexible underwriting. “We have many issues with consistency in underwriting,” one broker said, while another wished that carriers would “leave experienced underwriters in place to teach, mentor and train new talent.” Along those lines, a couple of respondents found underwriters’ inexperience to be a hurdle. “It’s an age thing; younger individuals in the chain means less experience and gut knowledge. A lot of decisions are strictly ‘by the book,’ which leads to lost opportunities,” said one broker. Added another: “Young underwriters need to learn how to think out of the box and work with more experienced underwriters.”
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BROKERS ON MGAs 2017
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SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020
FIVE-ST BRO
2019
CLAIMS PROCESSING
RANGE OF PRODUCTS
Average carrier performance 8.26
Average carrier performance 8.04
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS
AmTrust Financial
Liberty Mutual
AIG
Auto-Owners Insurance Group
Markel Insurance Company
AmTrust Financial
AXA XL
Nautilus
Chubb
Philadelphia Insurance Companies
Auto-Owners Insurance Group
Cincinnati Insurance Companies
PURE Insurance
Donegal Insurance Group
Safety National
Employers Mutual Casualty Company
Selective Insurance The Hartford
Erie Insurance Group
Travelers Insurance
Everest Re Group
Westchester (Chubb)
Claims processing remains a top priority for brokers, and it’s an area carriers have clearly invested in, judging by the increase in the overall average score from 8.11 last year to 8.26 this year. However, while respondents noted that claims service has improved in recent years, they also stressed that better and more frequent communication is key to everyone’s success. “Keep the agent involved in the communication chain so we are not blindsided when there is a problem or disagreement on claim handling,” one respondent said.
“Keep the agent involved in the communication chain so we are not blindsided when there is a problem or disagreement” For those carriers that have made communication a priority, their efforts haven’t gone unnoticed. Several brokers described their carriers as “very responsive” on claims, and one praised their carrier for being “committed to their policyholders,” adding that “much of their claims practice is remarkable.” Respondents also mentioned the importance of fast turnaround times and quick responses, both as criticism (“must be done more rapidly”) and as praise (“they continue to find ways to be the best”). Personalization of claims was often mentioned as a key way for carriers to nurture relationships with brokers, who wished for “more local adjusters” or a “dedicated adjuster by account.” Overall, though, the feedback in this category was largely positive.
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AXA XL
Liberty Mutual Markel Insurance Company Nautilus Philadelphia Insurance
Chubb
Companies
Cincinnati Insurance Companies
PURE Insurance Selective Insurance
Employers Mutual Casualty Company
The Hartford
Erie Insurance Group
Travelers Insurance
Everest Re Group
Zurich Insurance
After enjoying a significant bump in overall average score in 2019, carriers’ performance on product range slipped a bit this year, falling from 8.15 to 8.04. Even so, 18 out of 22 carriers managed to earn a five-star rating in this category. “Broad appetite” and “close to the broadest range of products we have access to” summarizes the positive feedback brokers offered their carriers. Brokers also praised niche carriers for their specialty offerings: “Love that I can package GL, marine and garage liability,” said one respondent, while another commended a smaller carrier for being “great in personal lines, small business and commercial auto,” despite a limited product availability and appetite.
“Every carrier can always offer more products over more industries for agents” While most brokers gave their carriers satisfactory ratings in this category, they still had feedback on areas where carriers could improve their product offerings, such as developing clearer underwriting guides, offering better and more consistent umbrella coverage, and providing coverage for recreational vehicles and other ‘toys.’ Other frequent requests included expanding classes of business and range of coverage (“I wish they offered property in every state”), as well as being more creative. One respondent summed it up by saying: “Every carrier can always offer more products over more industries for agents.”
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20PHL
We believe every customer deserves person-to-person support. That’s why, when you call PHLY, you’ll speak with a real person. A professional with answers to your questions about coverage, paying a bill, making a claim, binding a proposal, even how to use the chat feature on our website. Along with quality coverage and claims service, how we interact with you is one of the many things that set us apart. Now, real quick, let’s get you the answers you need. Call 800.873.4552 or visit ThinkPHLY.com
AM Best A++ Rating Ward’s Top 50 2001-2019 97.4% Claims Satisfaction 120+ Niche Industries
REAL PEOPLE. REAL ANSWERS. REAL QUICK.
Philadelphia Insurance Companies is the marketing name for the property and casualty insurance operations of Philadelphia Consolidated Holding Corp., a member of Tokio Marine Group. All admitted coverages are written by Philadelphia Indemnity Insurance Company. Coverages are subject to actual policy language.
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BROKERS ON MGAs 2017
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SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020
FIVE-ST BRO
2019
TECHNOLOGY AND AUTOMATION Average carrier performance 8.03
PRODUCT TRAINING AND MARKETING SUPPORT Average carrier performance 7.85
FIVE-STAR CARRIERS AmTrust Financial Auto-Owners Insurance Group
Markel Insurance Company
FIVE-STAR CARRIERS AmTrust Financial
Nautilus
AXA XL
Philadelphia Insurance Companies
Chubb
Cincinnati Insurance Companies
PURE Insurance
Cincinnati Insurance Companies
Donegal Insurance Group
Safety National
Donegal Insurance Group
Erie Insurance Group
Selective Insurance
Everest Re Group
The Hartford
Employers Mutual Casualty Company
Chubb
Liberty Mutual
Markel Insurance Company Nautilus Philadelphia Insurance Companies PURE Insurance Selective Insurance Westchester (Chubb)
Erie Insurance Group Liberty Mutual
Carrier performance in technology and automation continued to climb steadily in 2020, increasing from an average score of 7.94 last year to 8.03 this year. Fifteen carriers received a five-star rating in this area – down slightly from last year’s 16, but still a strong showing. Many brokers highlighted the fact that their carriers are in the process of upgrading or transitioning to a new system, which is causing some headaches. Others acknowledged that the tech that is in place is “solid, but could offer a little more information.”
“[The platform is] a little too automated; needs more flexibility on processing and payments” While some brokers offered effusive praise for their carriers’ tech offerings (“They just changed their online quoting portal, and it’s very intuitive,” said one broker; “Best rater and guide out there!” exclaimed another), there’s no doubt that there’s still plenty of room for improvement. In addition to general complaints about cumbersome and antiquated systems, brokers also had more specific feedback for carriers. One described their carrier’s platform as “a little too automated; needs more flexibility on processing and payments.” Others complained that “the rating site is not user-friendly” and “some options are hidden, and that takes added time to process a proposal.” Overall, the takeaway for carriers is that brokers are looking for increased technology offerings that will make their job more streamlined, efficient and simple.
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When it comes to the product training and marketing support offered by carriers, one broker summed up the overall tone of the feedback: “Always room for improvement.” Calls for more frequent meetings, clearer guidelines, access to more information and increased trainings were the most common requests. “I’d like to see a little more marketing material around products and/ or training,” one broker said, while others wished for “more frequent weekly trainings and prospecting trainings” and “more timely broker courses.” Some brokers acknowledged that while training and marketing support is available, it feels “very canned and not unique to our agency.”
“[We need] more information given upfront versus after the fact” Others had only positive things to say: “Our marketing representative is the best in the business,” said one broker, while another praised their carrier as “one of the better carriers to offer training.” Due to the importance of product training, it’s not surprising that brokers are asking for more and better programs from their carriers. “They have added a few new products over the last couple years, and I was not impressed with the lack of training on their rater and guidelines for these products,” one broker said. Another reminded carriers that “[we need] more information given upfront versus after the fact.” Broker support is key in this area, as is carriers and brokers being on the same page – and based on the feedback from brokers, it seems many carriers still have a long way to go.
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www.everestre.com
www.everestre.com
Everest Insurance® markets property, casualty, specialty and other lines of admitted and non-admitted direct insurance on behalf of Everest Re Group, Ltd., and its affiliated companies. Everest®, the Flag Logo and Everest Insurance® are registered service marks of Everest Reinsurance Company.
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BROKERS ON MGAs 2017
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SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020
FIVE-ST BRO
2019
ALL-STAR CARRIER FIVE-STAR CARRIER
Left: Vincent Vandendael (top), William Thygeson (center) and Michael Mulray (bottom). Center: Juan C. Andrade. Right: Mike Karmilowicz (top), Patricia McMahon (center) and Dane Lopes (bottom).
EVEREST RE GROUP Headquarters: Hamilton, Bermuda US headquarters: Liberty Corner, NJ Year founded: 1973 Employees: 1,650+ Number of offices: 23 Leadership: Juan C. Andrade, president and CEO, Everest Re Group; Vincent Vandendael, CEO, Everest Global Markets;
Mike Karmilowicz, EVP, Everest Insurance®, president of Everest Insurance North America P&C; Patricia McMahon, chief claims officer, Everest Insurance®; Michael Mulray, chief underwriting officer, Everest Insurance®; Dane Lopes, group head of marketing and communications, Everest Re Group, and chief commercial officer, Everest Insurance®; William Thygeson, chief administrative officer, Everest Insurance®
Everest Re Group is a leading global provider of insurance and reinsurance, operating for nearly 50 years through subsidiaries in the US, Europe, Bermuda and other territories. Everest Insurance® markets property, casualty, specialty and other lines of admitted and non-admitted direct insurance on behalf of Everest and its affiliated companies. Drawing upon global resources and financial strength, Everest is able to tailor each policy to meet the individual needs of its customers, and its vast portfolio of products, coupled with a full array of claims and loss control services, gives it the depth to manage virtually any kind of risk. Overall, Everest’s commitment is to be timely in its response, creative in its offerings and diligent in its effort to achieve mutual success with business partners. “Everest is an underwriting company, first and foremost,” says Juan Andrade, president and CEO of Everest Re Group. “Providing meaningful capacity and valuable solutions to our customers, while adapting our portfolio to market conditions to ensure profitability, is at the heart of what we do. We have a strong balance sheet and top-tier ratings, with underwriting talent in the locations needed by our customers around the world. Our industry-leading expense structure has provided us with flexibility, and we will maintain this essential discipline. Longstanding relationships are essential to our success. Everest is committed to maintaining our outstanding level of customer service while improving our digital and transactional capabilities.”
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we treat people like people. because after all, theyâ&#x20AC;&#x2122;re people. simple human sense
Thank you for the 5-Star Carrier Rating.
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SPECIAL REPORT
FIVE-STAR CARRIERS COMPETITIVE RATES
QUICK QUOTES
Average carrier performance 7.83
Carrier performance 7.77
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS
AmTrust Financial
PURE Insurance
AmTrust Financial
Liberty Mutual
Auto-Owners Insurance Group
Safety National Selective Insurance
Auto-Owners Insurance Group
Markel Insurance Company
Sompo International
AXA XL
Westchester (Chubb)
Chubb
Philadelphia Insurance Companies
Zurich Insurance
Donegal Insurance Group
Donegal Insurance Group Erie Insurance Group Everest Re Group Liberty Mutual
Erie Insurance Group
Philadelphia Insurance Companies
PURE Insurance Sompo International
Everest Re Group
Even though carriers’ average score on competitive rates increased a bit compared to last year, only 13 carriers received five-star ratings in this category. The main issues for brokers? Consistency, keeping pace with competitors and fairer systems. “It’s a roulette wheel – you never know what ‘fits’ until quoted. No consistency,” said one broker. “I wish the carriers would hold steady on premiums; we see wild renewal increases,” said another. “Take on more classes and rate accordingly with competition,” a third broker advised. Several brokers mentioned issues with high auto premiums for young adults. “The system automatically assigns drivers to vehicles, and in many cases, young drivers are rated to the most expensive and highestrated vehicle,” one respondent explained. Brokers also highlighted the need for careful consideration when assigning rates. “Do not rate up as much for comp claims or not-at-fault accidents. Review as to the cause,” one broker advised, while another wanted carriers to “give knowledgeable underwriters more flexibility.” A significant amount of discord seemed to come down to what brokers perceive as the hit-or-miss nature of rates – something carriers would do well to take into consideration.
After seeing a notable increase in average score for their quote turnaround time between 2018 and 2019, carriers’ performance dropped in 2020, falling from 8.06 to 7.77 and making this the lowest-scoring category in this year’s survey. Crucial to securing business, the quoting process requires efficiency, smooth operating systems and strong communication – things several carriers seem to be lacking, according to the feedback from brokers. While some brokers said they were satisfied with the speed at which they’re receiving quotes, common complaints revolved around “antiquated systems” and “too many management layers required for approval.” A few offered suggestions to help solve some of the problems: “Consolidate existing quote platforms into one,” said one broker, while another suggested, “Update the online rating system to better reflect the information needed to quote.” A third broker had a simpler fix: “The underwriters need to call back faster.” Overall, when it comes to quoting, brokers are looking for better communication, “expedited approvals on quotes” (specifically, turnaround times of 24 hours or less) and a rating system “that can deliver consistent rates that can be counted on.”
HOW CAN CARRIERS IMPROVE? IBA asked brokers for their feedback on how their carriers can improve their service. Here’s what they had to say: “Broaden their range of products” “Get hungry for business – treatment of brokers should be equal and processes adhered to” “Better agency service – most calls to the underwriter go to voicemail. I have a question today, not two days from now”
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“Flexibility in reviewing difficult accounts”
“Listen to the front line at the agency level”
“Better customer communication regarding claims and online support”
“Faster turnover rates and time”
“Need more products and to be more competitive on pricing”
“More user-friendly interfaces for agents and mobile apps for agents and clients”
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BROKERS ON MGAs 2017
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2019
FIVE-STAR CARRIER NAUTILUS INSURANCE GROUP, A BERKLEY COMPANY Headquarters: Scottsdale, AZ Year founded: 1985 Employees: 260 Number of offices: 1 Leadership: Tom Kuzma, president and CEO; Trish Buckhardt, executive vice president, COO and CIO; Tom Joyce, executive vice president and chief underwriting officer
Tom Kuzma (top), Tom Joyce (bottom left) and Trish Buckhardt (bottom right)
It began with a clear vision. In 1985, Nautilus Insurance Group, a Berkley company, began laying its solid foundation. Unparalleled customer service, a can-do attitude and creative problem-solving are hallmarks of the Nautilus experience and what differentiates it in the E&S market. That freshly minted company of six employees is now 260 strong and growing, holding firm to its founding principles and unwavering resolve to listen carefully and respond professionally. This dedication has resulted in Nautilus profitably writing more than $6.5 billion in gross premium since its inception. “We are committed to our promise to policyholders and being a trusted resource and true partner for our agents,” says Tom Joyce, executive vice president and chief underwriting officer. Specializing in the high-volume, smallpremium market, Nautilus provides smart underwriting solutions and exceptional customer experiences to appointed general agents in all 50 states. The company focuses on providing solutions to benefit its agents through enhanced product offerings, underwriting expertise, technology, education and service that promotes ease and convenience, making it a premier partner in the industry. “We are steadfast in our mission and company values, which have provided the foundation for Nautilus’ tremendous success,” says Tom Kuzma, president and CEO. “We are a team of driven, determined professionals who employ strategy and excellence in all that we do. There is no limit to what our future will hold.”
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BROKERS ON MGAs 2017
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SPECIAL REPORT
FIVE-STAR CARRIERS
FIVE-STAR CARRIERS 2020
FIVE-ST BRO
2019
ALL-STAR CARRIER
Left to right: Brian O’Reilly, Bob O’Leary, John Glomb and Bill Benecke
PHILADELPHIA INSURANCE COMPANIES Headquarters: Bala Cynwyd, PA Year founded: 1962 Employees: 2,000 Number of offices: 50+
Leadership: Bob O’Leary, chairman and CEO; John Glomb, president; Brian O’Reilly, executive vice president and chief marketing officer; Bill Benecke, executive vice president and chief claims officer
Philadelphia Insurance Companies (PHLY) designs, markets and underwrites P&C and professional liability insurance for more than 120 niche markets. For nearly 60 years, the company has maintained a disciplined approach to business, delivering security to customers while also supporting employees and the community. PHLY understands the unique needs of its customers, who have given the company a 96% overall satisfaction rating. Each year, PHLY partners with numerous local and national charitable organizations to give back to the communities it serves. Recognized as one of the top insurance workplaces since 2011, PHLY continues to seek out the best people, provide them with opportunities and recognize their achievements. The team is committed to delivering innovative products, maintaining positive relationships, staying accountable and acting with integrity. Headquartered just outside Philadelphia, PHLY currently has more than 50 offices across the country. It has an A++ (superior) rating from A.M. Best, an A+ rating for counterparty credit and financial strength from Standard & Poor’s, and has been a member of Ward’s Top 50 since 2004.
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S
“I offer Nautilus products to my clients with confidence. They are a rock-solid carrier with strong backing, a reputation for being fair, and when a catastrophe strikes, they come through with excellent customer service.”
Celebrating 35 Years of Partnerships
Virginia J. Clancy, ASLI, CIIP Vice President | TAPCO Underwriters, Inc
SOLID General Liability | Property | Commercial Excess Inland Marine | Miscellaneous Professional Liability Privacy Breach | Crime www.nautilusinsgroup.com | 800.842.8972 Nautilus Insurance Group products and services are provided through various Surplus Lines insurance company subsidiaries of W. R. Berkley Corporation and offered through licensed Surplus Lines brokers. Not all products and services may be available in all jurisdictions, and the coverage provided by any insurer is subject to the actual terms and conditions of the policies issued. Surplus Lines insurance carriers do not generally participate in state guaranty funds and insureds are therefore not protected by such funds. ©2020 Nautilus Insurance Group. All rights reserved. 07 | 20
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Financial Strength Matters Insurance is a ‘trust me’ product. There’s a long-term commitment here.”
– Duane Hercules, President
FEATURES
SECTOR FOCUS: WORKERS’ COMP
Surviving the storms From a global pandemic to an ‘above normal’ hurricane season, the current environment brings workers’ comp risks that shouldn’t be ignored THE NATIONAL Oceanic and Atmospheric Administration has predicted an ‘above normal’ Atlantic hurricane season this year, which could see up to 19 named storms and anywhere from six to 10 hurricanes. While property damage is the most obvious impact of natural disasters, economic recovery is also an important exposure to consider, particularly when it comes to workers’ comp insurance. Combined with the health risk still looming from the COVID-19 pandemic, the increased risk
Zender adds that the public health crisis has also created an ever-changing legal environment in each state, which impacts presumption of compensability and the way claims are investigated.
Common exposures Work-related hazards that stem from natural disasters like hurricanes can include electrical hazards, carbon monoxide and flash flooding to confined spaces, as well as the usual slips, trips and falls.
“The best way to handle risk is to report all claims, regardless of how minor they appear or the validity surrounding compensability” Brady Chan, Applied Underwriters of natural disasters is creating a perfect storm for greater exposure to hazards that can result in workers’ comp issues. “As a result of the COVID-19 pandemic, almost every single business has transformed in one way or another,” says Matt Zender, senior vice president and workers’ compensation product manager at AmTrust Financial Services. “These changes may have shifted focus and dollars into safeguarding employees from the coronavirus and away from safety measures for the hurricane season.”
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Because hurricanes are usually foreseeable events and preparation is possible, claims tend to decline before and during the disaster, and incidents of injury during the event itself tend to be low. “After the storm is over is when we often see an uptick in workers’ compensation claims,” says Garth Crow, executive vice president and chief claims officer at FCCI Insurance Group. “Employees are put to work doing things that they don’t necessarily have training or experience to do – perhaps they’re boarding up broken windows or on the roof putting
www.ibamag.com
3/07/2020 4:18:42 AM
Because
We Sell a
Promise
when natural disasters occur, most workers’ compensation commissions close, which impacts all issues that were pending. This can delay settlement approvals or disputes on benefit entitlement, compensability and the like.” Some states have workers’ comp regulations that are brought into effect once a disaster is declared. For instance, Texas, Florida, Georgia and the Carolinas have previously invoked conditions to expedite benefit payments and medical care to injured workers displaced by hurricanes. Telemedicine is also becoming more widely available and accepted by most states and insurance companies; Crow says FCCI is offering more vendors access to telemedicine. As a result, injured workers can receive the treatment they need without putting themselves at risk for outside exposures, allowing treatment plans to continue uninterrupted, even if medical facilities are closed.
THE ATLANTIC HURRICANE SEASON OUTLOOK SEASON PROBABILITY
Above normal 60% Near normal 30% Below normal 10%
Source: NOAA
up tarps without the proper safety equipment.” Increased risk can also stem from post-disaster conditions like standing water, power outages or an unsuspected downed power line. In some states, such as Florida, Crow says there might also
“Our clients should find comfort in the fact that we have the financial stability to pay claims that could materialize decades from now.”
Guiding clients through a disaster When a storm is coming, businesses that are organized and prepared have a greater likelihood of mitigating risk and preventing injury or harm. Planning, communication and rehearsals are all important measures that organizations can take ahead of a
Duane Hercules and John Csik, CFO and CIO, with members of Finance
“Have a plan, write it down, make sure you communicate it so that employees understand what might happen, and practice it” Garth Crow, FCCI Insurance Group be unique wildlife issues, particularly with snakes. Employers are required to protect workers from the anticipated hazards associated with their involvement in response and recovery operations. Another interesting aspect is how workers who were injured prior to an event are affected by shutdowns. “When stay-at-home orders are instated, medical appointments are canceled, which can prolong a disability when treatment plans are delayed,” says Brady Chan, vice president of claims operations at Applied Underwriters. “Additionally,
disaster. One small step that can make a big difference is making sure that insureds have an up-to-date contact list of everyone within their organization. “There could be instances where someone is trying to report a claim and doesn’t know how to go about it, or the carrier is trying to help but they don’t have contact information,” Zender says. Insureds should also have their insurance information readily available, and brokers need to encourage clients to follow state and federal protocol during a hurricane. Organizations need to be swift
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Proceed with Safety®
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FEATURES
SECTOR FOCUS: WORKERS’ COMP
cues destroyed – you couldn’t even figure out where you were,” he says. “Because of GPS and cell phone system improvements, you can figure out where you are and get a response to affected people and businesses much more quickly.” Technology is also helping to dilute the concentration of risk, Zender adds. During COVID-19, technology has made it possible for employees to shift from a single office environment to working from their homes, which means they are no longer all exposed to the same risk. If a hurricane hit tomorrow, he says, hundreds of people who would normally be in one place are now geographically distanced because of stay-at-home orders. Tools and resources that can support agents and insureds are also readily available online and are leaps and bounds ahead of what was available just a few years ago. At the end of the day, preparation is key; having a business continuity manageto implement guidelines, as hesitation to do so could place employees’ well-being at risk. “The best way to handle risk is to report all claims, regardless of how minor they appear or the validity surrounding compensability,” Chan says. By quickly reporting all incidents, employers can help make sure claims are thoroughly evaluated within prescribed timeframes. Heading into the current storm season, Zender encourages company leaders leverage the precautionary work being done in preparing for workplace re-entry during COVID-19 and use it as an opportunity to talk to employees about policies on working safely from a 360-degree perspective. Strong communication plays a critical role in effective disaster response. “Employers need to make sure that workers understand they will be taken care of from the get-go,” Zender says. “If you don’t have the right context in place from the start, a claim could get set on a negative path unnecessarily.”
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HURRICANE RESPONSE AND RECOVERY OSHA’s best practices for responding to and recovering from a hurricane include: Work site evaluation: Evaluate the work site to identify if safety or health hazards (such as noise, infectious materials or laceration hazards) are present. Exposure monitoring: As appropriate, conduct task-specific exposure monitoring during response and recovery activities. Data sharing: It’s important for response and recovery organizations to share hazard and exposure monitoring data. OSHA has posted summaries of its sampling data and exposure information for hurricanes Katrina, Rita and Wilma on its website. Source: OSHA
Technology can not only help facilitate that communication, but is also integral to the recovery effort, thanks to GPS and mapping technology. Rich Rueger, senior vice president of corporate underwriting at FCCI Insurance Group, points to hurricanes Andrew and Charley as examples. “There was a lot of damage in residential areas, with street signs down and visual
ment plan is an essential tool for navigating a disaster. “If your building is damaged or destroyed, if the power is out for weeks, if a pandemic hits, what are you going to do?” Crow says. “We want to survive these events – have a plan, write it down, make sure you communicate it so that employees understand what might happen, and practice it.”
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3/07/2020 4:18:53 AM
IB Ins
TEXAS
INSURANCE VIRTUAL EVENT | JULY 21, 2020
Insurance Connect Texas is an innovative new virtual event from Insurance Business America aimed at helping brokers connect, transact and network during a new era for the industry. Packed with essential insights and completely free for brokers, agents and risk managers, join us from wherever you are for: • Unmissable speaker sessions and panel discussions from industry experts • Networking opportunities with fellow insurance professionals • Virtual booths and one-to-one chats • The lowdown on big issues like cyber insurance, digital marketing and empowering women in the industry
FEATURED SPEAKERS MITCHELL DAVIS
ERIC WEISER
CANDACE RHEA
Managing Member & Senior Consultant
President
Middle Market Executive Underwriter/Sales Leader
Assured Partners
MB Davis Group
The Hartford
ALICIA CALHOUN
HARRISON BROOKS
Practice Leader: Energy, Oil & Gas – Wholesale Broker
Partner Reagan Consulting
JIMCOR
REGISTER NOW SPONSORS: __________________________
FREE FOR BROKERS, AGENTS AND RISK MANAGERS
MEDIA PARTNERS: ______________________
#IBInsuranceConnect
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FEATURES
AGENCY INSIGHT
Risky business The fallout from the COVID-19 pandemic has brought risk mitigation to the fore for all companies. Aaron Parker, VP of client experience at MJ Insurance, tells IBA how the agency has evolved with risk management at its core
IBA: How would you describe MJ Insurance’s approach to risk management? Aaron Parker: Risk management is a core component of our consulting practice. Our approach and the capabilities that we’ve developed go beyond the traditional insurance placement aspect of our industry. Where we’ve evolved is through an appreciation that each of our clients’ businesses and risk profiles are unique and that, in order to identify and provide impactful risk management solutions, we have to understand our clients’ profiles first and then use quantitative and qualitative data to evaluate and analyze their profile in order to develop effective risk management solutions.
IBA: How have you advised clients during the coronavirus outbreak? AP: Our primary approach has been to engage in direct conversation with our clients. They’re tackling the crisis through their own individual lens, both in terms of their immediate response and then as they adapt to a new normal as we move into the rest of the summer and the fall with the effects of the coronavirus, which are likely to remain and forever be a part of the business landscape. Alongside that has been an educational approach tied to the speed with which information has developed. That includes stateby-state rule-making; federal, state and local
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guidelines; and best-practice opportunities for specific industries. For every industry that we work with, understanding that those risk profiles are different, we’ve had to be in front of them with best-practice solutions that meet their needs. We’ve also hosted some webinars, and we have a COVID-19 resource center that’s broken out to provide not only the bestpractice guidance, but also to keep our clients informed and up to date on legislative matters and on insurance company positions from a premium forbearance position, as well as adjustments to a client’s risk profile exposure base that may be happening mid-term.
IBA: What are the key concerns your clients have about their evolving risk profiles due to COVID-19? AP: First and foremost, our clients are concerned about taking care of their employees, and we’ve seen this manifest itself in a number of different ways. The first way is around “If we can continue to operate, how
do we compensate our people?”, and from the insurance and risk management perspective, the questions are centered around “How do we operate in a safe manner, such that our employees are not exposed to the coronavirus or are best protected?” That comes from guidance on safe work practices and guidance from federal agencies, inclusive of personal protective equipment. Also tied into that is workers’ compensation coverage and the understanding of “Should my employee contract coronavirus while working, will there be workers’ compensation coverage?” From there, it’s how do they prepare for the next interruption, whether that be a pandemic or some other type of event. At MJ, we have been working with many of our clients even before the coronavirus outbreak on business continuity planning and making sure that our clients felt prepared to respond in the event that their business is interrupted, whether that be from a natural disaster, from a pandemic or a cyber
THE EVOLUTION OF MJ INSURANCE Over the past five decades, MJ Insurance has grown from a two-person startup into one of the largest privately held insurance agencies in the US. Its client base includes local, regional and national companies, and the agency works closely with top global insurance carriers. MJ is also a leader in risk management, conducting comprehensive risk analyses of its clients to assess their exposures and unique insurance needs.
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FAST FACTS: MJ INSURANCE AREAS OF EXPERTISE
Risk management, including analytics and claims consulting
Employee benefits and benefits consulting
Personal health insurance
Year founded: 1964
“We are not in a reactive state responding to a crisis because our clients have an enhanced degree of confidence” breach. We have met the call and the needs of our clients, who have sought guidance and counsel on preparing for an interruption.
IBA: More broadly, what value can risk-management-minded insurance agencies provide in times of crisis? AP: When we think about helping our clients optimize their risk profiles, one aspect of that is their confidence in their insurance program and risk management program. Specifically, we’re helping our clients prepare
for when an event happens and making sure that, from their perspective, they are confident that they have the programs in place to respond. That confidence equips them with the ability to operate and the ability to take on new business challenges, understanding that they’ve got the programs in place to position them and their people to respond, limiting any impact of a potential event. The second thing that we’re able to do as a risk-minded agency is, through our consultative practice, have those proactive dialogues
Offices: Carmel, Indiana, and Phoenix, Arizona Number of employees: 150 Annual revenue: $35 million with our clients about their broader business goals and initiatives so we can be asking those business-related questions and applying strategic solutions that position them to tackle the challenges that are likely to arise. We are not in a reactive state responding to a crisis because our clients have an enhanced degree of confidence, and, in the event of a crisis, issues aren’t surfacing that we weren’t already aware of and already in conversation with them about.
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SPECIAL PROMOTIONAL FEATURE
CLAIMS
Claims in the time of COVID-19 Mike Hessling, Gallagher Bassett’s CEO for North America, sat down with IBA to discuss how the claims industry is evolving during the coronavirus pandemic
THE FAST-MOVING nature of the COVID-19 pandemic has pushed the insurance industry into uncharted territory. Both the risks associated with contracting the disease and the impact of lockdowns and physical distancing rules are testing the industry in many ways. The claims management sector in particular is facing many new and unprecedented challenges. Claims adjusters are dealing with a significant influx of claims while also navigating an evolving regulatory framework. On top of the rapidly changing landscape, it’s also been difficult to confirm burden of proof and reach compensability determinations. The insurance lines most affected by coronavirus claims include workers’ compensation and business interruption, where legislation and litigation are rapidly evolving. “Legislators are challenging the application of exclusions in policies, and there has been a rise in class actions to overcome policy requirements,” says Mike Hessling, North America CEO of global claims manager Gallagher Bassett. “Consistency in claim process documentation and establishing a close working relationship between the claim service provider, carrier and insurer will be necessary to quickly respond as government and court decisions evolve.”
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When it comes to workers’ comp claims, Hessling recommends that employers report claims as early as possible to establish a fact record. From a carrier perspective, he says it’s imperative to closely monitor the changing regulatory landscape to ensure current regulations are applied. This means some claims will likely need to be touched several times during the process. Business interruption claims, on the other hand, are governed by the coverage terms and policy language set by the insurer. While many business interruption policies have virus exclusions that were put in place after the SARS pandemic, there are variances in exclusion and policy language, as well as unique claim circumstances, that require each claim to be thoroughly investigated and documented to support policy considerations and coverage determination. “We’ve seen the impact of COVID-19 on our economy; thus, it’s only natural that claims directly tied to economic activity are also affected,” Hessling says. “In addition, we’ve also seen moderate obstacles to move claims to resolution because of a lack of access to medical providers and facilities, as well as court closures.” Insurance carriers will be looking to overcome these challenges by staying connected
MANAGING COVID-19RELATED WORKERS’ COMP AND LIABILITY CLAIMS Mike Hessling shares six key strategies for effective COVID-19-related workers’ compensation claims handling: Adapt workers’ compensation practices with COVID-19-specific contact questions that are consistent with CDC guidelines and with employers’ return-towork and HR policies for handling COVID-19-related absences. Develop and maintain a database of evolving statutory regulations. Establish reporting/tracking capability to maintain control as statutes change to enable the ability to reopen claims and review positions, particularly as presumption laws are enacted. Maintain an active and strong connection with regulatory bodies to ensure clear understanding of newly issued guidance and to provide feedback when guidance presents practical hurdles. Establish a special unit to review all acceptances and denials. Contemplate the need for targeted contact tracing practices and activities that are distinct from core workers’ compensation investigation in support of insureds’ return-to-work plans.
with their claims managers, whether they’re in-house or at a third-party provider like Gallagher Bassett. To effectively handle COVID-19-related claims, Hessling suggests treating them like a new kind of catastrophe from the beginning and quickly assembling a task force to serve as experts as the situation evolves. The group should include a combination of expert claim handlers, regulatory liaisons, coverage attorneys, quality control and process design teams, and analytics and systems resources. He also recommends implementing best practices like the creation of unique claims handling and reporting to ensure all cases can be tracked and revisited if regu-
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“Legislators are challenging the application of exclusions in policies, and there has been a rise in class actions to overcome policy requirements” Mike Hessling, Gallagher Bassett latory guidelines change. However, the most important strategy for effective claims handling, Hessling says, is frequent communication and collaboration. “It’s imperative you engage early and often with business partners to establish open communication lines, to validate newly developed practices and to problem-solve quickly as situations emerge or change,” he says.
The future impact of COVID-19 As the world moves past the shock of economic shutdown and takes steps towards reopening, insurance carriers will be faced
with existing claims that need to be resolved. Hessling says resources will need to be redirected to handle full production, and the ability to scale up after potentially scaling down will tax insurance carriers, posing potential risk to both claims outcomes and insureds’ claims experience. “Developing robust forecasting capabilities, which tie into claims capacity management, is critical to staying ahead of this rapidly changing environment,” he says. Looking even further ahead, Hessling says the ability to understand and analyze the difference between frequency and severity
reduction will be critical for forward-looking actuarial projections and underwriting, especially when evaluating loss performance post-pandemic. “This is where tools like our SMART benchmarking can be so helpful,” he says, “to assist carriers in making this frequency versus severity distinction and making better decisions within their underwriting process.” At the start of the pandemic, Gallagher Bassett engaged its business continuity team and began an operational shift to handle all claims in a work-from-home environment. Given that 40% of employees were already working from home, it was a minor adjustment. Operations were built around access, connection, engagement and service. Being able to access networks safely and securely was important, as was the protection of data throughout the claims process. Employees stayed connected through video-enabled laptops to ensure ongoing, productive communication. Tools like Gallagher Bassett’s ENGAGE intranet platform helped teams,
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SPECIAL PROMOTIONAL FEATURE
CLAIMS COVID-19 LIABILITY CLAIM BEST PRACTICES For liability lines, Hessling recommends making the following claim strategy enhancements in response to this unique operating environment: Engage early and often with non-represented claimants and seek quick claim resolution. The ability to successfully contact third parties has been improved with much of society in some form of shelter in place. This presents an opportunity to build rapport, understand perspective and seek equitable resolution where true liability is present.
“It’s imperative that you engage early and often with business partners to establish open communication lines to validate newly developed practices and to problem-solve quickly as situations emerge or change” Mike Hessling, Gallagher Bassett managers and colleagues stay engaged. Likely the greatest pillar in keeping the business running smoothly has been exceptional service. “At Gallagher Bassett, we have management practices and protocols and dynamic reporting that have been in place for many years,” Hessling says. “Also, our unique-tothe-industry, operational-quality dashboard allows managers to instantaneously monitor the status and performance of any claim, adjuster or branch to ensure the highestquality service and optimal outcomes.” After the COVID-19 crisis recedes, Hessling believes an agile working environment will remain, as will greater use of remote access dashboards and other tools that have improved reporting and analytics. Another important aspect that isn’t going anywhere anytime soon is the more integrated partnerships Gallagher Bassett has forged with broker and carrier partners while collaborating throughout the pandemic.
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“Given the social distancing and lack of in-person, face-to-face engagement during this time, we have found an increase in the frequency of our virtual communication with partners,” Hessling says. “Daily check-ins have strengthened our relationships and more tightly integrated us with our partners. This enhanced partnership is essential to manage the changing landscape of insurance and claims.”
Better outcomes One of the primary reasons why carriers choose to work with Gallagher Bassett for claims handling is the results: “lower loss costs, delivered through high-quality and aggressive claims management and industryleading ancillary services,” Hessling says. “Additionally, carriers value our ability to consistently set appropriate reserves, which is critically important for effective underwriting.” Gallagher Bassett is also known for its
Understand the legal venues of litigated cases. With many courts or mediator offices closed or operating under limited hours, this may impact the ability to bring claims to trial or for a hearing, creating a need on both sides for settlement discussions. Re-examine plaintiff and defense positions. Given court closures and general economic concerns, third parties may be more amenable to reasonable settlement offers. Similarly, insurers and insureds may be open to increasing settlement offers to bring claims to closure and release actuarial accruals.
rapid pace of innovation. If measured by claim volume, Hessling says Gallagher Bassett would be ranked as a top 10 P&C insurance carrier, a testament to its significant experience and expertise. That experience is backed up by a dedication to creating an exceptional customer experience for insureds. “We are consistently ranked by risk managers as the leading third-party administrator within independent surveys, based on the exceptional talent and service focus of our claim professionals,” Hessling says. “We can provide an experience to insureds that allows carriers to differentiate themselves from the pack on the basis of claims service – a true competitive advantage in today’s insurance market.”
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FEATURES
PRODUCTIVITY
Change your life with deliberate elimination Aytekin Tank explains how paring down to just the essentials can transform both the way you do business and the way you live your life
“HOW ABOUT this one?” I glanced at the dark green shirt my wife was holding up. Not my favorite. In fact, I couldn’t remember the last time I’d worn it. We’re a small family, and we pride ourselves on living ecologically. Even so, our apartment felt like it was bursting at the seams, which is why we’d organized this clear-out. The dark green shirt was the fifth one I’d looked at before sheepishly shaking my head: straight into the charity pile. The experience reminded me of an editor I used to work with. An easygoing guy, he was ruthless when it came to cutting text. He’d take me through my work, line by line, asking over and over: “Do you really need this?” Ninety-nine percent of the time, the answer was no. And as unnecessary words, sentences and paragraphs were weeded out, the core content began to emerge – and shine. Like my old drafts, we live in a world that’s brimming with unnecessary content.
Our desks, schedules and brains are cluttered: We over-explain (to appear smarter), over-plan (to feel popular) and overload ourselves – and our to-do lists – to the breaking point. Quantity, not quality, has become our barometer for success. Can we apply the same editor’s eye to
Fewer interruptions It’s been 11 years since David Foster Wallace coined the term ‘total noise’: the seething static of every particular thing and experience. Today, this has just become part of the texture of living on a planet that is now home to more than 5 billion mobile phone users. The average American checks their smartphone 36 times an hour. When they’re not interrupting themselves, someone else is – every eight minutes, to be exact (or 60 times per day). This causes them to lose focus on the task at hand 40% of the time. And while all this is going on, they’re juggling around 605 emails per week. According to the Information Overload Research Group, this time-wasting costs the economy $997 billion a year. So what’s the solution? I recommend a self-imposed digital diet. It doesn’t have to be radical. At the end of my day, for example, I plug my phone in to charge in a different room at least an hour before I go to bed. This lets my mind quiet down, free of blue light and distractions. And I don’t re-check it until I’ve set foot in the JotForm offices: no work calls, no emails, nothing. This gives me a 14-plus-hour ‘fast’ from the triggers of technology every day. And when I do knuckle down to work, I feel refreshed and alert, not mentally depleted from hours of tapping, swiping and scrolling.
We over-explain (to appear smarter), over-plan (to feel popular) and overload ourselves – and our to-do lists – to the breaking point. Quantity, not quality, has become our barometer for success other areas of our life? By deliberately eliminating everything but the essentials, we give way to greater focus and simplicity. Here’s what else I think we could do with less of.
Checking our phones from the moment we wake up until we go to sleep encourages a reactive, scattered state of mind. By drawing a clear line between on and offline, you’ll sleep
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FEATURES
PRODUCTIVITY
better, work smarter and think healthier. I also take a ‘digital sabbath’ away from all forms of technology every Saturday and an entire ‘think week’ away from my company. One thing’s for sure: It makes my Monday mornings feel a whole lot better.
Less over-explaining In the middle of a lengthy email or a long meeting, I often find myself wishing that people would just get to the point. Often, the person who needs to get to the point is me. We’re conditioned to sugarcoat difficult conversations with mindless pleasantries. We
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believe lengthy explanations showcase our authority. From university dissertations to blog posts, we value word counts over clarity. And often, we simply under-prepare for situations, which means we often end up talking or writing more than is necessary. This leads to two-hour meetings that could be over in 20 minutes. Page-long emails with a couple of lines of real content. Articles abandoned halfway through. And most importantly, loss of focus from everyone involved. The human brain can absorb 750 words a minute, but the average person can only speak about 150 words a minute, meaning there are an extra 600 words that can float
around in the receiver’s brain. That’s how people talk themselves out of a sale, an argument or a business deal. “Brevity is an essential skill that can propel people’s careers in an age where the people that they’re talking to are overwhelmed,” says Joseph McCormack, author of BRIEF: Making a Bigger Impact by Saying Less. It all boils down to smart preparation. McCormack suggests making a mind map with the acronym BRIEF to organize ideas before presenting them: Background: Provide a quick context – what prompted the update?
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Reason: Explain why you’re speaking now – why should they pay attention? Information: Offer two to three key nuggets of information you want to share. What are the bullet points of the conversation? End: Decide on what note you want to leave the conversation. Follow-up: Consider the questions you might receive. Schedule rigorously. Self-edit ruthlessly. When you can, use pictures and video instead of text – people respond better to visuals. Time is our greatest luxury. Wasting it is bad manners. Throw others (and yourself ) a lifeline by getting to the point.
Less choice Bran flakes … cornflakes … frosties … “When did we start needing so much cereal?” I mutter to myself as my eyes glaze over in the supermarket aisle. Recently, I’ve started buying organic, low-sugar options only. Yes, this helps with my fitness regime, but really I’m deliberately limiting my own choice. Clearly, choice matters, particularly when it comes to big things that impact on our beliefs and autonomy. But most of the time, the choices we face have very little meaning. It’s been 16 years since Barry Schwartz wrote The Paradox of Choice. Instead of increasing our sense of well-being, he said, an abundance of choice is increasing our levels of anxiety and depression. Whether you’re deliberating between chocolate bars, TV shows, energy companies or profiles on Tinder, more choice equals more overwhelm. We waste hours dithering, changing our minds and going in circles. My advice? Set criteria for any areas of your life that sap your energy. This can also be a chance to release your inner do-gooder. Less is more – eliminate the non-essentials and limit your choices. Devise a weekly meal
plan. Commit to buying secondhand clothes only. Shop locally. Constraints illuminate and simplify. And when life feels manic, repetition and routine provide a much-needed sanctuary of calm and familiarity.
Less busy-ness We associate people’s worth with how busy they are: how many hours they work, how little they sleep, how off the charts their stress levels are. Because being ‘busy’ means we’re productive, and in demand and great at our jobs. We’re moving forward. We’re not wasting our time. It’s better to be doing something, anything, than nothing at all ... right?
temperatures just consume more resources that could be used for something else more productive.” It’s a simple idea that applies to many areas of our lives. At some point, the extra work we put in is unlikely to result in more rewards. Returns begin to diminish fast. In other words, it’s no longer worth it. Pareto’s principle states that 80% of your results come from 20% of your effort. Trying to pinpoint just one task or area where you can reduce your energy by half (and still get your desired outcome) can be an eye-opener. Then spend the time you save on something that recharges you. It takes courage to live with less. But I think it can make all the difference. It all boils
At some point, the extra work we put in is unlikely to result in more rewards. Returns begin to diminish fast. In other words, it’s no longer worth it Keeping on top of things is good – unless we miss crucial details because we’re rushing. Or waste hours on a simple task because we’re exhausted. Or burn bridges because we’re stressed and miserable. The busiest people are often the most oblivious. Slowing down gives you time to appreciate the context. Letting your brain switch off and repair its synapses will lead to greater focus and fresh ideas. Switch off and wait.
Less unnecessary effort In The 4-Hour Body, Tim Ferriss popularized the concept of the ‘minimum effective dose.’ He uses boiling water to illustrate his point: “To boil water, the minimum effective dose is 212° Fahrenheit (100° Celsius) at standard air pressure. Boiled is boiled. Higher temperatures will not make it ‘more boiled.’ Higher
down to a simple principle: eliminate before you add. And it can be applied to anything. Don’t take money you don’t need (we’ve built JotForm without a single dime of outside funding). Don’t buy a green shirt if you already have one (or, in my case, don’t buy one at all). This ensures you don’t end up overcrowding your life with anything that doesn’t add value. Limitations create space. Space gives way to greater movement. Movement pushes you forward. Take a red pen to your life and see what happens. Aytekin Tank is the founder and CEO of JotForm, an online form creation software with millions of users worldwide and more than 100 employees. A developer by trade but writer by heart, Tank shares stories about how he exponentially grew his company without receiving any outside funding.
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email iba@keymedia.com
STRUMMING ALONG Insurance executive Ryan Collier has made use of the COVID-19 lockdown to learn an instrument he’s been interested in for decades RYAN COLLIER’S love of banjo music dates back to watching Hee Haw as a child. But a feeling that it wasn’t “cool” to play the banjo kept him from pursuing it. He’s also never found much time for it in adulthood, due to his heavy travel schedule as chief digital officer for Risk Placement Services, as well as his children’s activities. A few years ago, Collier’s interest in
the banjo was reignited when he heard someone playing from his cottage on the water. Afterwards, his family bought him a banjo as a joke. “Once we went into the lockdown with no travel or kids’ activities, it unlocked my opportunity to finally try something that has interested me for over 40 years,” he says. So far, Collier’s banjo education has
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mainly focused on basics like pinches, rolls, hammer-ons and slides. Mastering these skills will allow him to learn more songs, he says, especially now that he has plenty of time to build a good foundation. “It’s so cathartic to fully dive into something that requires a different skill set than the typical 9-to-5 insurance day,” he says. “It’s also very humbling, in addition to the stress relief.”
Weeks Collier has spent working from home due to the COVID-19 pandemic
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Weeks it took him to get a handle on banjo playing
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Largest audience Collier has played for so far
Collier’s previous musical experience includes being a dru mmer in the school ba nd from 4th to 8th grade 48
W COM
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