Insurance Business America issue 4.02 by Key Media

IBAMAG.COM ISSUE 4.02

Our annual spotlight of the 100+ producers who are at the top of their game UP IN THE AIR WHAT YOU NEED TO KNOW ABOUT THE VAST AVIATION MARKET

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FIVE-STAR NETWORKS PRODUCERS WEIGH IN ON WHICH NETWORKS ARE MAKING THE GRADE

BOOM TIMES THE HOT CONSTRUCTION SECTOR THAT'S GROWING BY THE MINUTE

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BURNS & YES, WE CAN DO THAT

WILCOX

ACCESS IS OUR MIDDLE NAME. Our access to the widest range of domestic and international carriers means you can say yes to almost any hard-to-place risk. Give your clients what they want to hear with Burns & Wilcox.

800.521.1918 burnsandwilcox.com Commercial | Professional | Personal | Brokerage Binding | Risk Management Services

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Leveraging the

Nationwide Brand ®

As a leader in the excess and surplus/specialty market, it’s an exciting time for Scottsdale Insurance Company. We have transitioned to the Nationwide® brand. This opens up opportunities to take our strength, expertise, and growth potential to the next level. And we will continue to maintain our business model, strong foundation, and commitment to our agents far into the future.

E&S/Specialty

www.wearenownationwide.com A.M. Best rating of A+ (Superior) XV FSC Fortune 100 company Nationwide and the Nationwide N and Eagle are service marks of Nationwide Mutual Insurance Company. ©2015 Nationwide.

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ISSUE 4.02

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CONTENTS

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UPFRONT 03 Editorial

The keys to pumping up production

06 Statistics

PEOPLE

INDUSTRY ICON

COVER STORY

Putting culture first helped David Lockton turn Lockton Companies into an industry powerhouse

FEATURES

FIVE-STAR NETWORKS

How concerned are clients about the cost of cyber insurance?

09 Opinion

Why now’s the time to start making your succession plan

10 News analysis

The disturbing trend in flood insurance This month’s big movers, shakers and new products

14 Workers’ comp update

FEATURES

UP, UP AND AWAY

How to tap into the unbelievably broad aviation market

Last month, we asked producers what they’re looking for in a network. This month, they weighed in on how well their networks are performing in those key areas

08 Head to head

12 Intelligence

TOP PRODUCERS

What does it take to be a top producer? Several of the producers on this year’s list reveal the secrets behind their incredible success

Examining 2015’s natural disasters

Comp claims are trending downward – but they’re also becoming more severe

16 Technology update

Are robots about to take your job?

PEOPLE 62 Producer profile

XL Catlin’s Chris Kunstadter boldly goes where no insurance agent has gone before

67 Career path

Ted Dixon left behind a career as a track and field coach to join the insurance world

FEATURES

COVERAGE FOR THE CONSTRUCTION BOOM

Architects and engineers are back in business – and they need insurance

68 Other life

Broker Jake Stone’s school spirit

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UPFRONT

EDITORIAL

www.ibamag.com MARCH 2016 EDITORIAL Senior Journalist Caitlin Bronson Journalists Ryan Smith Tim Garratt Paul Lucas Henry Preen Donald Horne Olivia D’ Orazio Copy Editor Clare Alexander

SALES & MARKETING Vice President Cathy Masek Media Sales Managers Chris Wills Chris Anderson Marketing and Communications Manager Lisa Narroway

CORPORATE

CONTRIBUTORS

Chief Executive Officer Mike Shipley

Samantha Wright Brad Brain

Chief Operating Officer George Walmsley

ART & PRODUCTION Design Manager Daniel Williams

Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil

Designer Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez

EDITORIAL INQUIRIES caitlin.bronson@keymedia.com

SUBSCRIPTION INQUIRIES subscriptions@keymedia.com

ADVERTISING INQUIRIES

cathy.masek@keymedia.com chris.wills@keymedia.com chris.anderson@keymedia.com

Key Media 78O7 E. Peakview Ave., Suite 115 Centennial, CO 80111, USA tel: +1 720 316 0151 www.keymedia.com Offices in Denver, London, Toronto, Sydney, Auckland, Manila

Insurance Business America is part of an international family of B2B publications and websites for the insurance industry INSURANCE BUSINESS CANADA john.mackenzie@kmimedia.ca T +1 416 644 874O

INSURANCE BUSINESS AUSTRALIA peter.smith@keymedia.com.au T +61 2 8437 47OO

INSURANCE BUSINESS NZ

Tips from our top producers

he 2.5% growth in the US economy last year may only be – to borrow a phrase from Goldman Sachs Chief Economist Jan Hatzius – a “tortoise recovery,” but it’s a tortoise that’s increasingly close to reaching the finish line. GDP is up, and the Congressional Budget Office estimates that unemployment will drop to 4.5% in the coming year. Consumer attitudes are also rebounding as Americans grow more cash-rich and secure in their jobs. And good news for the economy, of course, means good news for insurance producers. But an improving economy can only do so much. In our 2016 Top Producers list, Insurance Business America has identified those insurance professionals who have used economic growth to boost already impressive strategies. While every individual on our list is different, we did notice some common traits among producers who managed to accumulate books of business worth more than $750,000 last year. First, top producers make sales calls less about the sale and more about education. With millions of dollars in the insurance marketing sector, there are a lot of misconceptions that even the most educated clients can fall for. But by reframing conversations as an opportunity to discuss risk and the concept of risk transfer, our top producers have made more headway than most.

By reframing conversations as an opportunity to discuss risk and the concept of risk transfer, our Top Producers have made more headway than most Second, top producers use all their available resources to make valuable connections. Whether that’s through neighborhood groups, community events or alumni associations, these producers form relationships that, over time, they can leverage into professional partnerships. And finally, a significant number our top producers have developed profitable niches for themselves in industries as varied as charter schools and beauty salons. Recognizing that specialization is the way forward, these producers are examining their own personal interests and attending industry conferences to increase their footprint in these unique niches. We hope that learning more about these top producers gives you an insight into how to improve your own business and see your name on next year’s list.

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The team at Insurance Business America Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss.

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UPFRONT

STATISTICS

The year in disasters The costs related to natural disasters might have dipped over the last 12 months, but the industry can’t afford to get complacent NATURAL DISASTERS around the globe grabbed headlines throughout 2015. From earthquakes in Nepal and Afghanistan that took thousands of lives to snowstorms in the US that cost billions of dollars, it’s hard to believe that 2015 was a down year for disaster damage. And yet Impact Forecasting, the catastrophe model development team at Aon Benfield, recently released their Annual Global Catastrophe Report, which showed

MAJOR DISASTERS OF 2015 While it might have been a down year for natural disasters in terms of overall economic losses, several major disasters rocked communities worldwide, including several in the US.

that insured losses from natural disasters in 2015 were down 31% compared to historical averages. However, that’s hardly cause for celebration. The number of disasters across the world rose, as 300 separate events hit over the calendar year. And a huge gap remains between economic loss and insured loss, highlighting the fact that the industry still has a long way to go in protecting the world from these nightmare scenarios.

Severe weather MIDWEST/ MISSISSIPPI VALLEY Economic losses:

$3 billion

Severe weather TEXAS Economic losses:

61,922

The total number of wildfires that burned in the US in 2015, a record year

$3 billion

The drought damage incurred by the State of California during 2015

$123 billion

Total global losses from natural disasters, down 30% on the 15-year average

$3.8 billion

350

The total number of deaths in the US from extreme weather events

Source: Impact Forecasting Annual Global Catastrophe Report 2015

BILLION-DOLLAR DISASTERS HOLD STEADY

LOSSES CONTINUE TO DIP Both insured losses and overall economic losses continue to trend downwards following extreme highs in 2011, but the gap between both figures remains a reminder of the value of insurance and the global opportunities that exist.

The number of disasters that crossed the billion-dollar mark remained steady, both at home and across the world, after recordsetting years in 2011 and 2013. 50

US events Global events

500

Global economic losses Global insured losses

440 360 270 210

$465 billion

$262 billion $132 billion

150 20

$123 billion $73 billion

$51 billion

$134 billion $50 billion

0 2010

2011

2012 2013

2014

2015

Source: Impact Forecasting Annual Global Catastrophe Report 2015

$205 billion $217 billion

2010

2011

2012

2013

$40 billion

$35 billion

2014

2015

Source: Impact Forecasting Annual Global Catastrophe Report 2015

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Tropical cyclone CHINA, PHILIPPINES Economic losses:

Winter weather NEW ENGLAND Economic losses:

$4.2 billion

$3.3 billion

Tropical cyclone CHINA, TAIWAN Economic losses:

Flooding CAROLINAS Economic losses:

$3.2 billion

Flooding INDIA, SRI LANKA Economic losses:

$5 billion

Forest fire INDONESIA Economic losses:

$4 billion

$16.1 billion Flooding NORTHERN ENGLAND Economic losses:

Earthquakes NEPAL Economic losses:

$2.5 billion

$8 billion

Source: Impact Forecasting Annual Global Catastrophe Report 2015

WINTER WEATHER, FLOODING SEE BIGGEST RISES The costs of winter weather, flooding and severe weather saw the biggest increases over 2015 when compared to the decade-long average, while drought and tropical cyclones saw a dramatic drop-off. Tropical cyclone Severe weather

TORNADO NUMBERS ON THE RISE The numbers of tornadoes that touched down in the US throughout 2015 took a startling turn upwards, hitting their highest levels since 2011, but still sitting below the Doppler Radar average of 1,223. 1,691

1,700

Flooding

1,600

Earthquake

1,500 1,400

Winter weather

1,289

1,300

Wildfire

1,186

1,200 1,100

Drought Loss in 2015 10-year average loss

Other 0

12 $ billions

Source: Impact Forecasting Annual Global Catastrophe Report 2015

1,000

938

907

900 800

2010

2011

2012

2013

888

2014

2015

Source: Impact Forecasting Annual Global Catastrophe Report 2015

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UPFRONT

HEAD TO HEAD

Is the cost of cyber coverage an impediment to clients? As clients file more cyber claims, premiums for the coverage have risen – but many say that’s hardly hindering its appeal

Christine Marciano Cyber insurance broker Cyber Data Risk Managers

“While cyber insurance tends to have higher premiums, I believe we will see more companies purchase[it] for the first time in 2016. Clients might scale back the amount of coverage to lower their premium spend, but they will have some coverage. As the product matures, the cost of coverage will balance out. For now, clients might leave themselves underinsured, and that’s a big exposure, but things should improve as underwriting gets streamlined and risks are priced more accurately. While the industry anticipates high premium growth by 2020, underwriting must improve in order to sustain any claims – after all, it’s only a matter of time before there are many.”

Spencer Timmel

Cybersecurity and privacy liability product leader Hylant “I do not believe an increase in costs will make it more difficult to attract more clients. Breach events are increasing in frequency and severity, and the plaintiffs’ bar and regulators are more aggressive than ever. The reality of these concerns puts less pressure on the cost of the insurance. Further, the cost of insurance is still relatively inexpensive to the limits clients are purchasing. The increase in limits will continue to the point where we truly understand how to quantify the risk. If you can confidently quantify the cost of a data breach for the client, they are going to purchase based on the coverage need, not to how much money is budgeted or available.”

Edward Schultz President Allan M. Block Agency

“The cost isn’t necessarily going up, mainly because of business owner’s policies that incorporate cyber coverage. That coverage isn’t at the highest limits, but adding it onto the business owner’s policy has helped mitigate the cost. The bigger issue is clients aren’t all sold on the need for cyber coverage, when actually the exposures are growing. Newspapers are constantly publishing stories about major breaches, but clients think it’s just the bigger businesses. There’s a lot of education that needs to be done, and that’s the obligation of insurance agents. It’s a lot easier to roll cyber coverage into a business owner’s policy and at least give the client some coverage.”

GOT COVERAGE? A Wells Fargo study of 100 middle-market companies in 2015 found that some 85% have cyber coverage, and almost half have already filed a claim. That promising figure should be good news for the industry, but the influx of payouts could push premiums higher, keeping new clients from getting the coverage they need. Many are circumventing the higher costs by scaling down the coverage – a move many brokers are wary of facilitating. However, many industry members believe premiums will settle down as even more businesses take on cyber insurance.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email iba@keymedia.com

Planning for the unexpected The best time to start working on your succession plan, writes Brad Brain, is right now

SOMEONE RECENTLY asked me if succession planning should start 10 years prior to retirement, as opposed to one. My response was, why wait at all? The right time to think about succession planning is as soon as possible. What producers need to realize is that succession planning is not always triggered by a founder’s decision to leave on his or her own terms. Even with the most fastidious planning possible, we are all vulnerable to game-changing factors that we have absolutely no control over, and it makes no sense to take these things for granted. What if your health deteriorates? What if there is a lengthy family emergency? What if you just get sick and tired of heavyhanded regulatory regimes? What if the joy you used to find in your work is no longer there? It’s an illusion to think that you are in full control of every aspect that is going to affect the terms and timing of your succession plan. And it’s not even limited to the stuff that happens to you personally. A good friend of mine bought a practice a few years back, but she didn’t set out to buy a business. She had just moved to town and approached a local financial advisor about the possibility of doing some joint work. As it turns out, the local advisor was looking to immediately divest herself from the responsibilities of her practice because of her husband’s failing health. The important point here is that it was not a change in her own health that forced

this advisor to look for an exit, but rather a change in her spouse’s health. It was purely good fortune, rather than premeditated planning, that the buyer and seller happened to cross paths at the right time. Succession planning should not be left to something as fickle as good fortune. Even if everything is sailing along smoothly right now, it pays to have a Plan B. Another friend of mine is a key person at a cutting-edge financial planning firm. These guys are at the top of the food chain, with a dominant market position, and they are in complete control over their careers. And

happens to you, they will still have someone looking after them. Finally, giving yourself plenty of lead time will allow you the ability to adapt to changing circumstances. I had a young fellow keenly interested in buying my own practice. It was only after he worked with me for a year in a junior capacity that it became blatantly obvious that he was not at all suited to take over. Best to find that out sooner rather than later. Early succession planning is a very good idea in order to be prepared for unexpected contingencies. But it makes good planning sense, too. There are certain matters to consider in advance – both financial and non-financial – in order to maximize the monetization of your agency upon succession, as well as address any other objectives you may have. Some of the variables that will impact the market value of your agency include: Do you have a clean balance sheet and income statement? Do you have structures and systems in place that make the business less dependent on any one individual? How much of your agency is based on recurring revenue? Are there any messes that need cleaning up?

“It’s an illusion to think that you are in full control of every aspect that is going to affect the terms and timing of your succession plan” even they have a Plan B. Why would a firm that already gets to call all of their own shots need a Plan B? It’s simple. Just because everything is going great now is no assurance that the situation won’t change in the future. Another thing to consider is what your clients think about the situation. This is not something clients will always ask about, but that doesn’t mean that they aren’t thinking about it. What happens to their policies if their insurance agent is no longer in the picture? Even if you are decades from your planned retirement, clients will appreciate knowing in advance that if something

These issues typically will take some time to work through and get into place. So, again, the sooner you start working on them, the better. It might take several years to package your agency for sale. Ask yourself what you want your ideal succession plan to look like. Because the best time to work on getting there is as soon as possible.

Brad Brain is a registered financial planner and the president of Brad Brain Financial Planning.

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UPFRONT

NEWS ANALYSIS

A flood of coverage cancellations More Americans than ever before are living in flood-prone areas – so why have policy sales plummeted almost 10%? A FLOOD event for the record books overwhelmed the central and southern US in the waning days of December. Unseasonable rainfall added to an already swollen Mississippi River, affecting nearly 20,000 square miles from southern Illinois to central Texas. Combined with an unexpected cold front, the storms claimed more than 40 lives and caused up to $1.2 billion in damage. Just two months earlier, historic flooding in South Carolina had added another $1 billion to the flooding toll.

government-sponsored flood policies in force has plunged by nearly 10% in the past six years, from 5.7 million in 2009 to 5.1 million in 2015. Even in South Carolina, which is one of the most insured states in the NFIP, fewer than 200,000 flood insurance policies are in force. It’s a precipitous drop, and according to Robert Hartwig, economist and president of the Insurance Information Institute, it’s one that’s only going to get larger. “It’s sad to say, but that gap is going to

“That gap is going to increase. People are reacting to price increases that have been put in place because the NFIP is broke” Robert Hartwig, Insurance Information Institute It’s a story that’s becoming all too familiar in flood-prone regions where sea levels keep rising and coastal development doesn’t stop. Yet despite the increased risk, more home and business owners are choosing to go without a critical piece of defense: flood insurance. Flooding is the most common and costly natural disaster in the US, causing an average of $50 billion in economic losses each year, according to the Insurance Information Institute. But data from the National Flood Insurance Program reveals that the number of

increase,” Hartwig said during a recent presentation on uninsured risk with Swiss Re. “People are reacting to price increases that have been put in place because [the NFIP] is broke.” Those price increases are the result of the Biggert-Waters Act and subsequent legislation, which were designed to move toward more actuarially sound rates and ease some of the $24 billion debt the program incurred after Hurricane Katrina in 2005. Premium rates jumped 15% to 18% for new and renewal policies on primary homes, and 25% on

secondary homes or homes that have suffered repeated losses. Also contributing to consumer reticence toward insurance is a lack of significant flood damage, says Hartwig – even barring the events of this winter. “Memories are short,” he says. “It’s been nearly 10 years since the last major hurricane in Florida – the longest span in history. And it does not take long for a gap between events for people to start questioning why they need this coverage.” Even more worrying, a significant number of people may not even think to evaluate their risk due to a misunderstanding of flood coverage. The Insurance Information Institute’s Annual Pulse survey reveals that while 56% of those with a homeowner’s policy know their coverage does not include damage from flooding, 24% believe that it does. Another 19% say they don’t know. These twin influences – high pricing and a lack of education – are paramount in insurance producers’ attempts to sell flood insurance amidst this drought of public interest.

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THE TIDE TURNS: NFIP POLICIES IN FORCE While the number of NFIP policies in force has grown since the ’80s, it has fallen 9.6% in recent years. 1980

2.104

1985

2.017

1990

2.478

1995

3.477

2000

4.369

2005

On the first front, many are turning to the private market – like Dan Freudenthal’s Florida-based brokerage Agency Flood Resources – for alternative solutions. “We are seeing that as NFIP costs increase, people are picking up the phone, calling their agent and saying, ‘What do you have as an alternative?’” says Freudenthal, who notes that the recent premium increases are the highest he’s seen in 15 years. “In the coming three

“The NFIP rates have been woefully inadequate for a long time,” says NAPSLO executive director Brady Kelley. “Until NFIP gets real about pricing, the private market can’t compete for risks that currently flow through that program. That’s still quite a way off. There are still caps on rates, and a 25% increase doesn’t make them actuarially sound.” Still, Kelley hopes private insurers – particularly surplus lines insurers – will be able

“Until NFIP gets real about pricing, the private market can’t compete for risks that currently flow through that program” Brady Kelly, NAPSLO years, a lot of interesting things will happen. The private flood market is about to burst.” However, at last count, just five private insurers are taking on flood risk nationwide, and artificially depressed pricing from the NFIP is making it difficult to attract more carriers to the market.

to retain a foothold in the flood market. He and NAPSLO have long lobbied for technical changes to the Flood Disaster Protection Act of 1973 that would explicitly endorse private flood insurance issued by non-admitted insurers. Non-admitted insurers are not barred from offering private flood insurance under

4.962

2007

5.656

2008

5.684

2009

5.700

2010

5.645

2011

5.646

2012

5.620

2012

5.569

2013

5.569

2014

5.351

2015

5.151

2 3 4 5 Number of policies (millions)

Source: National Flood Insurance Program

the language of the 1973 legislation, but NAPSLO and others are looking to eliminate any possibility of blocking those carriers from the market. “Surplus lines insurance provides an important option for consumers seeking coverage for unique or hard-to-place risks, including flood risks,” Kelley said when testifying before lawmakers in January. “NAPSLO’s support for this [change] stems from our desire to preserve that choice for consumers.” With such legislative clarification, increased education and actuarially sound NFIP rates, the flood insurance drought could finally come to an end.

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

AssuredPartners

Roehrs & Company

Roehrs is a Pennsylvania insurance agency dealing in commercial and personal lines, with a niche in wood products

Brown & Brown Insurance

BayRisk Insurance Brokers

The BayRisk team will be relocated to Brown & Brown’s office in Lafayette, La.

Confie

Fair Price Insurance

Fair Price is a specialty auto insurance agency based in New York City

National Financial Partners

Vanorsdale Insurance

The firm’s president, Doug Galloway, will assume the role of director of property & casualty for NFP

Patriot National

Mid Atlantic Insurance Services

Mid Atlantic will change its name to Patriot Underwriters when it joins the Florida-based technology company

Walsh Duffield Cos.

Barry York

The move is Walsh Duffield’s second acquisition of a Rochester, NY-based insurance agency

Zurich Insurance

Rural Community Insurance Services

The Swiss-based global insurer expands its US operations with the acquisition of the Wells Fargo unit

Specialty insurer to offer private executive portfolio

Berkshire Hathaway Specialty Insurance has launched the Executive First Private Company Portfolio, an insurance solution that includes directors & officers liability, employment practices liability, fiduciary liability, employed lawyers liability and commercial crime insurance in one written form. Customers will also have access to EPL First, which provides an online repository of human resources training and compliance resources and ‘help line’ services from an employment attorney. BHSI is initially targeting private companies with revenue in excess of $15 million.

More than 80% of insurers plan to acquire by 2019

The competition for attractive assets will intensify in the next three years, as the majority of insurers (82%) plan to acquire, while only one-third intend to divest, according to a survey of senior global insurance executives conducted by Willis Towers Watson M&A Risk Consulting in conjunction with Mergermarket. According to the survey, almost half of respondents made their last major acquisition in order to enhance their market position and increase customer numbers. In addition, consolidation, particularly in the US and specialty lines, spurred a rise in the number of mega-deals – 2015 saw four worth more than $5.4 billion, compared to just one in 2014. Survey respondents overwhelmingly indicate they expect to focus their M&A activity on core markets (80%), and only 8% don’t already have operations in deal target markets. Distribution, which is already a key driver of more than a third of M&A activity, will likely become increasingly important as insurers seek new routes to market and higher revenues.

K&K Insurance adds new program for fraternal organizations

Agents working with fraternal orders such as the American Legion and the Knights of Columbus now have access to a new insurance program. K&K Insurance Group launched its fraternal order program in January, offering coverage options that include property, general liability, crime and equipment breakdown. “With experienced underwriters and claims managers that understand the specific needs of fraternal orders, we are well-prepared to provide exceptional service and quality coverage to insurance agents and their clients,” said K&K’s Mark Nunes.

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PEOPLE New Empire Group introduces excess liability program for real estate

New Empire Group has expanded its prime umbrella/excess liability program portfolio with a new excess liability program for real estate. Underwritten by an AM Best A8 carrier, the program offers low minimum premiums and competitive rates, and provides limits from $5 million to $25 million (limits of up to $100 million are available). Qualifying classes of business include condominium associations, co-ops, apartments, homeowner’s associations, commercial buildings and office buildings.

Farmers launches rideshare coverage in four states

Farmers Insurance announced in January that it is beginning to sell modified auto policies to rideshare drivers in Texas, Oklahoma, Arizona and Ohio. Farmers Rideshare Insurance Coverage will add about $15 per month to a customer’s premium and enables the driver to select a customizable policy that pays for damage to their own vehicle, uninsured/underinsured motorist coverage and medical payments coverage. The insurer worked with representatives of each state’s insurance department, as well as legislators and leaders of rideshare companies, to develop the product.

Brit Insurance introduces industry-first claims offering

Global specialty insurer Brit Insurance has announced a first-of-its kind claims product designed to provide policyholders with a definitive timeline for responding to an insurance claim. Pay or Explain is initially being marketed to yacht owners, and guarantees a clear roadmap to managing claims within 30 days of being notified, for insurance coverage of up to $150 million. In preparation for the product, Brit has upgraded its infrastructure and personnel to improve its speed in managing claims and payments.

NAME

LEAVING

JOINING

NEW POSITION

William Bell

Chubb Corp.

Liberty International Underwriters

Senior vice president of US environmental

James Crouse

N/A

USI Insurance Services

Property & casualty practice leader

Matthew Foote

Lloyd’s

Argo Group International Holdings

Head of exposure management

Michel Heffernan

Aon plc

Alliant Insurance Services

Executive vice president, Construction Services Group

Robyn Jackson

N/A

The MEMIC Group

Director of claim operations

Steve Koslow

CUNA Mutual Group

Allianz Life Insurance

Chief compliance officer

Kevin Kenny

Wells Fargo Insurance Services

ProSight Specialty Insurance Group

Senior executive, strategic initiatives

Cynthia Koehler

Liberty Mutual Insurance

XL Catlin

Global practice leader, casualty claims

Amy M. Landry

FM Global Insurance

Risk Strategies Company

Property loss-control engineer

Sue Mason

N/A

Allied Insurance Brokers

Senior vice president

Don Pickens

Liberty Mutual Insurance

Zurich Insurance

Chief underwriting officer, global corporate in North America

Charles Puno

Protective Re

Safety National Re

Vice president

Bill Thygeson

Hamilton Insurance

Everest Insurance

Chief administration officer

Rick Wiseley

QBE North America

Hiscox USA

Head of programs

David Zona

Allianz Global Corporate & Specialty

Prudential Financial

Chief operations officer, Prudential Group Insurance

Zurich Insurance poaches new CEO from rival

Following the departure of Martin Senn, Zurich Insurance has called on Generali CEO Mario Greco to take over the top leadership position at the carrier, effective May 1. Greco has a history with Zurich, having run the Swiss insurer’s main general insurance business before leaving to join Generali in 2012. He returns at a difficult time for the company, which issued a profit warning in January for its general insurance business – its second in four months.

Prominent insurance trade group leader steps down

Insurance Information Institute president Robert Hartwig announced in early February that he will leave his position with the industry trade group later this year. Hartwig, an economist who was appointed to the position in 2007, is leaving in August to join the faculty of the University of South Carolina’s Darla Moore School of Business. Hartwig said he hopes to use his time in the academic community to attract and educate young talent to the insurance industry, which he continues to regard as “vitally important.”

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UPFRONT

WORKERS’ COMP UPDATE

Fewer comp claims, increased severity Insurers might be dealing with fewer claims, but the ones that are reported are becoming more severe

information contained in the report could help both employers and hospitals make better decisions when it comes to workers’ compensation issues. Workers aged 36 to 55 accounted for more than half of the paid indemnity claims, the report noted. The report also found that the share of overall losses for workers in the 36-55 age bracket is less than the share of overall claims for those 30 years old or younger –

“Younger workers generally spend more in medical care relative to total costs”

A new report from Milliman and Keenan Healthcare found that workers’ compensation claim severity continues to increase, even while the actual frequency of claims decreases. The report, in its second year, provides details such as claim frequency and severity, impact of reforms, medical and indemnity costs, and allocated loss adjustment expense over the past decade. According to the report, the overall losses per $100 of payroll stayed relatively unchanged from 2004 to 2014, while the

NEWS BRIEFS

severity of claims increased by 5.5% annually between 2005 and 2014, and claim frequency dropped. In addition, the report noted that the estimated cost per indemnity claim for accidents that occurred during 2014 decreased by about 10% from 2013. “[Workers’ comp] is complex and always changing, and there are many challenges that employers and hospitals must contend with,” said Milliman principal and consulting actuary Richard Lord. Lord added that the

Two voluntary benefits may decrease claims

A new report from Aflac suggests adding two additional insurance products to a client’s account can help decrease claims. According to the Aflac Workers’ Compensation Report, 42% of all companies providing voluntary accident and disability insurance reported declines in their workers’ comp claims – some of up to 50%. Roughly 17% of employers offering voluntary accident insurance and 15% of those offering disability saw claims declines of 25% to 49%. The declines were most frequent for large employers.

an indication of lesser average severity of indemnity claims for younger workers. Also, the data suggested that as workers age, any workers’ compensation incident becomes more likely to result in an indemnity payment. “Younger workers ... generally spend more in medical care relative to total costs,” the report states, “whereas older workers tend to have larger relative indemnity losses between 20% and 25% of claims with paid indemnity are litigated.” Milliman and Keenan’s data summary also detailed that although litigated claims only made up 20% of the total claims with indemnity payment, they account for nearly 54% of total incurred losses because litigated claims have considerably higher average claim severity.

AIG teams up with wearables manufacturer

AIG is looking to improve its understanding of workers’ compensation losses through a new investment in wearables manufacturer Human Condition Safety. The trackable device, which is embedded in construction workers’ vests, is designed to monitor the movements of employees in factories, on construction sites and in other high-risk workplaces. The sensors transmit data on the wearer’s movements in real time; the hope is that they will help managers keep track of where their workers are and also help decrease fraud.

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Q&A

John Lucker Principal

Wearable tech meets workers’ comp

DELOITTE CONSULTING

Years in the industry 21 Fast fact Lucker is a leader of Deloitte’s Advanced Analytics & Modeling practice, one of the leading analytics groups in the professional services industry

What’s prompting the desire for workers’ comp insurers to partner with wearable tech manufacturers? What I think is really driving a lot of the insurers’ interest in this is the fact they are seeing competition to be particularly keen in recent years. Insurers are looking for ways to shine a light on themselves in a way that helps them look unique and different and, at the same time, provides value back to the end customer, which, in this case, would be an employer.

How could an insurer’s workers’ compensation business ultimately benefit from this type of data? The data can be used to help prevent an injury, to monitor the recovery from an injury and to make sure that certain parameters aren’t exceeded as the person recovers but returns to some light-duty work. The data can be used to manage the recovery of a person throughout the actual medical healing process and the care management process. There are a lot of different use cases. From an injury prevention perspective, there are companies out there that are introducing things like wristbands or various other wearables on a worker that, if they get within a certain distance of some type of machine or hazardous condition, the machine would basically shut itself off or wouldn’t start. There are things around helping workers recover in an expeditious fashion, whether it’s devices that alert the workers to appointments they have with

Tennessee steps away from opt-out plans

Tennessee officials have backed away from considering legislation that would have allowed private employers to opt out of the state’s workers’ compensation system. The bill was endorsed a year ago by Senator Mark Green and Representative Jeremy Durham. The Tennessee Advisory Council on Workers’ Compensation unanimously decided against recommending the proposal. The Tennessee House Consumer Affairs Committee canceled a hearing related to the bill and took the bill off notice, removing it from the legislative calendar for the year.

doctors or reminders to take their medication or triggers that it’s time for them to contact the doctor. There’s a variety of these types of use cases. The key is … there has to be this algebraic equation that’s balanced, which is that it’s valuable to the worker, employer [and] insurer, and that the ultimate return on investment has to flow in both directions.

What key privacy concerns arise in respect to this kind of data use? All of the cautions we’re familiar with need to apply around data privacy and cyber risk. But this only applies if, in fact, really sensitive information is flowing. Personally, I would question how sensitive it really is that a particular worker, who might only be identified through the wearable device as some kind of ID number, is lifting 25 pounds, or that somebody’s body temperature is 99.5 and they need to drink more. I don’t think it seems that private, but you never know how people might interpret this. I think the real concern … is that [insurers’] access to some of this information might be used in a disadvantageous way to the employer or the employee. I think an employee’s expectations are that this data is going to have reasonable protections around it, in the same way their social security number and personal identifiable information might be protected in a payroll system. An employer is probably expecting the insurer’s going to do something to their benefit with this data and not to their detriment.

Health insurers attempt to ﬁght opioid abuse

Massachusetts-based CeltiCare is taking a stand against opioid abuse by bringing on social workers to aid clients. CeltiCare has assigned the new hires to work with individual patients to monitor use and help train recipients of opioids on how to reverse overdoses. It also hopes to lower its own costs related to opioid use – according to the insurer, nearly a quarter of hospital admissions are related to substance use, and CeltiCare spent more than 10% of its budget last year on Suboxone, a medication to treat addiction to narcotics.

Nine convicted in fraud investigations

The Ohio Bureau of Workers’ Compensation announced in January the successful conviction of nine individuals who defrauded the state’s workers’ compensation system. The court actions were the result of investigations conducted by the BWC’s special investigations department. Workers’ compensation fraud results in incorrectly inflated premiums for other, law-abiding companies and can result in errors & omissions lawsuits for insurance agents who are perceived to be participating in the fraud.

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UPFRONT

TECHNOLOGY UPDATE NEWS BRIEFS Startup’s success signals changing consumer priorities

Insurify, a company developed out of MIT, recently pulled in $2 million in seed money from investors after introducing the launch of Evia (Expert Virtual Insurance Agent). The ‘robo’ agent purports to find consumers better car insurance by snapping a photo of a car’s license plate and pulling the resulting information to shop for quotes. The startup’s model resembles that of CoverHound and Google, but offers a broader range of carriers, including big companies like Progressive, Allstate and AAA.

E-signature provider boosts business by 40% in 2015

AssureSign, an electronic signature software provider, announced that it had doubled annual revenue in 2015 and increased its insurance industry client roster by 40%, pointing to a variety of growing trends both in the insurance space and among consumers. In addition to achieving those milestones, AssureSign solidified its market leadership among the more than 50 companies that are Microsoft Dynamics CRM partners. AssureSign CEO David Brinkman estimates that just 20% to 25% of insurance agencies have e-signature capabilities, but expects that to increase in the next 12 to 18 months.

Nationwide announces online commercial quoting system

Nationwide is hoping to better serve its agents and their small business clients with a new commercial quoting system. Called FastPath, the tool boasts streamlined technology

that results in faster quoting and an average of 80% fewer screens. The system also automatically accepts 60% of simpler, smaller risks that don’t require underwriter review and go straight into issuance. In addition to FastPath, Nationwide is releasing a social media tool and web-based mapping application to allow agents to view and search for more commercial prospects.

Two bills regulating drones considered in California

Two bills were proposed in January in an attempt to make drone operation safer for Californians. If both are passed, drones would be required to sport license plates and have insurance, and drone pilots involved in accidents would have to leave their contact information, like drivers involved in auto accidents. The insurance policies would be relatively inexpensive and sold at point-of-sale, much like auto insurance. The hope is that such policies would prevent any “drone hit-and-run incidents.”

State DMV puts brakes on selfdriving car technology

Fully autonomous vehicles aren’t ready for prime time, as far as California’s Department of Motor Vehicles is concerned. For now, the California DMV isn’t allowing automated cars that don’t have a human driver, even though Google is building one that’s designed to work without a person behind the wheel. “Given the potential risks associated with deployment of such a new technology, DMV believes that manufacturers need to obtain more experience in testing driverless vehicles on public roads prior to making this technology available to the general public,” the agency wrote.

Surviving the automation transformation A new report warns that 25% of insurance jobs will be replaced by automation by 2025 – but are independents doomed? A new report from the McKinsey Global Institute promises that the age of automation could wipe out as many as one in four full-time insurance positions in the next 10 years. Operations, product development, and marketing and sales support are all ripe for the taking, say researchers, who estimate that 25% of these positions are likely to be consolidated over time. And while independent insurance agents are not left out of this stark equation – the analysis suggests that 60% of tasks performed by producers could be automated – industry experts say there are still ways for them to flourish. Unsurprisingly, nearly all of them have to do with embracing new technology. “To meet these challenges, insurance companies will need to source, develop and retain workers with skills in areas such as advanced analytics and agile software development, experience in emerging and web-based technologies, and the ability to translate such capabilities into customerminded and business-relevant conclusions and results,” McKinsey said in the report. To their credit, insurance producers have already begun this process. In a separate report from agency technology provider Vertafore, researchers found that while more than half of producers (54%) feel moderately to seriously threatened by advances in automation, four out of five agencies also reported increasing their IT

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budgets over the last 12 months in order to address these threats. Nearly 50% plan to spend more on advancing customer self-service capabilities, while 43% are looking to make investments in cloud services and solutions. Investments in mobile (40%) in the form of mobilefriendly websites and apps are also top priorities for agents going forward. By improving efficiency in these areas, producers can free up more time to spend on the kind of creative problem-solving that machines can’t easily replicate.

“If you’re an agent that’s small, I still think there’s a way for you to win. I really do” And that is exactly what they need to do in order to increase their value proposition to customers and stay relevant, argues Valen Analytics CEO Dax Craig. As head of a company that develops technology and data solutions for carriers, Craig facilitates conversations with both insurance companies and agents, and from that vantage point, he sees a forthcoming evolution in insurance distribution – but not one that necessarily precludes producers. “If you’re an agent that’s small, I still think there’s a way for you to win. I really do,” he says. “Those who are adopting more technologically driven apparatuses to help them do business are going to be the ones most attractive to potential buyers.”

Q&A

Rory Joyce Co-founder and chief product officer COVERHOUND

Fast fact Based in San Francisco, CoverHound offers a digital platform that allows consumers to compare and purchase insurance

Peer-to-peer insurance Is the concept of peer-to-peer insurance starting to take off? We have seen some traction with the model with our friends overseas, specifically in Germany – you’ll see there’s a company, Friendsurance, that’s been around for a little while. Some of the reasons that it’s been slower to take off here in the US are just structural. In the US, you have 50+ regulatory bodies overseeing insurance. Even the cost to build a new peer-to-peer insurance company from scratch is quite significant, especially if you want to be available in more than just one market. There’s a lot to navigate through, and I think there’s no doubt we’ll see more of it. It just takes some time.

What are the benefits of the peer-to-peer model? From a consumer standpoint, generally the costs can be lower because of some of the benefits to the insurer … [such as] lower fraud [and] lower claims behavior, which results in lower operational costs to administer claims. Overall, there’s more retention of the policies, and that goes back to the idea of being in a pool with people you maybe know. You’re less likely to make claims when you know who exactly is going to be paying that claim, in effect. You’re less likely to cancel your policy when that will be one less person who’s participating in the pool, which could also adversely affect the price for people you know. So it’s less about making a claim and the faceless insurance company’s going to be the only one on the hook. Instead, now it’s your co-worker, your sister, your mother.

How much of a threat does the peer-to-peer model pose to traditional carriers? The traditional carriers … always take a ‘wait and see’ approach with these new innovations. They’re going to keep an eye on the Lemonades and the Friendsurances of the world, and see how that plays out – how much distribution the companies are able to get under this new model. And if it’s something that looks like there’s traction around, then they’ll pivot into doing it and participating and offering those programs themselves. Not every carrier is going to be equipped to make that transition, so that’s why there’s no question that there are going to be some changes in who the dominant carriers in the US are over the next, say, five to 10 years. We just don’t know which of the new underwriting models – whether it be things like peer-to-peer [or] usage-based insurance – are really going to gain a foothold in the market.

So what’s next for peer-to-peer insurance? Having known the insurance market well and how slowly it [can] move, I think we’re all anxious to see more and more innovation. There’s a bunch of interesting variables at play, but it will be fun to monitor how this takes off and launches in the US.

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PEOPLE

INDUSTRY ICON

COMMUNITY FIRST David Lockton explains how not just focusing on the bottom line propelled Lockton Companies to the top of the insurance world

IN AUGUST, David Lockton will celebrate 40 years in the insurance industry. Since 2003, he has been the chairman of Lockton Companies, where he previously served as president and CEO. With Lockton at the helm, the firm has established an astonishing track record of four decades of continuous organic growth; in the 2015 fiscal year, its total revenue exceeded $1.24 billion. Today, Lockton Companies is the largest privately held independent broker in the world. Needless to say, Lockton and his team have scaled remarkable heights as a business. But for Lockton, the company’s crowning achievement is its culture. “When we were 50 people, we knew we had a different kind of experience for our customers,” he says. “The difference was that when customers walked in the door, they sensed they were the center of the universe, and we felt they were the center of the universe. “We didn’t think we’d be able to be big and maintain that same kind of culture,” he continues. “Today, we have 6,000 people, and we have the same culture. In fact, I think it’s stronger today than it was when we had 50 people.” The cornerstone of that culture, according to Lockton, is that unlike competitors who focus only on profits, Lockton Companies puts the onus on customer satisfaction. “A good portion of our people join us

from our competitors, where they’ve been in an environment that is very focused on short-term profits,” Lockton says. “When they come to Lockton, they find out that they get rewarded for practicing the profession they’ve learned, and that they’re judged based on merit – and for us, merit is how you go about creating value for our customers. “I think that just feels right to our people. I think the way that we care for our fellow associates feels right to our people. People get a certain energy out of it, and it’s contagious. And that is amazing to me.”

Back to the start Lockton grew up in Kansas City. After graduating from high school, he set his sights on a career as a trial attorney. His brother, Jack, the firm’s founder, tried to persuade Lockton to consider the insurance path, but Lockton wasn’t interested. Things soon changed, though. “One day I came home, and [Jack] had bought the first new car in our family,” Lockton remembers. “It was a convertible Mustang. I think that’s when he got my attention. I changed my major from English to business finance,

“When people come to Lockton, they find out that they get rewarded for practicing the profession they’ve learned, and that they’re judged based on merit – and for us, merit is how you go about creating value for our customers” Maintaining that culture is a responsibility that Lockton takes to heart. “As chairman, all I have to do is come in and foster that caring culture, and concern myself with how working at Lockton can be a fun, exciting and rewarding venture. And then I just get out of people’s way and let them do what they’re good at.”

anticipating joining him.” But before he would allow his brother to come on board, Jack wanted Lockton to get some real-world experience elsewhere. So Lockton began working at a bank, but quickly became restless, and his resolve to pursue an insurance career intensified. “My wife and I invited my brother and

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PROFILE Name: David Lockton Company: Lockton Companies Title: Chairman Years in the industry: 40 Fast fact: Lockton Companies contributes more than $3 million annually to various nonprofit organizations across the US

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PEOPLE

INDUSTRY ICON

his wife over for dinner on the patio one night, and I made my pitch that I was going to get into this insurance brokerage business,” Lockton says. “I wanted to do it with him, but I was going to do it whether he hired me or not. “We had a pretty long evening … but by the end of the night, he had agreed that I could come to work for him.”

Serving communities While the firm continues to sustain impressive levels of growth, Lockton

icant need. “We set up a not-for-profit within our company called Associates Caring for Each Other [ACE],” Lockton says. “It’s always been amazing to me how associates band together to help people who are in trouble, whether they have a jobless spouse or a serious illness. I felt like it was a great thing we were doing, and we didn’t want to have people fall through the cracks, so we formalized it. I think we do a really good job of making sure that [when] our associates … have those kinds of critical needs … the opportunity is extended to

“It’s always been amazing to me how associates band together to help people who are in trouble, whether they have a jobless spouse or a serious illness. I felt like it was a great thing we were doing, and we didn’t want to have people fall through the cracks, so we formalized it” Companies also places significant emphasis on giving back. “We make it our business to make our communities better – our community outside of our company and our community inside of our company,” Lockton says. Last year, staff in the UK branches participated in Lockton Gets in Gear. Cyclists from all 11 UK Lockton offices took part in a mission to cycle between all of those offices, including those in Scotland and Ireland. The ride raised nearly $100,000, which went toward construction of the Lockton Suite at London’s Great Ormond Street Hospital, a facility where parents of sick children can stay at the hospital. Another endeavor targeted at Lockton’s internal community aims to provide support for employees in times of signif-

associates to help them. And they come through every time.” Looking to the future, what does Lockton’s chairman hope to accomplish? “We’re very successful for a number of reasons, but two very important ones are that we’re privately owned – and so we’re able to stay focused on the customer and not get overly concerned about next quarter’s profits – and the other is that we’ve been able to attract a really great leadership team. Before I leave this place, I want to make sure that we have a model that will allow family ownership to be sustained through the future generations. I want to have the governance structure around that, and I want to make sure that we have all the right leaders in the right leadership positions to carry forward our success.”

LOCKTON COMPANIES BY THE NUMBERS

1966

The year Lockton Companies was founded by Jack Lockton, David’s brother

$1.24 billion

Total revenue Lockton Companies achieved in 2015

6,000+

The number of associates employed by Lockton Companies

125

The number of countries with clients served by Lockton Companies

The number of offices Lockton Companies currently occupies across the globe

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24/02/2016 2:41:39 AM

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24/02/2016 2:41:48 AM

FEATURES

COVER STORY: TOP PRODUCERS

Insurance Business America names 111 of the insurance industry’s top-performing producers WELCOME TO Insurance Business America’s 2016 Top Producers list. This year, we received an overwhelming response to our request for nominations, and as a result, we’re pleased to be able to bring you an impressive roster of industry pros who are making their mark across the US. Because of the wealth of applications we received, the IBA team also decided to create the Platinum Producers Club, recognizing the success of those at the top of the top – producers with books worth more than $3 million. You’ll find them starting on page 42. Think your name should be on this list? Make sure you nominate yourself for consideration in next year’s report. We’d like to extend a word of thanks to all of the producers who put their names forward to ensure we can bring you a list of truly high-caliber industry professionals. We hope you enjoy the insights shared by this year’s crop of Top Producers.

THE METHODOLOGY Rather than sequentially ranking our Top Producers, we decided that, this year, applicants whose own book of business for 2015 (net commissions) exceeded $750,000 deserved a place in the report. Each nominated producer was required to provide specific details about his or her book of business in order to be eligible. IBA then decided to specially recognize those whose books exceeded the $3 million mark by listing them in our Platinum Producers Club.

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TOP

PRODUCERS

2016

TOP PRODUCERS INDEX NAME

PAGE

COMPANY

NAME

PAGE

COMPANY

NAME

PAGE

COMPANY

Acker, Martha Lee

Arthur J. Gallagher & Co.

Hammer, Matthew

Baldwin Krystyn Sherman Partners

Overmyer, Dan

Overmyer Hall Associates

Alexander, Mike

ABM Insurance & Benefit Services

Hancock, Monti

Hancock-Leavitt

Page, Curtis

Higginbotham

Andolina, Philip

Lawley Insurance

Heckle, Richard

Dean, Heckle & Hill

Patterson, Ben

Patterson & Associates Insurance Agency

Andrew, Ryan

The Andrew Agency

Henderson, Jerry

Arthur J. Gallagher & Co.

Pfeiffer, Larry

Arthur J. Gallagher & Co.

Anthony, Jane

The Trident Group

Henley, Norman

Arthur J. Gallagher & Co.

Phillips, Steven

First Choice Insurance Agency

Arnold, Mike

Van Zandt, Emrich & Cary

House, Randy

LP Insurance Services

Pike, Gregory

LP Insurance Services

Augustyniak, Lori

Horizon Insurance

Huber, Russell

PartnerSource

Pool, Brian

Lonestar Integra Insurance Services

Baker, Frank

Baldwin Krystyn Sherman Partners

Hudson, Allen

Sahouri Insurance & Financial

Potthast, John

Foundation Insurance Group

Momentum Insurance & Financial Services

Humann, John Ross

Cook Maran & Associates

Powers-Leavitt

Humphreys, John

Eagan Insurance Agency

Powers-Broadbent, Charlene

Jones, Kim

Kim Jones Insurance Agency

Ragland, Cruger

Hubbard Insurance Agency

Kauffman, David

Lechner & Stauffer

Reiner, Jonathan

RT Specialty

Kehl, Jack

Overmyer Hall Associates

Robinson, James

Robinson & Stith Insurance

Keith, Christopher

Lockton Insurance Brokers

Rust, Adam

Liberty Mutual Insurance

Kiger, Mark

Orion Risk Management Services

Scali, Terry

NFP

Schaaf, Paul

Cameron M. Harris & Co.

Schaefer, Greg

Schaefer Enterprises

Schneider, Brian

Higginbotham

Schoolcraft, Joya

Schoolcraft Insurance Agency

Schreter, Jonathan

Bolton & Company

Sims, Jeremy

Shepherd Insurance & Financial Services

Smink, Dawnyel

Canyon Lands Insurance

Smith, Sarah

Options Insurance

Strohecker, Laura

Insurance Marketing Agencies

Sylvester, Nancy

Arthur J. Gallagher & Co.

Valenza, Joseph

Frenkel & Co.

Von Haden, Ryan

TRICOR Insurance

Von Tersch, Sara

NFP

Walters, Mark

CS Insurance Strategies

Wanglin, Ronald

Bolton & Company

Bayless, Steve Beck, Eric

Bouchard Insurance

Becker, Lance

Arthur J. Gallagher & Co.

Berrian, Joel

Berrian Insurance Group

Betz, Albert

Betz Rosetti & Associates

Brandes, Tisha

Brandes Insurance Agency

Campbell, Terry

Arthur J. Gallagher & Co.

Chemadurov, Vlad

Risk Services

Chino, John

Arthur J. Gallagher & Co.

Cooper, Gary

Leavitt United Insurance Services

Courtney, William

Liberty Mutual Insurance

Curiel, Thea

Owen-Dunn Insurance Services

Curtin, James

Liberty Mutual Insurance

Davenport, Robert

Humble & Davenport Insurance Brokers

DePriest, Tim

Arthur J. Gallagher & Co.

Ehlers, Jim

Jim Ehlers Insurance Services

Evans, Justin

Tri-County Insurance Services

Even, Perry

Arthur J. Gallagher & Co.

Fanberg, Zachary

Eagan Insurance Agency

Fontenelle, Charles

Fontenelle & Goodreau Insurance

Foote, Robert

Frank H. Furman

Fox, Kelly

Northwestern Mutual

Kingman, Brian

Arthur J. Gallagher & Co.

Kulikowski, Joe

LP Insurance Services

Lee, Mark

Higginbotham

Lewis, Dwight

Corporate Four Insurance

Lobato, Kathy

Farmers Union Insurance

Logan, Stan

Logan Lavelle Hunt

Marcus, David

Arthur J. Gallagher & Co.

Mason, Kevin

Acentria Insurance

McEachern, Kendall

Acentria Insurance

McNulty, Brad

Shepherd Insurance & Financial Services

Megginson, Paul

Risk Management Partners

Middleton, Bob

Maury Donnelly & Parr

Mika, John

Orion Risk Management Services

Miola, Paul

Arthur J. Gallagher & Co.

Monahan, Dennis

Leavitt Southern California Insurance Services

Waterhouse, Jim

Spectrum Risk Management

Legacy Capital Group

Webb, Chris

Webb Financial Group

Freismuth, Tom

HUB International

Moriconi, Lisa

Furman, Michael

The United Fidelis Group

Morris, Jean Ann

LP Insurance Services

Wells, Gary

Leavitt Southern California Insurance Services

Furnari, Dustin

HUB International

Moss, Ryan

Higginbotham

Whiteside, Scott

Arthur J. Gallagher & Co.

Gabler, Adam

CDS Insurance Services

Muston, Susan

Liberty Mutual Insurance

Wightman, Scott

Arthur J. Gallagher & Co.

Garrison, Scott

HUB International

Nelson, Jonathan

Insurance Service of Asheville

Wilson, Marcus

Tolman & Wiker Insurance Services

Glickman, Alexandra

Arthur J. Gallagher & Co.

Noss, Drew

Higginbotham

Woodruff, Tim

Leavitt Group

Gresser, Mark

Charles Allen Agency

Oravetz, Ed

Marsh & McLennan Agency

Young, Jody

Higginbotham

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FEATURES

COVER STORY: TOP PRODUCERS

What does it take to be a top producer? The global insurance market continues to be soft, and the growing consensus is that there’s no end in sight. So it’s encouraging to learn that producers are much more optimistic this year when it comes to book growth and new business run rates. That insight comes from David Estrada, founder and managing director of Rainmaker Advisory, a consulting firm that recently polled more than 1,200 producers for its 2016 Annual Producer Survey. In doing so, Estrada was able to identify several key characteristics that make for a top-performing producer:

• • • • • • •

Diligent in undertaking weekly pipeline updates Focused sales initiatives by niche industries Embraces highly specific definitions of what represents an ideal client/target to prospect Has well-refined sales methodologies and processes Understands the difference between ‘sales’ and the ‘business of sales’ Understands he or she is not just an individual contributor, rather a leader of a team Understands that through professional development, he or she will be able to write progressively larger, more complex and more lucrative business year-over-year

Rainmaker’s survey asked producers to respond to 30 questions about their sales process and outlook. Here’s what they had to say on some of the issues.

HOW MANY YEARS HAVE YOU BEEN PRODUCING BUSINESS? 35%

33.3% 30.6%

30% 25% 20%

16%

15%

10.6%

9.3%

10% 5% 0%

Less than 3 years

3-5 years

5-10 years

10-25 years

25+ years

Source: 2016 Rainmaker Advisory Annual Producer Survey

HOW DO YOU BELIEVE YOUR NEW BUSINESS FOR 2016 WILL COMPARE TO YOUR THREE-YEAR AVERAGE NEW BUSINESS RUN RATE? I anticipate my new business results this year will be more than 20% below my three-year average

13.9% 4.6%

I anticipate my new business results this year will be 5% to 20% below my three-year average

I anticipate my new business results this year will be about the same – give or take 5%

29.2%

I anticipate my new business results this year will be 5% to 20% above my three-year average

27.7%

I anticipate my new business results this year will be more than 20% above my three-year average

13.9%

Other

10.8% Source: 2016 Rainmaker Advisory Annual Producer Survey

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TOP

PRODUCERS

2016

DO YOU BELIEVE YOUR BOOK WILL GROW OR SHRINK IN 2016? 40%

39.4%

35% 30% 25%

22.7%

20% 16.7%

15% 9.1%

10%

9.1%

5% 3%

I believe it will shrink by more than 20%

I believe it will shrink within the 5% to 20% range

I believe it will remain constant â&#x20AC;&#x201C; give or take 5%

I believe it will grow within the 5% to 20% range

I believe it will grow by more than 20%

Other Source: 2016 Rainmaker Advisory Annual Producer Survey

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24/02/2016 10:51:37 AM

FEATURES

COVER STORY: TOP PRODUCERS THE 2016 IBA TOP PRODUCERS LIST

STAN LOGAN

Logan Lavelle Hunt, Louisville, KY

ALBERT BETZ

Betz Rosetti & Associates, Gulfport, MS

Stan Logan’s insurance industry experience spans an impressive 35 years. Today, he’s a co-owner and agency sales manager of Logan Lavelle Hunt, a Kentucky agency established almost a century ago. For the last three decades, Logan also has been involved in his local Home Builders Association. During that time, he’s held multiple offices (local, state and national), has achieved numerous Associate of the Year designations and has recruited more than 1,000 members to the association. He says that’s meant many nights spent on the road attending events, but the payoff has come in the many friendships he’s made and the business he has earned.

ALEXANDRA GLICKMAN

Arthur J. Gallagher & Co., Irvine, CA

BOB MIDDLETON

Maury Donnelly & Parr, Baltimore, MD

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TOP

PRODUCERS

2016

ED ORAVETZ

Marsh & McLennan Agency, Houston, TX

Raising the bar on client expectations and doing whatever it takes to exceed those expectations is a mantra for Ed Oravetz. He says he focuses on creating long-term client relationships by delivering value on a daily basis, without any expectations. In 2014, his own boutique firm, VISICOR, was recognized as one of the fastestgrowing private companies in Houston and was later acquired by Marsh & McLennan Agency. Since the acquisition, Oravetzâ&#x20AC;&#x2122;s personal book value has grown from $1.6 million to $2.7 million; heâ&#x20AC;&#x2122;s convinced his beliefs and unique approach laid the foundation for that impressive growth. Looking ahead, his sights are fixed on continuing to grow every year.

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FEATURES

COVER STORY: TOP PRODUCERS JIM EHLERS

DiBuduo & DeFendis Insurance Agency, Lodi, CA

With a 36-year insurance career under his belt, Jim Ehlers has significant specialist coverage knowledge. It was the family farming business led Ehlers to specialize in agriculture-related business insurance, including crop insurance. Starting as a producer at MCV Insurance Producers in 1980, Ehlers joined his current firm in 2011.

GARY WELLS

Leavitt Southern California Insurance Services Santa Ana, CA

JIM WATERHOUSE

Spectrum Risk Management, Irvine, CA

RICHARD HECKLE

Dean, Heckle & Hill, Matthews, NC

Richard Heckle and his two partners founded their eponymous firm in 1981. By that time, Heckle already had considerable experience in the insurance industry. He started his career in 1971 with the Continental Insurance Company before moving to the agency of Davis Young and Lee in 1977.

KENDALL MCEACHERN

Acentria Insurance, Destin, FL

Kendall McEachern, CEO and founder of Acentria Insurance, is an industry veteran of more than 30 years. Based in Destin, Florida, he specializes in risk management and insurance for the real estate and construction industries. McEachern’s team is responsible for insuring more than 400,000 multi-family units with property values in excess of $22 billion, as well as 4 million square feet of commercial office space and real estate buildings. Before founding Acentria, McEachern was a managing partner, senior vice president and board member for Insurance Office of America, a tenure that saw him receive a variety of impressive awards. He also enjoys giving back and has served as a chairman for the American Heart Association.

ZACHARY M. FANBERG

Eagan Insurance New Orleans, LA

With a background in real estate from his time at Tommy Crane Group, Zachary Fanberg quickly became one of Eagan’s condominium insurance experts, writing coverage for a large percentage of the many condos and condo conversions popular in the city of New Orleans. Fanberg is an avid competitive sailor and has won the United States Men’s Sailing Championship, the Mallory Cup, three times in recent years.

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TOP

PRODUCERS

2016

JODY S. YOUNG

Higginbotham, Houston, TX

Jody Young is another top producer from the Higginbotham team. She says she’s been successful in growing her client base because of her knowledgeable, professional and talented team members, who provide support to clients every day to assist them in navigating the insurance system. Young says building these relationships is at the core of her team’s success. She also attributes her success in part to Higginbotham’s focus on educating buyers about their various programs, because an educated buyer makes a better consumer. Finally, Young measures her personal success by what she gives back. She enjoys speaking and teaching engagements with various organizations, which afford her the chance to share her years of knowledge and insight.

ERIC BECK

Bouchard Insurance, Clearwater, FL

Eric Beck began his career in insurance 13 years ago with a consistent focus on social service and healthcare organizations. Beck says his goal was to fully understand the risks faced by those organizations and to develop sound risk management strategies to reduce costs. Over time, he says he’s been able to save his clients millions of dollars, allowing funds to be redirected back into their services. Beck also spends time in Tallahassee, lobbying on behalf of clients to help maintain their funding sources. He’s been able to grow his book by becoming the preferred agent for a number of associations, and is asked to speak across the US about ways to reduce costs and improve efficiencies in risk management programs.

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FEATURES

COVER STORY: TOP PRODUCERS

STEVE BAYLESS

Momentum Insurance & Financial Services Houston, TX

PAUL R. SCHAAF Cameron M. Harris & Co., Charlotte, NC

Paul Schaaf is a risk consultant for Cameron M. Harris & Co. in its Charlotte, North Carolina, office. A former US Army officer and certified private instrument pilot, Schaaf began working in insurance in 1999. In 2014, he was named one of the 12 best insurance pros under 40. He credits great mentors for having helped build a platform of behaviors that have led him to succeed in the business. He says some of the best advice he’s ever received is to try to always leave the client in a better position than the one they started in. Schaaf also says he’s enjoyed the opportunity to be part of a company that has experienced double-digit growth since launching in 2009.

CHARLENE POWERSBROADBENT Powers-Leavitt, Phoenix, AZ

JOEL BERRIAN

Berrian Insurance Group, Littleton, CO

JOHN MIKA

Orion Risk Management Services, Newport Beach, CA

JONATHAN NELSON

Insurance Service of Asheville, Asheville, NC

MARK LEE

Higginbotham, Houston, TX

As a managing director at Higginbotham, Mark Lee has had no shortage of recognition for his achievements. Operating within the oil & gas, construction and manufacturing niches, Lee has received several awards during his 10 years in the industry, including IIAT Young Agent of the Year in 2013, and being named to the IBA Hot 100 and 40 Under 40 lists in 2015. Lee attributes his success to his mentors, Randy Lee and Jerry Crider, who, despite their different approaches, were very successful and knowledgeable teachers.

JOHN HUMPHREYS

Eagan Insurance Agency, New Orleans, LA

When John Humphreys left Loyola University in 1985, Tears for Fears were at the top of the charts, and View to a Kill was making a big noise at the box office. Fast forward 31 years – today, Humphreys is a vice president at Eagan Insurance. He moved over to Eagan after a fouryear stint at Whitney National Bank; as a producer, he specializes in large, complex commercial risks and public entities.

Another producer with a slightly unconvential background, Steve Bayless started his working life looking after medical records. After a few months, his next career change took him to the Houston Grand Opera Chorus (although he did keep his day job as a CSR with Templeton Insurance Agency). Six years later, Bayless moved to his current firm, Momentum Insurance & Financial Services, where he’s the commercial lines manager and has excelled in building a substantial book of business with commercial P&C clients.

DAN OVERMYER

Overmyer Hall Associates, Columbus, OH

Dan Overmyer started his career with a brief stint as an underwriter for Cincinnati Financial Corporation in 1999. He went on to join Berwanger Overmyer Associates as an account manager the following year and spent the next decade working his way up through the ranks. In 2008, the firm was acquired by the Willis Group, where Overmyer served as vice president until his departure. In 2011, Overmyer joined his brother, Greg, to launch Overmyer Associates, a commercial and personal property & casualty insurance agency built on the brothers’ extensive collective experience. Their experience paid off significantly: Overmyer Hall Associates saw meteoric growth, becoming the fifth largest property and casualty insurance agency in central Ohio in just three years.

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TOP

PRODUCERS

2016

GREG SCHAEFER

Schaefer Enterprises, New York, NY

He was once an NCCA Division 1 basketball player, but these days, Greg Schaefer keeps busy running a Manhattan-based insurance agency that specializes in all aspects of business, personal and program insurance. A Wall Street veteran, Schaefer says his father, also an insurance professional, inspired him to create an insurance company that was built around customer service and trust. Seventeen years later, both Schaefer and his organization have received a number of accolades in recognition of the business’ significant growth. He credits this success to the fact that Schaefer Enterprises’ business model is precisely aligned with his clients’ goals – to keep costs down and longterm security up.

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FEATURES

COVER STORY: TOP PRODUCERS DREW NOSS

DAWNYEL SMINK

Drew Noss has been with Higginbotham – one of the largest independent insurance brokerage firms in the country – for more than 10 years, specializing in finding insurance solutions for manufacturing, real estate, distribution and transportation. Noss holds a master’s degree in management from Dallas Baptist University.

Dawnyel Smink has been in the insurance industry for more than a decade. Under her leadership, Canyon Lands Insurance has earned numerous industry awards, including being named one of Allied’s top agencies in the nation for growth from 2010 through 2014 and a 2010 National Association of Women Business Owners All-Star Business. Smink herself was named one of the Arizona Republic’s top entrepreneurs under 35 in 2009.

Canyon Lands Insurance, Mesa, AZ

Higginbotham, Fort Worth, TX

GARY COOPER

Leavitt United Insurance Services Fresno, CA

Gary Cooper serves as a broker for Leavitt United Insurance Services, the third-largest privately held brokerage in the nation. A third-generation insurance agent, Cooper began his career in 1990, working for his family brokerage. Cooper’s years of experience have given him a broad knowledge base in practically all types of commercial insurance, with a special focus on agriculture and large apartment properties.

JOYA SCHOOLCRAFT

JOHN ROSS HUMANN

Cook Maran & Associates, East Hampton, NY

Specializing in the area of New York City construction, John Humann, vice president of Cook Maran & Associates, has been described as “an asset to NYC Metro area business owners.” His approach to helping clients to negotiate New York’s complicated labor law and construction markets has cemented his reputation within the industry. Although his specialty is in construction, his practice is not exclusive to this industry; he also has clients in the real estate, food, medical, manufacturing and distribution sectors.

Schoolcraft Insurance Agency, Manassas, VA

JUSTIN EVANS

LORI P. AUGUSTYNIAK

KATHY LOBATO

MARCUS WILSON

MARK WALTERS

MARK D. KIGER

LAURA STROHECKER

MARK GRESSER

LISA MORICONI

MICHAEL FURMAN

Tri-County Insurance Services, St. Paris, OH

Farmers Union Insurance, Castle Rock, CO

CS Insurance Strategies, Chicago, IL

Insurance Marketing Agencies, Worcester, MA

Legacy Capital Group, Little Rock, AR

Horizon Insurance, Bradenton, FL

Tolman & Wiker Insurance Services, Santa Maria, CA

Orion Risk Management Services, Newport Beach, CA

Charles Allen Agency, Waite Park, IL

The United Fidelis Group, Palm Beach, FL

FRANK BAKER

Baldwin Krystyn Sherman Partners, Tampa, FL

Currently a managing advisor at Baldwin Krystyn Sherman Partners, Frank Baker’s success in the industry has grown out of his adept ability to develop great client relationships. Prior to starting with BKS in 2006 as a founding colleague, Baker was a financial planner with American Express Financial Services. His work at BKS provides bespoke and customized holistic protections to clients across the real estate, hospitality and financial sectors, specifically to maritime, private risk and commercial risk clients.

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TOP

PRODUCERS

2016

GREGORY PIKE

TIM WOODRUFF

LP Insurance Services, Las Vegas, NV

The Leavitt Group, Las Vegas, NV

Greg Pike is a principal and vice president of LP Insurance Services. He’s chalked up well over two decades of experience in the industry, beginning his career in 1989 at McFadden Insurance Agency in Las Vegas, where he later became principal and, along with his team, grew the agency into an impressive $4 million enterprise. Since 2013, he’s led LP’s Southern Nevada division. When speaking to younger brokers, Pike often advocates the importance of taking time to work on the smaller things. Pike himself spent considerable time working on a small residential account that none of his colleagues were interested in. That relationship ultimately led to Pike being introduced to another client, who happened to be one of the largest master-planned developers in the area.

By the time he went to college, Tim Woodruff knew a career in the insurance industry was calling, so he chose a degree in insurance and risk management. For the last 20 years, he’s been putting that degree to good use, first at Arthur J. Gallagher and Federated Insurance, and now as a senior account executive at the third-largest privately held brokerage in the US. Woodruff joined Leavitt in 1996 and has been recognized as a Million Dollar Producer every year since.

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FEATURES

COVER STORY: TOP PRODUCERS ROBERT P. FOOTE

Frank H. Furman, Pompano Beach, FL

Robert Foote is the president of Frank H. Furman, an organization whose mission is to impact clients’ operating results by consistently deploying time-tested risk management strategies that drive down those clients’ insurance burdens, therefore reducing their overheads and elevating their profit margins. He says positioning the firm as a service provider that’s focused on profit margins shifts the dynamic between the buyer and broker, making it more of a peer-to-peer rather than clientand-vendor relationship. Another key factor Foote says has fueled the business’s growth is its focus on and deep entrenchment in very select industry groups – those considered somewhat underserved in the marketplace. He believes this allows his team to have an intimate understanding of clients’ challenges and opportunities, and affords an opportunity for the business to separate itself from its peers.

MIKE ARNOLD

Van Zandt, Emrich & Cary, Louisville, KY

MIKE ALEXANDER

ABM Insurance & Benefit Services, Houston, TX

MONTI HANCOCK

Hancock-Leavitt, Taylor, AZ

PAUL MEGGINSON

Risk Management Partners, Flowood, MS

PERRY EVEN

Arthur J. Gallagher & Co., Irvine, CA

PHILIP M. ANDOLINA

Lawley Insurance, Buffalo, NY

DENNIS MONAHAN

Leavitt Southern California Insurance Services Orange County, CA

When it comes to experience, few producers on this list have as much as Dennis Monahan, vice president at Leavitt Southern California Insurance Services, who has spent more than 40 years in the insurance industry. With his comprehensive knowledge and specialization in multi-state, multilocation, foreign, property and package accounts, it’s no surprise that Monahan currently works with a list of around 100 clients. The fact that these clients cover a range of areas, including manufacturers, wholesalers, contractors, property owners and professional services, is further testament to Monahan’s exhaustive expertise and success within the field.

After beginning his career at his father’s firm, The Arnold Group, in 1988, Mike Arnold has amassed almost 30 years of experience in the industry. He joined Van Zandt, Emrich & Cary 12 years later in the role of principal and VP, following a merger between that firm and The Arnold Group, of which he was co-owner. Arnold became president and CEO at Van Zandt in 2013, having become one of the agency’s top producers, growing individual revenue for the organization to more than $1 million a year.

CRUGER RAGLAND JR.

Hubbard Insurance Agency, Kilmarnock, VA

CHARLES E. FONTENELLE

Fontenelle & Goodreau Insurance, Metairie, LA

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24/02/2016 10:52:22 AM

F i n a n c i n g for t h e i n s ura nc e in d ustry

Insurance lending requires insurance expertise. TOP

PRODUCERS

2016

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KELLY EUGENE FOX Northwestern Mutual Augusta, GA

After serving as vice president of sales at Southern Heritage Group for more than 13 years, Kelly Fox’ joined Northwestern Mutual in 2010. Kelly is the vice president of the Augusta, Georgia, Northwestern Mutual network office.

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DUSTIN FURNARI

HUB International, Chicago, IL

A former professional golfer, Dustin Furnari left the links to join HUB International in 2010. Furnari’s specialties include risk management for construction, private equity and land development. He also specializes in the emerging video game industry, offering comprehensive coverage exclusively for Illinois video gaming operators. Furnari holds a bachelor’s degree in business law from Western Carolina University, where he graduated cum laude.

ROBERT DAVENPORT

Humble & Davenport Insurance Brokers, Renton, WA

www.ibamag.com

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24/02/2016 10:52:27 AM

FEATURES

COVER STORY: TOP PRODUCERS SCOTT GARRISON

SARAH SMITH

HUB International, Tulsa, OK

Options Insurance, Minneapolis, MN

TERRY SCALI

CHRIS WEBB

NFP, Scottsdale, AZ

Webb Financial Group, Lake Forest, IL

VLAD CHEMADUROV Risk Services, Houston, TX

WILLIAM D. COURTNEY

Liberty Mutual Insurance, Wilmington, DE

SARA VON TERSCH NFP, Scottsdale, AZ

JACK KEHL

Overmyer Hall Associates, Columbus, OH

A former underwriter at Willis Group, Jack Kehl believes his big break was when Greg Overmyer gave him his first job as a bond producer. Kehl had no sales experience, but since the career change, he’s never looked back. “Jack has handled some of the largest and most well-respected construction accounts in the region, making him a real niche for our agency,” says Brian Hall, one of the agency’s partners.

ADAM W. GABLER

ADAM RUST

Contractors and Manufacturing risks are Adam’s specialties and they appear to have served him well. He joined CDS as a Sales Executive in 2006 and after five years in the role he was promoted to Executive Vice President. Described by clients as an aggressive “go getter” he is also a keen athlete having gained second place in the Vail Lake US Mountain Bike West series to name just one of his many sporting achievements.

Adam Rust started with Liberty Mutual In May of 2010 as an intern while attending the University of Houston sales program. He has a bit of an insurance heritage – his grandfather was a former insurance commissioner of Texas. In 2015, Rust was recognized with multiple zone top producer awards, the largest being the Top Overall P&C Producer, which earned him a trip to play in the Liberty Mutual Invitational at Pinehurst Resort in North Carolina.

CDS Insurance Services Glendora, CA

www.ibamag.com

Liberty Mutual Insurance, Kingwood, TX

THOM FREISMUTH

HUB International, Del Mar, CA

As an executive vice president at HUB International and a Million Dollar Round Table member, Thom Freismuth has more than 40 years of experience. Among several other professional awards to his name, Freismuth’s successful practice saw him named POWER Broker of the Year in 2013.

TOP

PRODUCERS

2016

THEA CURIEL

Owen-Dunn Insurance Services, Sacramento, CA

Thea Curiel has spent 27 years in the industry, and her experience encompasses both the carrier and agency sides of insurance. Formerly a commercial lines supervisor, Curiel says her breakaway opportunity came in joining the production team, where she thoroughly enjoys assisting business owners in controlling their insurance costs. Her specialty at California-based Owen-Dunn

Insurance Services is captive insurance programs; she focuses on the construction, auto dealer, waste management, hospitality and property management industries. Curiel says she loves setting clients up for success, and getting to know them on both a business and personal level. Earlier this year, she was named Owen-Dunnâ&#x20AC;&#x2122;s top net new business producer.

www.ibamag.com

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24/02/2016 10:52:41 AM

FEATURES

COVER STORY: TOP PRODUCERS

BEN PATTERSON

Patterson & Associates, Richardson, TX

RYAN MOSS

Higginbotham, Friendswood, TX

After graduating from the University of Texas at Arlington in 1996, Ryan Moss wasted no time setting up his own agency, The Essential Group the following year. Having spent 13 years building the company around the niches of energy, marine and construction markets, in 2010 Moss identified an opportunity to better serve The Essential Group’s customers through a merger with Higginbotham. Fast forward six years, and Ryan’s specialist knowledge in energy, construction and maritime is still at the core of the work he now does as managing director at Higginbotham’s South Houston location.

BRAD MCNULTY

DWIGHT LEWIS

Prior to joining Shepherd Insurance back in 2000, Brad McNulty served as general sales manager at Palmer Dodge for more than 10 years. His specific areas of expertise lie in sourcing, analyzing and implementing the best deals for some of the country’s premier franchise truck dealers. Brad earned his place as an IBA top producer (alongside colleague Jeremy Sims) because of his extensive knowledge of garage liability and workers’ comp packages for the trucking market.

A partner at Corporate Four Insurance, Dwight Lewis has been in the insurance industry since 1983. Lewis has expertise in a broad range of industries, and a specialty in transportation. Lewis holds an MBA from the University of Minnesota.

Shepherd Insurance, Indianapolis, IN

When Ben Patterson began his career, he was employee number five at an independent agency with only four carrier contracts. The best opportunity to write business was in personal lines. The agency took advantage of the successes on the personal lines side to pursue carrier contracts, building one book at a time. Patterson’s focus, however, turned to commercial carrier contracts, where he now focuses on foundations, nonprofits and technology. Accounts with professional or directors & officers exposure are what he enjoys most. Patterson is president of Patterson & Associates Insurance Agency, which is an IIABA Best Practices Agency and also was recognized as a Best Place to Work by the Dallas Business Journal in 2013 and 2015.

Corporate Four Insurance Edina, MN

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TOP

PRODUCERS

2016

MATTHEW HAMMER

Baldwin Krystyn Sherman Partners, Tampa, FL

Matt Hammer is a managing advisor at Baldwin Krystyn Sherman Partners in Tampa, Florida, where he specializes in construction and real estate. On the construction side, he works with national builders to mitigate construction defect risk while designing programs to enhance their revenue base. Hammer has been recognized on numerous occasions for his strong performance – he was named BKS’ top producer in 2012,

2013 and 2014, and this is his second appearance on IBA’s Top Producer list. Among his other achievements, Hammer managed to reduce insurance spend on property insurance for 10 of his clients by an average of 28%, and he also launched an innovative insurance solution for a national homebuilder that transferred more than $1 billion of construction defect risk off their balance sheet.

www.ibamag.com

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24/02/2016 10:52:54 AM

FEATURES

COVER STORY: TOP PRODUCERS

JONATHAN SCHRETER Bolton & Company Pasadena, CA

Jonathan Schreter has worked in insurance for 12 years, after racking up more than a decade of experience in marketing and advertising – experience he says still defines the way he does business today. Joining the industry as a broker at Hoffman Brown Company, Schreter says it became increasingly clear to him that his job was not to sell insurance, but instead to identify risk and to demonstrate how insurance can mitigate that risk. Since 2011, he’s been with Bolton & Company, where he says a significant component of his success is his ability to connect clients with the resources and people that offer them the solutions they need.

CHRISTOPHER M. KEITH Lockton Insurance Brokers, Philadelphia, PA

BRIAN POOL

Lonestar Integra Insurance Services Houston, TX

Some top producers start as they mean to go on – straight from education into the industry. Others find their way in after trying other fields. Brian is the latter – following a Media Production degree into a video editing job. Six years later though and Brian had found his true calling – after a year at RJF Group Farmers Insurance followed by InsurMe and then Varsity Insurance he opened his own agency in 2012.

As the president of Lockton Insurance Brokers, Chris Keith provides clients with practical, strategic and advisory services, and uses a data-driven approach to help them solve complex business problems. Not just a top producer, Keith also gives back to his community. He sits on the board of directors for Beats the Streets Philadelphia, an organization devoted to establishing youth wrestling programs and facilitating academic tutoring in the Philadelphia area.

www.ibamag.com

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24/02/2016 10:52:53 AM

TOP

PRODUCERS

2016

RYAN VON HADEN

TRICOR Insurance, Madison, WI

For Ryan Von Haden, insurance is in the blood. His grandfather began the family business in the 1950s, and it was later purchased by his parents and run by his mother before merging with TRICOR Insurance in 2010. Von Haden began working in the business while in high school and continued interning while attending college. Joining the industry full-time in 2004, his first role was as an underwriter for West Bend Mutual. For the past 10 years, he’s been with TRICOR, where he’s been a leading property &

casualty producer, and was recently promoted to partner and vice president of business accounts. Continuing education is of great importance to Von Haden, and he’s very proud to have earned his Certified Insurance Counselor and Associated Insurance Services designations. From 2008 to 2014, he chaired the Young Professionals Club of the Professional Insurance Agents of Wisconsin, and he currently sits on the board of directors for the Boscobel Area Hospital and Clinics Foundation.

www.ibamag.com

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24/02/2016 10:52:57 AM

FEATURES

COVER STORY: TOP PRODUCERS

BRIAN SCHNEIDER

Higginbotham, Fort Worth, TX

RYAN ANDREW

The Andrew Agency, Richmond, VA

In 2006, Ryan Andrew left his job at Virginiabased Crowder and Holloway to start his own firm. A decade later, he now is one of the nation’s top producers with a wide range of clients. The twist in this success tale? His firm acquired Crowder and Holloway last year.

RANDY HOUSE

Brian Schneider is executive VP of business insurance for Higginbotham, one of the country’s largest full-service brokerages. Schneider has been in the business for more than five years. So what’s helped him become a top producer? He attributes his success to great leadership at Higginbotham and the firm’s unifying mission – to exceed the expectations of its clients, employees, carriers and communities in a partnership to deliver a single source for insurance and financial services.

JOHN G. CHINO

Arthur J. Gallagher & Co., Orange County, CA

LP Insurance Services, Truckee, CA

Randy House is a Reno native who attended the University of Nevada Reno before joining his father’s insurance firm in 1989. He has more than 25 years of experience in the commercial property & casualty insurance industry and currently leads LP’s efforts throughout the Truckee/ Lake Tahoe region. After leaving his father’s firm, House joined Lucini/Parish Insurance in 1997, and that’s when current LP principal Rich Bullard first approached him. House later moved to Lake Tahoe in 2007, working with Wells Fargo Insurance Services and HUB International. In 2014, he reconnected with Bullard and was named a partner at LP Insurance, where he now leads the Tahoe region.

John Chino entered the Gallagher intern program in 1981. He spent two years in London, becoming the first American to pass the exam Lloyd’s implemented to foster standards for their brokers. And speaking of exams, Chino himself is an educator, currently on the faculty of the National Alliance for Insurance Education and Research and a course leader for The Institutes. He says his role as a teacher is a key to his success as a producer, keeping him sharp and reinforcing his understanding of his clients’ needs. As a producer, he serves self-insurance pools for cities, counties and school districts in eight states, as well as many individually selfinsured agencies. One of his clients, the state of New Mexico, has a spaceport it plans to start using for private space travel in 2016, and Chino and his team placed insurance for the operation.

www.ibamag.com

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TOP

PRODUCERS

2016

JEAN ANN MORRIS

LP Insurance Services, Reno, NV

JEREMY SIMS

Shepherd Insurance, Carmel, IN

Jeremy Sims graduated from the University of South Florida and has spent more than eight years in the industry. At Shepherd Insurance, he works alongside fellow IBA top producer Brad McNulty as a senior sales executive for the firmâ&#x20AC;&#x2122;s truck dealership program. He moved over to Shepherd from The Bridgewater Club in 2008.

JONATHAN REINER

RT Specialty, Chicago, IL

Jonathan Reiner has been in the insurance industry since 2009. After joining RT Specialty in 2010, his career took off, and he became a very well-recognized figure in the professional lines community. He has already won many professional liability production awards. Reiner has a deep specialized knowledge of financial products, including directors & officers, errors & omissions and cyber liability. Reinerâ&#x20AC;&#x2122;s passion for his craft, along with his exceptional team at RT Specialty, has allowed him to shatter production records in the field and foster exceptional growth annually.

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FEATURES

COVER STORY: TOP PRODUCERS CURTIS W. PAGE

Higginbotham, Austin, TX

JOE KULIKOWSKI

LP Insurance Services, Reno, NV

After attending college on a baseball scholarship in Kansas, Joe returned home to Reno to start a career in the medical field, acting as a pharmaceutical representative for Pfizer and Johnson & Johnson. By 2004, he had decided to change his career path and joined Wells Fargo Insurance Services. In 2010, he joined his current firm, where he is a principal. His success comes from being a specialist in coverage for the medical profession, brokering medical malpractice and related insurances for physician practices and healthcare entities.

STEVEN PHILLIPS

First Choice Insurance Agency, Poplar Bluff, MO

A 25-year veteran of the insurance industry, Steven Phillips’ firm is very much a family affair. He merged with his wife’s independent agency in 2009, and his son now also works at the firm. The company services clients across Missouri, Arkansas, Mississippi, and Michigan, and represents more than 100 carriers. Phillips covers businesses of all sizes, which means he has a large number of clients across the region.

KEVIN MASON

Acentria Insurance, Destin, FL

More than 23 years of industry experience have helped Kevin Mason become president of his own firm. He currently specializes in multifamily protection while focusing on national condominium associations. Before co-founding his current business in 2005, Kevin served as branch manager for Insurance of America, where he was recognized as Rookie of the Year.

ALLEN HUDSON

Sahouri Insurance & Financial Washington, DC

Five years ago, Allen Hudson took a leap of faith, leaving his job at a major broker to take charge of the commercial unit at Sahouri, where he specializes in developing niche market insurance programs in underserved markets. It seems it was a good decision – as head of the company’s commercial P&C team, Hudson has overseen department revenue growth of a remarkable 1400%. He’s also won several accolades for his success in the role and has helped the business to secure a few, too.

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PRODUCERS

2016

Insurance Business America is recognizing leading independent retail brokerages in our April edition

ENTER TODAY Submissions close Friday March 11 www.ibamag.com

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www.ibamag.com

24/02/2016 10:53:18 AM

FEATURES

COVER STORY: TOP PRODUCERS

THE PLATINUM PRODUCERS CLUB The producers on this list are the best of the best – those who managed to build books of business above $3 million in 2015 JANE E. ANTHONY

RONALD WANGLIN

Jane Anthony has had an extensive three-decade-long career in insurance. She’s done commercial insurance, medical professional liability insurance, personal lines and now high-net-worth personal lines. She’s worked for several organizations, including Colonial Penn and AIG; today, she owns her own risk consulting business and works for The Trident Group. Her experience even extends to the education sphere, where she’s taught insurance classes for those working to achieve their Chartered Property Casualty Underwriter certification.

With more than 35 years of industry experience, Ron Wanglin specializes in a number of niches, including aviation, education, healthcare, manufacturing, real estate and technology. As a past president of the Independent Insurance Agents Association in Santa Monica, he has a high profile within the industry and is a regular speaker at national conferences.

The Trident Group, Devon, PA

Bolton & Company, Pasadena, CA

SUSAN MUSTON

Liberty Mutual Insurance, Austin, TX

Susan Muston is no stranger to awards – she’s been recognized with both state and national awards. Liberty Mutual recognized Muston’s potential soon after she joined the company in 2004, giving her three company accolades for going over and above performance standards for new hires.

TISHA BRANDES

Brandes Insurance Agency, Dallas, TX

When Tisha Brandes opened her own agency, she wanted to stay indepenedent. She also wanted to find and efficient way to market and grow her new business. Her secret? Great referrals. As of today, 90% of her business growth is through referrals. In addition to commercial property and auto/fleet, the Brandes Agency also covers inland marine and builder’s risk in its impressive portfolio.

TIM DEPRIEST

Arthur J. Gallagher & Co., Pasadena, CA

With nearly 25 years of insurance and consulting experience to his credit, Tim DePriest is a managing director at Arthur J. Gallagher in Southern California. He is one of a few insurance professionals in California who maintains both a property & casualty and employee benefits insurance license. DePriest has been recognized as one of the top insurance consultants/ brokers in the US. He’s been named a Power Broker by Risk & Insurance for multiple years running, and he was one of only eight insurance professionals in the nation to receive Liberty Mutual’s Responsibility Leader designation for his contributions to the nonprofit and insurance industries. DePriest began his career as a commercial lines underwriter with Chubb and then joined Deloitte Consulting after graduating from Northwestern University with his MBA.

RUSSELL HUBER PartnerSource Dallas, TX

Finding a niche can pay big dividends – and Russell Huber can attest to that fact. As an EVP at PartnerSource, he focuses exclusively on workers’ compensation. But then he took that niche even further, focusing specifically on Texas Nonsubscription and the Oklahoma Option. That specialization has ensured him a place in the IBA Platinum Producers Club. Joining PartnerSource in 2004, Huber previously worked with CIGNA as a healthcare sales executive for more than 19 years.

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TERRY CAMPBELL

Arthur J. Gallagher & Co., Los Angeles, CA

Educated at Cal State, Terry Campbell began his insurance career at Willis in 1991, where he stayed for 14 years. Campbell’s current practice at Gallagher is specialized – but it’s a big specialty. As part of the global risk management team, he deals with multinationals’ exposure to risk. He’s currently a managing director of insurance and risk management for North American clients, working on large accounts.

DAVID S. KAUFFMAN

Lechner & Stauffer, Pennsburg, PA

David Kauffman is vice president at Lechner & Stauffer, based in Pennsburg, Pennsylvania. He began his insurance career as an intern at a local Allstate agency before moving onto a summer internship with American Reinsurance during college. Post-graduation, Kauffman spent a year as an account manager before moving into a production role, and he hasn’t looked back since. Today, he specializes in commercial insurance needs of varying sizes and dynamics. Kauffman says the key to his success has been taking a systematic approach to what he does, maintaining plenty of activity, working hard, being honest and surrounding himself with other talented individuals. He says he’s fortunate to have a lot of good people assisting and surrounding him each day, and that the business has blessed him beyond his wildest expectations.

BRIAN KINGMAN

Arthur J. Gallagher & Co. Los Angeles, CA

JAMES ROBINSON

Robinson & Stith Insurance, New Bern, NC

James Robinson began his insurance career in 1984. Today, he’s the president of Robinson & Stith Insurance, a family firm founded in 1905. In addition to managing day-today operations at the firm, Robinson serves on several committees for the Independent Insurance Agents of North Carolina.

As managing director of Gallagher Entertainment, Brian Kingman’s job is to help Hollywood find coverage for its stars and their films. That isn’t always easy; some actors – particularly troubled stars with a penchant for brushes with the law – can be difficult to insure. But Kingman has a proven track record of success. During his career, he has provided insurance solutions for numerous Hollywood productions, including several Tyler Perry films and several installments of The Hunger Games series.

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FEATURES

COVER STORY: TOP PRODUCERS JAMES CURTIN

Liberty Mutual Insurance, Atlanta, GA

Since joining Liberty Mutual in 2007, James Curtin has made a name for himself in the Atlanta area as a top-quality insurance agent. Curtin has received numerous company awards and was named a 5-Star Professional by Atlanta Magazine. “The approach James takes is full of heart, presence of mind and concrete practical knowledge,” says one customer. “He has changed my expectations for what an agent should be and for what having insurance is about.”

JOSEPH G. VALENZA

DAVID L. MARCUS

As principal and executive vice president at Frenkel & Co., Jospeh Valenza manages the firm’s marine and cargo division and takes an active role in the development of new business production strategy. An industry veteran with more than 30 years of experience, Valenza specializes in the production and management of multifaceted insurance programs.

David L. Marcus has been with Arthur J. Gallagher & Co. for more than 30 years. In that time, he’s risen through the ranks to become an area chairman with the firm. Marcus also has served as chair of the Broward Education Foundation, an organization that promotes educational opportunity for public school students.

Frenkel & Co., New York, NY

Arthur J. Gallagher & Co. Boca Raton, FL

LARRY PFEIFFER

Arthur J. Gallagher & Co. Kansas City, MO

JERRY F. HENDERSON Arthur J. Gallagher & Co., Los Angeles, CA

Jerry Henderson was already an insurance industry veteran when he joined Arthur J. Gallagher & Co. in 2001. An acknowledged industry expert, Henderson has been consulted by many top carriers – including National Union, Chubb, St. Paul and AXIS – for his input on new policy forms and endorsements. He’s also a frequent speaker at industry functions.

Larry Pfeiffer has served as president of Gallagher Transportation Services for nearly two decades. In that capacity, he oversees the implementation of unique risk management solutions tailored to fit transportation companies that run the gamut from just a few units to several thousand.

MARTHA LEE ACKER

Arthur J. Gallagher & Co., Birmingham, AL

Martha Lee Acker has more than 30 years of experience in the risk management industry, with a special focus on long-term care. That’s a space with big exposures in both frequency and severity of loss, which makes Acker’s commitment to reducing industry exposure so important. Her experience and commitment have paid off: Acker is a licensed property & casualty agent in about 35 states, and led the way in the establishment and management of two captive insurance companies for both commercial general liability and professional liability for long-term care facilities.

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PAUL MIOLA

Arthur J. Gallagher & Co., Marlton, NJ

Paul Miola started working in his chosen field of insuring school districts back in 1983, when he combined the resources of 13 school districts to form the Atlantic and Cape May Counties Association of School Business Officials Joint Insurance Fund in order to obtain competitively priced workers’ compensation coverage. Since then, he hasn’t looked back, currently managing four district pools and three municipal pools. Miola has been in insurance since 1972, starting with Aetna, where he worked until 1981. He joined Arthur J. Gallagher from Cashan & Co. in 2006 when the brokerage acquired his employer. He is currently executive vice president of the firm’s Northeast Public Entity division.

SCOTT WIGHTMAN Arthur J. Gallagher & Co. St. Louis, MO

Entering the profession as a risk manager for Venture Stores, once the largest discount chain in Chicago, Scott Wightman has been uniquely positioned to understand the insurance business from the client’s point of view. His client-side view of the industry continued with a stint as director of risk management at St. Louis University before settling at his current brokerage in 1999. Working with the Pattonville school district, Wightman was instrumental in developing and launching one2one – an award-winning selfinsured product that allowed schools to afford to get coverage for students’ laptops.

LANCE BECKER

Arthur J. Gallagher & Co. New York, NY

For nearly 11 years, Lance Becker has served as the vice chairman for Arthur J. Gallagher’s Northeast region. He’s also co-director of the company’s global risk management practice. In that capacity, Becker heads up a team devoted exclusively to the risk management needs of large companies. He’s also a member of the Council for Litigation Management’s advisory board and Zurich’s advisory board, as well as the board of the Excess Lines Association of New York.

KIM JONES

Kim Jones Insurance Agency, Palm Bay, FL

Kim Jones has been in the insurance industry for more than 25 years. In 2000, she founded the Kim Jones agency in Palm Bay, Florida. Since then, the agency has grown to two branches serving all of Brevard County and neighboring areas.

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FEATURES

COVER STORY: TOP PRODUCERS

NANCY SYLVESTER Arthur J. Gallagher & Co., Baton Rouge, LA

Nancy Sysvester has built a career in public risk management. In her position at Arthur J. Gallagher, she plays a key role in the company’s unique approach to public sector risk issues. Her expertise has attracted notice; in 2013, Sylvester was named a Power Broker by Risk & Insurance magazine.

SCOTT WHITESIDE

Arthur J. Gallager & Co., San Francisco, CA

Four decades in the industry have given Scott Whiteside a wealth of experience and an encyclopedic knowledge of construction risk. He specializes in designing both owner-controlled and contractor-controlled insurance programs for public and private projects. After joining the industry as an adjuster, he eventually helped start his own San Francisco-based construction insurance company, Lamberson Koster & Company. Arthur J. Gallagher purchased the business just four years later, keeping Whiteside as an integral part of their growing construction practice.

JOHN POTTHAST

Foundation Insurance Group, Falls Church, VA

John Potthast founded Foundation Insurance Group in 1994, building it from scratch with a contract from Erie Insurance Group. Since then, the firm has grown to be one of Erie’s most trusted agencies and one of the most successful agencies in the region. Potthast has been recognized twice with Erie’s Quality Agent of the Year Award, and was the recipient of Safeco’s Community Hero Award for his dedication to helping children with autism spectrum disorders.

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NORMAN HENLEY

Arthur J. Gallagher & Co. Austin, TX

As a senior vice president at Arthur J. Gallagher & Co., Norman Henley has plenty of experience having joined the brokerage in 1991 via the sale of his own firm, Henley, Williams & Associates. Like many of the producers who have managed to gain a place in the Platinum Producers Club, Henley has specialized his practice; real estate and captive insurance are two of his major areas of expertise.

COMPANIES WHOSE STAFF WERE RECOGNIZED IN IBAâ&#x20AC;&#x2122;S 2016 TOP PRODUCERS COMPANY

COMPANY

ABM Insurance & Benefit Services

Foundation Insurance Group

Northwesten Mutual

Acentria Insurance

Frank H. Furman

Options Insurance

Arthur J. Gallagher & Co.

Frenkel & Co.

Orion Risk Management Services

Hancock-Leavitt

Overmyer Hall Associates

Higginbotham

Owen-Dunn Insurance Services

Horizon Insurance

PartnerSource

HUB International

Patterson & Associates Insurance Agency

Hubbard Insurance Agency

Powers-Leavitt

Humble & Davenport Insurance Brokers

Risk Management Partners

Insurance Marketing Agencies

Risk Services

Insurance Services of Asheville

Robinson & Stith Insurance

Kim Jones Insurance Agency

RT Specialty

Lawley Insurance

Sahouri Insurance & Financial

Leavitt Group

Schaefer Enterprises

Charles Allen Agency

Lechner & Stauffer

Schoolcraft Insurance Agency

Cook Maran & Associates

Legacy Capital Group

Sherpherd Insurance & Financial Services

Corporate Four Insurance

Liberty Mutual Insurance

Spectrum Risk Management

CS Insurance Strategies

Lockton Insurance Brokers

The Andrew Agency

Dean, Heckle & Hill

Logan Lavelle Hunt

The Trident Group

DiBuduo & DeFendis Insurance Agency

Lonestar Integra Insurance Services

The United Fidelis Group

Eagan Insurance Agency

LP Insurance Services

Tolman & Wiker Insurance Services

Farm Bureau Insurance

Marsh & McLennan Agency

Tri-County Insurance Services

Farmers Union Insurance

Maury Donnelly & Parr

TRICOR Insurance

FirstChoice Insurance Agency

Momentum Insurance & Financial Services

Van Zandt, Emrich & Cary

Fontenelle & Goodreau Insurance

NFP

Webb Financial Group

Baldwin Krystyn Sherman Partners Benefit Commerce Group Berrian Insurance Group Betz Rosetti & Associates Bolton & Company Bouchard Insurance Brandes Insurance Agency Cameron M. Harris & Co. Canyon Lands Insurance CDS Insurance Services

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FIVE-STAR NETWORKS

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Insurance Business America asked thousands of producers to rate how their networks are performing in key areas – and talked to leading ﬁgures at the networks to get their reaction to the results

“YOU ARE not entitled to your opinion. You are entitled to your informed opinion.” The words of American writer Harlan Ellison were ringing in our ears when we asked producers to select this year’s five-star networks. After all, who better to cast judgment on a network’s performance than those who use its services every day? As a follow-up to the “Producers on Networks” story we published last month, IBA surveyed members of networks and alliances to fi nd out which groups were

performing best in eight key areas. If a network scored 80% or better in the category, it received a five-star rating. However, our research didn’t end there. After hearing from the producers, we also sought out reactions from heads of some of the leading networks across the US. Did they agree with the producers’ opinions? What did they think about the areas where producers thought networks weren’t up to snuff ? And what did they have to say to those producers who are still reluctant to join a network?

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So what is a network? Even the word ‘network’ is a clear point of contention throughout the industry. “A lot of people simply don’t understand networks,” says Frank Whitcomb of the Minnesota Independent Insurance Agents & Brokers Association. “In the state of Minnesota, we have nine agencies that we can describe as networks – they are state-based agencies. They may have 10 or more locations, but they are all within the state, offering advantages to local companies. “[Aggregators and networks] are very different,” he continues. “In fact, we find that many companies may be more cautious about working with aggregators but not with statebased networks. Aggregators are often viewed as competition by the traditional independent agencies, whereas state-based networks are more individualized and more closely held.” George Biancardi, president and CEO of Networked Insurance Agents [NIA], agrees that the terminology has not been well-defined. “The terms – network, cluster, aggregator and even wholesaler – are used interchangeably, with each meaning different things to different people,” he says. “Where does Networked fall? On both sides, because we have two main businesses. One is what we call a cluster… which approaches the insurance market as one group. The other is what we call aggregation, which comprises over 1,000 independent agents.” Meanwhile, Bruce Basso, CEO of the Worldwide Broker Network [WBN], believes that aggregators and networks are actually vastly different organizations with contrasting goals. “An aggregator is usually an entity with venture financial backing that is buying agencies and brokers with the intent of forming them into a single company somewhere down the line,” he says. “It has a specific game plan, which is what people are buying into, but it is not about independence. It is about either being acquired for a greater goal or looking for a stronger path in a larger organization. “An independent network,” he continues, “is not about combining under a single company through purchase or sale, but attaining common goals, including greater revenues and increased profitability – but independently.” But while there’s seemingly no unified definition as to what a network is, its benefits for insurance producers are clear.

“The terms – network, cluster, aggregator and even wholesaler – are used interchangeably, with each meaning different things to different people” George Biancardi, Networked Insurance Agents ACCESS TO AN INCREASED NUMBER OF COMPANIES AND PRODUCTS

FIVE-STAR NETWORKS ACCESS TO COMPANIES AND PRODUCTS Agency Network Exchange Iroquois Insurance Producers Network ISU Group

COMMISSIONS AND PROFITSHARING

FIVE-STAR NETWORKS COMMISSIONS AND PROFIT-SHARING Agency Network Exchange Iroquois Insurance Producers Network ISU Group Keystone

Keystone Networked Insurance Agents Pacific Interstate Insurance Brokers Smart Choice Strategic Insurance Agency Alliance

Pacific Interstate Insurance Brokers Smart Choice Strategic Insurance Agency Alliance

According to our survey, the standout benefit of being part of a network is the access producers receive to a wider range of insurance companies and products. This perk rose from second place in last year’s survey to first this year. It was also the category in which the most networks achieved a five-star rating for their performance. However, according to network heads, producers should examine why a network formed to ensure its structure meets their requirements in terms of the markets it can introduce them to. “Some networks, such as those for smaller agents or brokers, form for company clout, or buying power with insurance products or other services,” Basso says. “Clearly, the combined buying power of a network gets greater attention from insurance companies.”

Commissions and profits are a vital reason for producers to join networks – and the networks appear to be delivering. Producers gave their networks an average score of 8.09, making this the second highest performing category, slipping slightly from first last year. “Captive writers are looking for higher commissions by working on their own,” Whitcomb says. “If they find a network that says, ‘I can give you an expanded market and a high commission split,’ then this is a win-win situation.” Paul Taylor, executive vice president of sales at Smart Choice, believes that offering high commissions is a vital component of his company’s winning formula. “With us not charging fees and dues, and giving the agent the ability to receive 100% of the commissions, we added close to 900 new agents in 2015,” he says.

PRODUCERS’ PERFORMANCE RATING

8.22

8.09 www.ibamag.com

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FEATURES

FIVE-STAR NETWORKS ACCESS TO NICHE AND NONTRADITIONAL MARKETS

FIVE-STAR NETWORKS ACCESS TO NICHE MARKETS Insurance Producers Network Iroquois

FIVE-STAR NETWORKS TRAINING AND EDUCATION Iroquois Keystone

Strategic Insurance Agency Alliance Access to nontraditional and niche markets has maintained its place as the third highest performing feature of networks for the second year in a row, although only four networks were able to earn a five-star rating in this area. David Ward, regional vice president for Iroquois South, believes that by offering increased market access, networks can help their members reel in the cash. “Our size and track record of profitability with our core companies help us create increased revenue opportunities for our member agencies,” he says. “Providing access to additional markets so that members can write and retain more business is another way in which networks can help members to increase their revenue.”

PRODUCERS’ PERFORMANCE RATING

7.75

“The combined buying power of a network gets greater attention from insurance companies” Bruce Basso, Worldwide Broker Network

OVERALL BUSINESS CONSULTING

FIVE-STAR NETWORKS OVERALL BUSINESS CONSULTING Iroquois

Smart Choice Strategic Insurance Agency Alliance

Keystone

TRAINING AND EDUCATION

Getting new talent into the business is proving difficult for many companies – but it appears that networks are providing vital support in educating those who do arrive. Producers gave them an average performance rating of 7.11, and four networks achieved a five-star rating. Networks don’t just provide training for newcomers – their educational resources also can be used by existing producers to bolster their performance. This can include introductions to new technologies, profit-sharing programs and revenue-enhancing strategies.

PRODUCERS’ PERFORMANCE RATING

7.11

Keystone Business consulting is generally seen as a key offering by the networks themselves – but only two networks, Iroquois and Keystone, were able to net a five-star rating in this category. Nevertheless, networks often provide an extensive range of business consulting offerings, from market optimization, which helps producers determine the right market mix to maximize profits, to financial benchmarking, which often involves a complete analysis of a company’s performance with assessments about where they can improve. Some networks also offer accelerator programs designed to help individual agents to achieve their goals faster.

PRODUCERS’ PERFORMANCE RATING

7.09 MARKETING

FIVE-STAR NETWORKS MARKETING Iroquois Networked Insurance Agents Building a brand has become a vital component of any business – but the networks earned only a slightly above average rating for their marketing performance, and Iroquois and NIA were the only networks to receive a five-star rating. WBN’s Bruce Basso believes marketing is one of the key components of a network’s offering and that producers can benefit greatly from the expansion in awareness that a network can offer. “Building a brand is a central focus,” he says. “The idea is to develop tools ranging

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from advertising to videos to collateral material – all to expand awareness of the network and its individual members. Some members – usually the larger ones – lead with their own firm’s brand and then incorporate the network when needed. Others may choose to lead with the network brand, especially with new prospects. It’s up to the individual member firm.”

PRODUCERS’ PERFORMANCE RATING

6.85 CUSTOMER SERVICE SUPPORT

“Throughout the industry, we just haven’t figured out how to attract new agents” Frank Whitcomb, Minnesota Independent Insurance Agents & Brokers

FIVE-STAR NETWORKS CUSTOMER SERVICE SUPPORT Iroquois Networked Insurance Agents

HOW WELL ARE NETWORKS PERFORMING? PRODUCERS’ PERFORMANCE RATING

6.76 ADMINISTRATIVE SUPPORT

FIVE-STAR NETWORKS ADMINISTRATIVE SUPPORT Iroquois Pacific Interstate Insurance Brokers Networks received middling performance ratings from producers in customer service and administrative support. However, there may be more to the story, given that many producers commented that they expect to provide that type of support themselves and don’t actively look for these features from a network. Nevertheless, two networks were still able to earn a five-star rating from their producers in each category.

PRODUCERS’ PERFORMANCE RATING

We asked producers to rate on a scale of 1 (poor) to 10 (excellent) how well their networks are currently performing in each of the following areas: Access to an increased number of companies and products

8.22 8.09

Commissions and profit-sharing Access to niche and nontraditional markets

7.75

Training and education

7.11 7.09

Overall business consulting

6.85

Marketing

6.76

Customer service support Administrative support Claims support Talent recruitment

6.75 6.20 6.00

6.75 www.ibamag.com

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FEATURES

FIVE-STAR NETWORKS CLAIMS SUPPORT

FIVE-STAR NETWORKS CLAIMS SUPPORT Iroquois ISU Group Keystone There were two areas of comparative weakness among the networks, according to our survey respondents: claims support and talent recruitment. However, when asked which network benefits were most important, producers also rated these two areas the lowest. Smart Choice’s Paul Taylor was surprised to see claims support come in so low on the list, noting that he has never known any issues in this area. “Our agents are contracted directly with our insurance company partners and have direct access with each company when handling claims,” he says. “I can’t recall any claims issues from our agents. We do work closely with our insurance company partners, helping agents identify and train new producers and CSRs through the companies’ certified training programs.” Although claims support received a relatively low score overall, three networks managed to achieve five-star status.

PRODUCERS’ PERFORMANCE RATING

6.20

“I feel joining a network gives the agency more independence” Paul Taylor, Smart Choice

TALENT RECRUITMENT Talent recruitment was a different story – no networks were able to ascertain the illustrious five-star rating. As the average age of agents in the industry climbs to 57, Frank Whitcomb believes this is a quandary that stretches far beyond the networks alone. “Honestly, this is an industry-wide problem,” he says. “Throughout the industry, we just haven’t figured out how to attract new agents. We’re reaching a point where the number of retirements is rapidly increasing, and this is creating a real need for new talent. However, it’s hard to find.” Taylor, however, believes there are solutions in the form of top-quality training programs. “Many companies have agent producer schools, CSR training programs and many other outlets for agents to use,” he says. NIA’s George Biancardi, meanwhile, believes this is only a problem in certain areas of the industry. “Talent recruitment is actually a huge benefit for the larger networks that actually place business with carriers on behalf of their member agencies,” he says. “These larger, full-service

networks can offer a small agent resources usually found from only the largest regional or national brokers.”

PRODUCERS’ PERFORMANCE RATING

6.00 To join or not to join So what about those producers who aren’t already part of a network? For them to be enticed, they’d need proof that they could gain access to niche markets – producers who weren’t part of a network ranked this as the top reason they might consider joining a network. However, Iroquois’ David Ward disagrees with the emphasis producers placed on this factor, believing it represents short-term thinking and that the wider connections the network can offer are more valuable than the latest in-fashion market. “I think it’s safe to say that most agencies start looking at networks as a way to gain market access to carriers that are currently considered ‘hot,’” he says, “but I believe they soon find out that gaining market access to the ‘hot carrier of the month’ is a futile quest because carriers run hot and cold. Instead, agencies that get the most out of a relationship with a network or aggregator use the connections and expertise of the network to build a stronger agency.” Of course, some producers simply can’t be persuaded to join a network – loss of independence was cited as the leading reason to stay away. But many network heads argue that this fear isn’t always realistic, and that many networks actually embrace a culture of independence. “It is the degree to which agents can maintain their independence that differentiates many networks,” Ward says. “Iroquois, for example, was begun by independent agents, and maintaining agency independence has been a core value for us for almost 40 years. We don’t tell our members how to run their agencies. We give them information, resources, options and incentives, and allow them to choose which ones are best for their agency.” Biancardi also believes that these concerns will quickly subside once agents truly understand the realities of being part of a network. “Loss of independence is naturally a major concern for any independent agency owner,” he says. “However, we do not require equity in our

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RANCE BUSIN SU N

2016 ks or

TA IVE S R Net w SF ES

members’ agencies, and they maintain full ownership of their books of business. As they develop books of business with certain carriers, we help them to establish direct relationships with those carriers if they desire more control and are adequately staffed. Some agents prefer to leave the placement of new and renewal business to us while they focus on strengthening and developing their own client relationships.” Basso says the onus is on producers to evaluate the marketplace and understand how the network is structured. If it has rigid, franchise-like requirements, it might not be a good choice; however, others offer strong independence and respect their members’ culture. “You always have to look at the intent of the network and how well it executes for the membership,” he says. Then there are those who believe that

producers actually gain more independence by being part of a network. “I feel joining a network gives an agency more independence by allowing them to add companies with less volume commitments and also get higher compensation,” Taylor says. “Many agencies become captive to one or two markets, strapped with high-volume commitments.” “I don’t see it as an issue,” Whitcomb adds. “If anything, producers are gaining freedom from being managed so heavily by a captive company. The only time I can really see this as being an issue is that independent agents joining aggregators or a network may not have the freedom they had before. But this is why it’s so important to have different business models – different agents will thrive in different environments.”

How good are networks? Producers who are already working with networks had an overwhelmingly positive response to our survey. In fact, nine networks earned a five-star rating in at least two categories, suggesting significant satisfaction among producers.

“Gaining market access to the ‘hot carrier of the month’ is a futile quest because carriers run hot and cold” David Ward, Iroquois South

WHAT’S KEEPING YOU FROM JOINING A NETWORK? 50% 40% 30% 20% 10% 0%

Loss of independence

Time Negative Cost/loss of Sharing commit- past expe- commis- of clients ment rience sions

When it comes to selecting a network, therefore, perhaps it’s important to consider not only the quality of the service available, but also how the network will meet your company’s unique needs. “To compare one network to another, consider market expertise, quote/request turnaround times, technology and follow-up from the network’s account management and customer service teams,” Biancardi advises. “The service staff is the key for helping the agent to write more business than they otherwise could on their own.” “Joining a network gives an agency the opportunity to increase its total revenue and use the network’s resources, scale and markets to better compete against other larger agencies,” Ward adds. Among the experts we spoke to, unsurprisingly, the message is clear – networks are the present and the future.

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FEATURES

AVIATION

Up, up and away Ready to take your business to new heights? The aviation sector offers producers a vast and stable market EVER SINCE 9/11, news from the aviation sector seems to be fraught with horror stories, from the disappearance of Malaysia Airlines Flight 370 somewhere in the South Pacific in 2014 to the deliberate crash of Germanwings Flight 9525 in southern France last year. But the specter of such disasters is only a small part of the aviation industry. The sector is populated by a diverse array of business classes that present interesting and unexpected opportunities for insurers who want to engage in a potentially lucrative and steadily growing market.

From the ground up Major lines of business within the aviation sector include both international and domestic airlines, aviation manufacturers, airport service providers (such as fuelers, baggage handlers and caterers), privatized air traffic control and drones. There’s also general aviation, which includes anything that flies that is not airline or military, such as corporate aircraft, chartered aircraft, utilities, emergency medical services and news helicopters. While it may seem strange to lump firmly grounded business classes such as caterers into the aviation sector, there is a good reason for it, says Lori Hunter, a California-based aviation specialist with surplus lines wholesale broker Worldwide Facilities. “In order to take the food out to the commercial aircraft, the caterers have to put it on lift trucks on the tarmac and

load it onto the plane,” she explains. “In a typical claim scenario, the driver operating the lift with the food cart could damage the aircraft, resulting in a very expensive proposition.” Such a varied sector naturally requires a broad spectrum of insurance products. Manufacturers require aircraft products liability coverage. This product serves several tiers of buyers. At the apex are the people building the aircraft. After that come Tier 1 suppliers – people who make things like engines, avionics and f light control actuation systems. After that come sub-tiers – for instance, people making one piece of metal that goes into those complex items. “It’s a straightforward coverage, addressing bodily injury and property damage arising out of an aviation product,” says Eric Donofrio, XL Catlin’s North American regional manager for aviation insurance. “If someone alleges your product caused

“Aviation is mature, and there are tremendous barriers to entry. Financial networks talk about disrupters, but we don’t see that in the aviation world. You don’t come in and say, ‘I will be the next aircraft manufacturer’” Eric Donofrio, XL Catlin

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MAJOR AVIATION CARRIERS

Global Aerospace AIG XL Catlin Allianz Starr Companies

or contributed to an accident, and people on the aircraft were injured or there was property damage on the ground, that’s what this would cover.” Another common coverage, known as grounding coverage, is more of a financial loss cover. If something happens to an airplane that results in bodily injury or property damage – the engine blows up, for example, and hurts a person or the aircraft – the FAA may ground all of that type of aircraft until the problem is resolved. “If the FAA mandates grounding, the airlines come to the manufacturer of the

product that caused the grounding and say, ‘We are losing revenue because your part caused our aircraft to be grounded,’” Donofrio explains. “This coverage responds to the financial loss a manufacturer might have because their product caused the grounding.” Airline/general aviation hull and liability coverage responds to bodily injury and property damage if the plane crashes. The coverage works the same way for commercial airlines and the general aviation business class. “Corporate aircraft have the same exposures as a commercial airline – people

riding in the aircraft, and people and property outside of aircraft in the event of a crash,” Donofrio says. Coverage for airport service providers consists of an airport general liability form with coverage specific to airport premises. The coverage is required because P&C policies have exclusions for airport exposures. It is geared toward people providing services inside the airport – aircraft repair, maintenance, fueling, etc. Products and completed operations coverage insures the airline itself, including its employees. However, if an airline pilot makes a mistake, they derive their protection from the airline’s hull and liability policy. All aviation policies also have a war exclusion, covering things like terrorismrelated incidents or outright acts of war. Generally speaking, Hunter says, commercial airlines and major airports are the typical business classes that purchase stand-alone war coverage. In the global airline industry, there are two different ways of placing insurance coverage: on a quota share basis or on a 100% basis. The way the coverage is placed revolves around the size of the limit. Often, when it comes to the giants of the industry, “the exposure is so significant that no one insurer wants to do it on their own,” Donofrio says. Airlines tend to buy $1.5 to $2.25 billion worth of cover for any one occurrence. “No one market wants to put out that much limit,” he says. “In a co-participation basis, everyone pays a share.” Even an aviation manufacturing company buying a comparatively low limit of $5 to

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FEATURES

AVIATION “There continue to be a number of manufacturers that don’t insure their aviation products … There is an opportunity to have a discussion with your client, and ask them if the product they are making is going into any sort of aviation product” Lori Hunter, Worldwide Facilities GENERAL AVIATION LIABILITY EXPOSURES Airports • Private airports • Government airports • Small airports • Regional airports • Major airports Helipads • Hospital helipads • Private helipads • Commercial helipads Fixed base operators • Landlords • Hangar and fueling operations • Repair and service operations • Overhaul operations •Military contractors • Paint shops Aviation service providers • Ground handlers • Wheelchair assist • Cargo services • Baggage handlers • Airport maintenance providers • Airport contractors Source: Starr Companies

$10 million might have a product that is so significant and so likely to cause a loss that one market wouldn’t want to cover it on their own because of the exposure, even though the limit is low. The other way to place coverage is on a 100% basis, which comes into play for a business with a very low loss exposure, or where the frequency of loss is very low. Smaller, owner-f lown aircraft such as corporate jets would fall into this category. “From a global perspective, most business is transacted on a quota share basis, and people that play on that business in the US are the same internationally,” Donofrio says. “It truly is a global marketplace.”

A soft market with tremendous capacity The aviation insurance market has changed quite dramatically in recent years. As recently as 1999, there were three major players in the US and three to four niche players. Today there are six to seven major carriers and at least 12 niche players, signifying a huge expansion in the US from a capacity standpoint. “Right after 9/11, rates jumped for a couple of years depending on market segment, and ever since then, they have been slowly coming down,” Donofrio says. “The theme of the aviation market is that there is tremendous capacity, keeping rates very low.” The rate decrease has been most dramatic

in the last couple of years; the main driver has been overcapacity in the market. Capacity in the aviation marketplace also ties into another trend. “We have seen a reduction in the number of catastrophic losses [in commercial airlines] since early 1990s, driven by improving aircraft technology,” Donofrio says. “Airlines have put a lot of work into safety culture.” That may seem counterintuitive, given the high-profile aviation tragedies that have occurred since 9/11. But the number of catastrophic crashes not related to terrorist activity has indeed gone down dramatically over the last 20 years. In the ’70s, Donofrio says, there were a couple of major accidents every year. But the last major non-commuter airline to crash in the US was in October 2001. Since then, there have been just two commuter airline crashes. “It’s pretty amazing that, over that time span, there have been very few losses,” Donofrio says. Along with the excess capacity in the sector has come more willingness among carriers to be flexible in their terms. As an example of this phenomenon, Hunter recalls a policy she placed last year with a high-net-worth individual who owns two private jets. “When you provide this kind of coverage, there is generally a pilot warranty, where the carrier says it will provide insurance, but will warrant that only a limited number of specifically named pilots can f ly the planes, and that they have to maintain a certain level of training and retraining during the year,” she says. “Last year when we quoted the risk, underwriters would only offer terms that mandated a very specific and rigorous level of pilot training. This year, when we quoted the renewal, several companies were willing to relax their requirements because the marketplace is so competitive.”

A stable sector As antithetical as it might seem, the aviation sector is not terribly dynamic. “I’m sometimes jealous of other lines of coverage like cyber that are really growing

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and popping,” Donofrio says. “Aviation is mature, and there are tremendous barriers to entry. Financial networks talk about disrupters, but we don’t see that in the aviation world. There are regulatory and capital barriers to entry. You don’t come in and say, ‘I will be the next aircraft manufacturer.’” The aviation market is also going through a period of consolidation. “Not only are we not seeing new people coming in, but we are seeing airline mergers and manufacturer mergers that are reducing the number of insureds in the market over time,” Donofrio says. On the bright side, global airline growth tracks the global economy, so if the global economy is growing at 3%, so is the aviation sector. The general aviation market in the US is also quite mature. “It will be more flatline than anything in the coming years, while some markets such as owner-flown aircraft are actually contracting,” Donofrio says. “Flying doesn’t have same wow factor that it used to have. Thrill-seekers these days seem to have a lot of other competing interests.” The one exception to this rule is the recent phenomenon of drones, or as the insurance industry refers to them, unmanned aerial vehicles [UAVs]. “That may be the one area where there will be substantial growth in coming years,” Donofrio says. The insurance market for UAVs is still very much up in the air. It remains to be seen whether these projected opportunities will ultimately land in the aviation market. Regardless, insurance carriers are racing to create innovative new coverages. “We have specifically designed a policy to cover physical damage and liability, similar to an aircraft policy,” says Joe Trotti, president and CEO of AIG’s Aerospace division. “In terms of client base, it’s not always an aviation client. Major corporations use drones as part of their business model and wouldn’t necessarily be buying coverage from the aviation market.” The gamut of drones is pretty broad, from something that would be purchased by a weekend enthusiast to something as

large as a commercial aircraft. With an estimated 1 million drones sold in the US to date, “it’s an area that’s growing significantly,” Trotti says, “and we anticipate that it will continue to grow over the next five years or so at a fairly rapid rate.” While the perils associated with operating a drone are very similar to those of a traditional aircraft, “there are far more dangerous things than flying a small UAV,” Donofrio points out. “And the reason the aviation market exists is because the non-aviation market is concerned about harm to passengers when you have a crash. With the major aspect of liability stripped out of that coverage, you can certainly see where non-aviation markets would be fine with covering those risks.” But, he adds, “once you start seeing UAVs flying outside of the line of sight of the operator, and if the UAVs are operating in same space as an airline, it changes the game significantly,” both from an ethical and risk standpoint, and would ultimately demand more of an aviation-driven coverage.

Where the opportunities are “It’s hard to find opportunities in the aviation sector right now,” Donofrio admits. “It’s a mature sector, the client base is shrinking, and brokers are having to fight very hard to keep the clients they have. With the market coming down, brokers’ revenue is coming down, too, because they are on commission, and their fees are under competitive pressure.” But despite that rather bleak landscape, Donofrio adds, “If you provide valueadded services beyond the renewal transaction, such as contractual reviews or risk management, that creates an opportunity for the savvy broker.” It is also possible, he says, to look for ways to cross-sell other coverages to aviation clients. “We deal with a lot of brokers who are purely aviation brokers, specialist brokers, and some specialists are able to provide non-aviation coverages such as P&C, auto, etc. That tends to be a differentiator.” Trotti agrees. “It’s important to look for those emerging opportunities and really

AVIATION SAFETY BY THE NUMBERS

1,287

Total number of civil aviation accidents in the US in 2014

439

Total aviation fatalities the US in 2014

Number of fatalities on large scheduled commercial airlines in the US in 2014

Number of accidents on small commuter airlines in the US in 2014

Number of small on-demand airline (air taxi) accidents in the US in 2014 Source: Insurance Information Institute

try to find those niches to best serve your client and offer a full suite of expertise to support it.” Hunter, meanwhile sees unique opportunities for insurance producers in the aviation manufacturing sector. “There continue to be a number of manufacturers that don’t insure their aviation products,” she says, “either because it’s not required or because they are ignorant about the fact that the products policy they purchase to cover their other products might not cover the aviation products as well. There is an opportunity to have a discussion with your client, and ask them if the product they are making is going into any sort of aviation product, and if so, give them the quote, because the market is so soft.”

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PEOPLE

PRODUCER PROFILE

The sky’s the limit As the manager of XL Catlin’s space insurance program, Chris Kunstadter goes where few have gone before CHRIS KUNSTADTER is not a rocket scientist by training – his bachelor’s degree is in French literature. But he does have a passion for the space industry and its insurance needs. As the long-time manager of XL Catlin’s space insurance portfolio, he gets to exercise that passion on a daily basis. Like any kid growing up in the ’60s, Kunstadter watched the Gemini and Apollo launches on TV. “It was very exciting to watch; you really felt like this was pushing the limits of technology and human endurance,” he says. “I was certainly interested in space as a kid.” The Chicago native was even more interested in airplanes. He got his pilot’s license when he was just 16, and worked as a pilot while in graduate school at UC Berkeley. Naturally, he thought he’d go into the airline business. However, by the time he got out of school, the 1978 Airline Deregulation Act had radically destabilized the industry. So instead of flying airplanes, Kunstadter found a niche where he was able to use his background in statistical analysis to work with the airline industry – and not be laid off every six months. He spent five months in London working with Willis as a researcher in the early ’80s, which segued into a job working in the airline department of US Aviation Underwriters. “After a year, they saw I had this technical background and asked if I could take over their space business,” he says. That was in 1984, and he’s been in space insurance ever since.

The final frontier Over the course of his career, Kunstadter has been actively involved in all aspects of XL Catlin’s space insurance business, including technical, financial and actuarial analysis; policy wording construction; claims handling; and business development. He has been responsible for developing and exploiting innovative satellite salvage opportunities, and has participated on numerous failure review boards for satellites and launch vehicles. “I have learned a lot about what can go wrong and the types of things to be looking out for,” he says. “We usually know what questions to ask, but we’re always learning more.” In addition, he has worked closely with satellite operators, launch providers and government agencies to enhance industry understanding of space debris and space situational awareness, and has participated in developing guidelines on the risk management aspects of space debris. He spends a lot of time teaching commercial risk management methods to government agencies and organizations – including NASA and the Federal Aviation Administration (which licenses launches in the US). As NASA has shifted to become more of an exploratory organization, the commercialization of communications, earth imaging and even previously unfathomable pursuits like asteroid mining have fallen to the private sector.

“There is so much about the universe we don’t know and so much exploration aimed at how the universe works ... It’s a very exciting time in the space world ...

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WHAT’S ON THE HORIZON IN THE COMMERCIAL SPACE INDUSTRY? Space tourism. Believe it or not, space tourism already exists. “A number of people have gone up to the International Space Station as space tourists and short-term visitors,” Kunstadter says. “And what we are going to see in the near future is companies launching suborbital flights, where [people can] experience half an hour’s worth of weightlessness.” Asteroid mining. This is also on the brink of becoming viable. In November, President Obama signed the US Commercial Space Launch Competitiveness Act into law, laying down the ground rules for the mining of asteroids and exploitation of other space resources. Commercial spaceports. To accommodate all this activity, commercial spaceports are popping up around the US, dotting the country from Virginia to New Mexico to Alaska. The phenomenon opens up interesting new possibilities in the space insurance sector. “It really is an extension of the notion of an airport,” Kunstadter says. “A lot of the risks are similar, so it fits well with the book of business XL Catlin has.” “There is a tremendous interest now in space opportunities – a lot of money and excitement,” Kunstadter says. A lot of that excitement stems from the new space race that is unfolding between business magnates Jeff Bezos and Elon Musk, both of whom are vying to become the leader in the commercialization of space through their respective Blue Origin and SpaceX programs. “It’s a real boon to us,” Kunstadter says. “With new technologies come new risks. We have been preparing for this and watching closely.” Even for a seasoned insurance pro like Kunstadter who has spent his working life in the aviation and space insurance sector, the possibilities are nothing short of thrilling. “There is so much about the universe we don’t know and so much exploration aimed at how the universe works ... and very exciting stuff being done by NASA and the international community,” he says. “It’s a very exciting time in the space world, and by extension, a very exciting time in the space insurance world.”

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FEATURES

ARCHITECTS & ENGINEERS

Coverage for the construction boom As the construction industry continues to rebound from recession, the number of architects and engineers who need insurance is growing at a rapid rate mainstay in construction industry forecasting and business planning, predicts that total US construction starts for 2016 will rise 6% to $712 billion, and that gains for residential building will be up 16%, while nonresidential building will be up 9%. Likewise, the design sector is growing in excess of 10%, according to Sandridge. “They are just now getting back to where they were in 2007. They have rebounded very well. They are growing today, and there are lots of new start-ups – and lots of opportunities for producers in this line.”

Who needs coverage and why?

ALMOST EVERYONE suffered during the Great Recession, but architects and engineers were hit harder than any other professional business sector. That’s because design professionals are heavily involved in the beginning of a construction project. When the recession hit, money for new projects (and business for architects and engineers) dried up. But over the past three years, architects and engineers have made a strong comeback, riding on the coattails of the rebounding economy and booming construction market. Construction and design are linked economically. “Both play critical roles in almost every project,” says Homer Sandridge,

an underwriting director at Travelers who is responsible for the carrier’s professional liability program for architects and engineers. “You need both to get something done.” Yet the fates of the two do not mirror each other exactly, because the design team’s role comes much earlier in the process. “Picture a roller coaster with the design professional in the front car and the contractor in the back car,” Sandridge says. “While both may be impacted by changes in the economy, design firms are impacted earlier.” Today, that roller coaster is taking design professionals on an exciting and profitable ride. The 2016 Dodge Construction Outlook, a

Architects and engineers are the primary business classes within the sector. Within these two broad disciplines, there are specialty subsets – such as civil or structural engineers, landscape architects, or interior designers – that may or may not require a license. Architects and engineers are particularly at risk of having a sizable claim brought against them. The whole success of a construction project hinges on their ability to do their job in a precise and timely manner. “Regardless of how well they may plan for a project, the potential for mistakes in their performance of services is still very real, and if things go wrong, the sums involved in rectifying a mistake can be high,” Sandridge says. “Their financial security can depend on how well protected they are from a lawsuit or claim.” Anything that goes wrong on a building project can result in a professional liability claim for architects and engineers. “There may be a structural issue, there may

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be an elevation problem, there may be some grading or drainage issues – anything related to the design firm’s professional service,” says Doug Strong, senior vice president and director of field operations for XL Catlin’s design professional group. Design errors can cause significant delays in construction projects, with costly consequences. And if the architect or engineer’s mistake in planning caused that delay, they can be held liable. Claims can get pretty complicated, because it’s not always clear who is ultimately at fault – the architect, engineer, contractor or subcontractor. Damages to the project typically comprise more than 90% of total incurred loss, while the other 10% of losses stem from bodily injury. “Let’s say an architect designed an apartment building with a balcony on it and didn’t design the balcony railing correctly,” Sandridge says. “You can imagine the consequence of that.” While bodily injury claims in the sector are relatively infrequent, when they do happen,

purchase in most cases.” The professional liability product for this sector encompasses many services that architects, engineers and design consultants provide to their customers, protecting them against losses resulting from negligence, errors and omissions in the performance of professional services. Policies can be tailored to cover either the design professional’s practice or a specific project. In some cases, a firm may also require additional limits over the first practice policy. “It’s really important to their business that the problems with their clients be handled in a fair, equitable and expeditious way,” Sandridge says, “because their reputation is critical to their existence in business.” Professional liability policies are all written on a claims made basis, as opposed to an occurrence basis, setting the coverage apart from almost all of the other business liability lines. Another distinguishing factor in these policies is that they have evolved into extremely broad

“Architects and engineers are just now getting back to where they were in 2007. They are growing today, and there are lots of new start-ups – and lots of opportunities for producers in this line” Homer Sandridge, Travelers they get a lot of publicity and can result in large damage awards.

Essential coverage types The professional risks and insurance needs of architects, engineers and other design professionals can vary greatly from field to field. Generally speaking, they are not traditionally big buyers of general liability or property coverages, given that 95% of firms in the country are small to medium-sized and don’t have auto fleets or large property exposures. “The one coverage every design professional needs to buy is professional liability,” says Chris Calnon, vice president of North American financial lines for Chubb. “Professional liability really drives the bulk of their insurance

5 CLAIM PREVENTION STRATEGIES Here are five ways business owners can protect their architectural, engineering and design firms and prevent certain losses before they occur: 1 Educate yourself and your employees about how common business procedures affect your client’s exposure to risk. 2 Be picky when it comes to clients, and watch out for red flags such as the gold-digging client, the inexperienced client and the cheapskate. 3 Manage your risk with a precise, strongly worded written contract. 4 Avoid client disappointment by setting realistic expectations for the project. 5 Recognize the warning signs of lawsuits such as communication breakdown or odd behavior from your client. Source: Insureon coverages, so it’s important the agent understands the coverage for their client.” As the A&E sector has rebounded, so has the market for insurance carriers. Up until 15 years ago, only a handful of carriers served the line, and there was very little competition. But over the last 20 years, the market has opened up dramatically. Today, nearly two dozen insurance carriers provide a range of professional liability products for architects and engineers.

Technology drives trends and unusual coverages, often with common exclusions removed. For example, Sandridge says, Travelers’ professional liability policies for architects and engineers have no exclusion for pollution or mold, even though that’s a standard exclusion on most general liability policies. “Because of our unique experience and the claims we have seen, we have been able to remove those exclusions,” he says. Some carriers go one step further and add coverage that partially fills the pollution liability hole in the general liability policy. “It’s unusual coverage,” Sandridge says. “The first time an agent covers a client in this sector, they may be surprised. There are carriers on the market that don’t sell all these specialized

Design firms are intrinsically dynamic. “They strive for improvement and excellence by their very nature,” Strong says. “They push the status quo by seeking innovation and individuality in their designs. So the sector itself is continually changing, and technology has increased the speed of change.” Insurance for the professional design sector must be equally dynamic. “You really need to stay on the cutting edge of this sector in order to offer insurance products that meet their needs,” Strong says. XL Catlin, for example, recently unveiled several new enhancements to its professional liability insurance for architects and engineers, including protection for a firm’s use of drones, as well as coverage for the use of 3-D printing or other computer-assisted design technology.

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FEATURES

ARCHITECTS & ENGINEERS Carriers are increasingly adding cyber liability coverage onto professional liability policies for architects and engineers as well. Because claims are so prevalent in the sector, more and more leading carriers are offering pre-claim assistance to their clients, hiring an attorney or expert to help resolve problems before a claim is even made. “We do our best to encourage architects and engineers not to wait until a claim is made to contact us,” Strong says. “They contact us when they first begin to notice there is a problem arising on a construction project and they notice the communication with their client deteriorating.” Another industry trend has to do with owners and design firm customers shedding their risk to the A&E industry. Carriers have responded by beefing up value-added services such as contract support to help policyholders ensure the contracts they enter into are fair and do not expose them to unnecessary risk.

WHERE DO ARCHITECTS PRACTICE?

74%

practice in architecture firms (including sole practitioners and multidisciplinary firms with architecture as lead discipline)

practice in universities/colleges/associations

practice in government

practice in the corporate sector

practice in construction

17%

are in unknown practice Source: AIA

“You need to listen to your customers, and you need to respond to their needs. And in order to do that, you need to foster and support collaboration. The industry itself is very receptive to that” Doug Strong, XL Catlin Hot-button issues

Opportunities and advice

Procurement and retention are particularly hot issues in the A&E sector today. “Holding onto experienced design staff continues to be a challenge for growing firms,” Strong says. “There are multiple reasons why, including perpetuation of senior staff. Additionally, economic issues in the past have created a void in the talent pool. People left the sector during the recession for other opportunities.” Merger and acquisition activity is also prevalent in the sector, and continues as a vehicle to meet firms’ growth needs. Research consulting firm Zweig Group recently released a report revealing that 78% of architecture and interiors firms’ strategic plans for the next five years include either a merger or an acquisition. From a trend standpoint, industry experts agree that economic conditions are far better now in the A&E sector than they were a few years ago, which has sent ripples through the insurance industry. “We are seeing companies get healthier, which is a really good thing from an underwriting standpoint,” Calnon says. “It means that firms are not having to underbid jobs anymore, or not having to bid on jobs in which they don’t have an expertise. They can find jobs where they have a relevant skill set, versus in a really tough market where they may be stepping outside of their comfort zones, taking jobs just because they need the money.” While the A&E sector represents a mature insurance market, “the economic crisis changed the way people are operating their businesses,” Calnon says. “They are much more cautious about where their insurance spend is and whether they are getting value for it. I think the biggest challenge for us is continuing to demonstrate to our policyholders the value we bring to the table.”

While the level of change within the A&E marketplace over the past few years signifies volatility and risk, it also provides opportunity for insurance agents who can manage to keep up. “You need to partner with your customers in order to be successful,” Strong says. “You need to listen to your customers, and you need to respond to their needs. And in order to do that, you need to foster and support collaboration. The industry itself is very receptive to that, and by nature is inclusive of a high level of collaboration.” “The opportunity is in the growth of the economy,” Calnon adds. “The more the economy grows, the more the construction industry grows, the more our clients will grow, and the more there will be new clients.” However, that opportunity comes with a caveat. “For new producers without experience in the sector, the sophistication that comes with experience would be very difficult to achieve,” Sandridge says. “There are many specialist agents who really spend most of their work lives serving architects and engineers.” That doesn’t mean agents should shy away from the sector. Rather, Sandridge advises, they should take advantage of insurance specialists who are out there. “Find a good partner or two, start with small and mediumsized firms, and rely on the underwriter to help you.” When evaluating carriers, “the first place to start is by asking who the claims people are,” Sandridge adds. “If the carrier only has one name, that’s a little suspicious. The depth and experience of claims handling is critical in this line, because the policyholder’s reputation is on the line.”

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PEOPLE

CAREER PATH

RUNNING TO INSURANCE What started as a passion for track and field turned into a love of business, launching Ted Dixon into the world of insurance 2010 KEEPS BENEFITS BUSINESS When the Affordable Care Act passed, Dixon Associates had a choice to make: keep their benefits business or sell it off to an insurance behemoth. Dixon chose the former . “That was a little frightening because I saw all these agents selling their blocks of business to the larger houses. But now I’m starting to see that come the other way, where a lot of my clients are happy to work with a smaller agency and see the owner every year, rather than have turnover every year”

2003

MOVES BACK TO DUXBURY As he was searching for his next opportunity, Dixon’s thoughts stopped on his father’s insurance business, Dixon Associates. His love of business drew him back to Duxbury, Mass., where he signed on with his father’s company

“I really enjoy how the insurance industry is so clean. There isn’t a lot of gray area, and my value to the client is uncomplicated”

2000 STARTS ONLINE SALES COMPANY What began as a software idea turned into Athletics Direct, an online retail project that sold equipment to college athletic departments. By 2003, Dixon was on track to do $1.2 million in sales – but he’d need to come up with $1 million in capital “My daughter was going into the first grade, and I had two other little kids behind her. [Athletics Direct] was a victim of its own success”

1999 JOINS HIS BROTHER’S ADVERTISING COMPANY After leaving coaching, Dixon found work with his brother’s advertising agency in Annapolis. But he wasn’t there for long. During his year with the agency, he caught the entrepreneurial bug and decided to start his own company

1998 LEAVES COACHING After a few years, Dixon found himself coaching at Swarthmore College in Philadelphia – an experience he enjoyed. But with a young family to support, he decided the job wasn’t sustainable “When my oldest daughter was about a year or so old, I realized that coaching took up way too much time for way too little money. So I left coaching in ’98 and really never looked back” While studying history at Bates College in Lewiston, Maine, Dixon spent a semester at San Diego State University, where he ran track “I loved San Diego, and I loved San Diego State, so upon leaving, I said, ‘I’m going to come back here and be a track coach at San Diego State.’ They laughed at me, but after graduating from Bates, I drove back out and showed up on their door and started working as a volunteer assistant to the San Diego State track team”

1991 BEGINS HIS MASTER’S DEGREE

1990

GRADUATES FROM BATES COLLEGE

Dixon quickly learned that to sustain a career coaching college sports, he’d need a master’s degree, so he briefly left San Diego State, then returned to coach the distance team “The coaches with San Diego State found [a fast-track program] for me in southern Alabama where you could do both a work-study and take classes, and get your master’s degree in a year”

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PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE E-mail iba@keymedia.com

GETTING INTO CHARACTER Broker Jake Stone’s passion for mascot-themed children’s books brings a new meaning to ‘writing insurance’ GROWING UP in Eugene, Ore., the Oregon Duck was a part of life for Jake Stone. So when he had a child of his own, he made sure she knew all about the beloved University of Oregon mascot. “She had a Ducks book that I didn’t like,” he says. “I thought, ‘I could write something better,’ so I did.” Stone’s book, The Oregon Duck: Pride of Autzen Stadium, was picked up in January 2012 by a publishing company that specializes in children’s books, and is now sold in Barnes & Nobles and Costcos across the US, as well as online on Amazon. But Stone hasn’t stopped there. He wrote two other mascot books: Game Day with Swoop! in November 2012, and Bronco Blue! Boise State Football in December 2012. And while his work in insurance might seem like a non sequitur, Stone’s focus on school districts and public entities actually pulls his day job and his other life together. “Working with so many school districts, I do a lot of inspections, and I’ll see my book on the shelf in the school,” he says. “It brings everything full circle. That’s always really neat.”

1947

The first year Donald Duck appeared as the University of Oregon mascot

1996

The first year Swoop appeared as the University of Utah mascot

1986

The first year the Boise State Broncos played on their famous blue turf

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Expect big things in workersâ&#x20AC;&#x2122; compensation. Expect to save a third of your clients 30% or more. Most classes approved, nationwide. For information call (877) 234-4450 or visit auw.com/us. ÂŠ2016 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.

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