Sutherland insights insurance news flash august 20, 2014

INSURANCE NEWS FLASH August 20, 2014

Table of Contents Sales & Marketing ................................................................................................................. 3 Finance ................................................................................................................................. 9 Technology .......................................................................................................................... 14 Strategy .............................................................................................................................. 18

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Sales & Marketing Alteris Launches New Specialty Insurance Program for Large Water-Related Entities in the U.S. August 18, 2014 | SNL https://www.snl.com/IRWebLinkX/file.aspx?IID=103333&FID=24883931 Alteris Insurance Services, Inc., a wholly-owned subsidiary of Argo Group International Holdings, Ltd. (NASDAQ:AGII), an international underwriter of specialty insurance and reinsurance products, today announced that the company has launched a new specialty insurance program for large waterrelated entities in the contiguous U.S. (excluding Alaska and Hawaii).

Alteris’s new specialty insurance coverage will provide protection to large water-related facilities (water, sewer, reclamation and irrigation districts)—up to $11 million in capacity—against property and liability losses that can result from the treatment, storage and distribution of water. Specialty insurance coverages include general liability, auto liability, employment practices liability, public officials liability and law enforcement professional liability. The new program will be managed through Alteris Public Risk Solutions, a division of Alteris that provides specialty insurance products and services to governmental entities and self-insured governmental pools.

“Large water-related entities continue to deal with increasingly complex risks in their day-to-day operations, yet traditional insurance products available in the market today are still falling short,” said John Atherton, senior vice president, general manager, Alteris Public Risk Solutions. “To keep pace with the evolving risk management demands of this unique business class, we’re looking forward to teaming up with Alteris to deliver a totally-customizable specialty insurance solution that responds to actual—not assumed—needs for such specialized protection.”

“We are pleased to announce this exciting new program for large and complex water-related entities that participate in their own risk bearing,” said Paul Fuller, senior vice president, underwriting, Alteris. “In partnership with our dedicated public risk solutions practice, Alteris is well positioned to leverage its specialized knowledge base to provide ongoing education, customer support and other valued-added services—efforts that we’re confident will help to deepen relationships with brokers and insureds alike over the long term.”

How larger down payment demands are crushing the homeownership dream for Millennials August 14, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/14/how-larger-down-payment-demands-arecrushing-the-h The challenges facing prospective buyers of the least expensive homes in the U.S. are getting harder to overcome.

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Already beset by stagnant wages, growing student debt and competition from investors who are snapping up listings, those looking to purchase moderately priced houses must also provide more cash up front. The median down payment for the cheapest 25% of properties sold in 2013 was $9,480 compared with $6,037 in 2007, the last year of the previous economic expansion, according to data from 25 of the largest metro areas compiled by brokerage firm Redfin Corp.

The higher bar is a symptom of still-tight credit that is crowding out first-time buyers even as interest rates remain near historical lows. Younger adults, who would normally be making initial forays into real estate, are among those most affected, weakening the foundations of the housing market and limiting its contribution to economic growth.

“The numbers tell the story of why we have millions of potential homeowners who are renters or living with their parents,” said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania’s Wharton School in Philadelphia. “What has changed is the ability to become an owner. And that’s changed through a down payment that’s more than doubled.”

Down payment The median down payment for the cheapest 25% of homes was 7.5% of the sales price last year, up from a low of 3.1% in 2006 and compared with an average 4.2% from 2001 through 2007, according to Seattle-based Redfin. For properties in the middle 50%, the share rose to 8.8% in 2013 from an average 8.2% in the seven years leading to the last recession, and for the top quarter it climbed to 20.9% from 19%.

One of the main reasons for the jump is that fewer first- time buyers are applying for loans backed by the Federal Housing Administration, which require smaller down payments, after the government agency boosted mortgage-insurance premiums, said Malcolm Hollensteiner, the director of retail lending products and services for the U.S. unit of Canada’s Toronto-Dominion Bank. FHA raised the cost of borrowing and tightened underwriting to cope with losses on mortgages it backed as the property bubble burst.

Borrowers must now pay an up-front fee of 1.75% of the loan balance and up to 1.35 percentage points in annual mortgage-insurance premiums. A new program announced in May will help homebuyers who go through counseling lower their premiums.

FHA loans Some of those borrowers may be going to private lenders that demand bigger down payments instead. In 2013, 39% of first-time buyers used FHA loans, which generally require 3.5% down, compared with 56% in 2010, according to data from the National Association of Realtors.

The affordability index for first-time buyers, which measures the ability of a family earning the median income to purchase a median-priced home at current interest rates, declined to 105.7 in the second quarter, the lowest since the final three months of 2008, according to the NAR. Banks have “become much tighter on credit, even on government-backed mortgages,” said Dean Maki, chief U.S. economist at Barclays Plc in New York. This has made it “harder for first-time buyers and others with limited credit histories.”

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Buy backs Banks don’t want to make loans to borrowers they consider to be riskier because they’re worried about having to buy back the loans, said Mike Calhoun, president of the Center for Responsible Lending, a consumer group in Durham, North Carolina. And if they do give mortgages to borrowers who have lower credit scores, they’ll require a larger down payment to offset that risk, he said.

Iris Garcia, 35, has seen firsthand how the bar has been raised. She and her husband hope to close next month on a $239,000 four-bedroom “fixer-upper” on the north side of Chicago with their four children. The couple came up with 15% down to win the bid, after losing out on another property to an all-cash investor.

“A few years ago that would have been different,” Garcia said of the up-front payment. “Just with everything that’s been going on in the market, that was the safe way to go.”

To be sure, stricter lending, while crowding out market participants, also might mean a healthier crop of homeowners and reduced probability of another crash, said Gary Rogers, an agent with Re/Max Holdings Inc. in Waltham, Massachusetts, and a regional vice president for the NAR. Putting more money down probably means fewer owners will owe more than their properties are worth should prices drop.

Improved liquidity “If there is a downturn, houses are still going to be more liquid than they were before when people were buying with zero and 3.5% down,” Rogers said. “The liquidity of housing is going to be improved as time goes on because of this trend, and I think that’s a really great buffer.”

First-time purchasers accounted for 28% of all sales of previously owned homes in June, compared with about 40% historically, NAR data show. A dearth of first-time buyers is pushing down the national homeownership rate, which fell in the second quarter to its lowest level since 1995, according to Census Bureau data.

The Redfin median down payment calculations don’t include all-cash purchases, which are mainly from investors looking to take advantage of the drop in prices at the bottom of the market to pick up rental properties. Those purchases made up 52% of lower-tier transactions in 2013, compared with 23% for the middle 50% and 21% for the top quarter, the data show.

Economic impact The economy won’t get back to its pre-recession growth rate without more first-time homebuyers, whose entry helps boost construction and spending on durable goods such as furniture and appliances, said Wharton’s Wachter.

Young adults in particular are probably having trouble coming up with bigger down payments.

Unemployment among 25- to 34-year-olds was 6.6% in July, compared with 6.2% for all groups. The rate for that subset averaged 5% in the four years leading to the last recession. Record levels of student debt are also making them less likely to take out a mortgage, according to research by the Federal Reserve Bank of New York.

Buyers looking for less-expensive properties are also finding a dearth of supply after investors swooped in, according to a Redfin analysis. In contrast, listings have increased the middle market and at the top, the data show.

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Such obstacles, combined with the expectation of having to offer more cash up front, threaten to derail the younger generation from entering the housing market, said Wachter. “If higher down payments persist, we will have a Millennial generation that’s missing in action in homeownership,� she said.

Most people are happy with their car insurers these days, and there's one big reason why August 13, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/13/most-people-are-happy-with-their-carinsurers-thes It's true: Customer service really does make a difference.

How else to explain the results of J.D. Power's latest U.S. Auto Insurance Satisfaction Study, which found that overall customer satisfaction with auto insurers has reached an all-time high, continuing a trend that the research firm has been tracking for the last five years.

What's happening? Insurers are getting better at communicating with their customers. As a result, those customers are generally more satisfied with their coverage experience overall.

According to a post on this report at CarInsurance.com, 51% of U.S. drivers told J.D. Power they "definitely will" renew their current auto policy with their existing carrier when it comes time to review their coverage, a figure that's up two points since 2013. What's more, 49% said they would "definitely" recommend their insurer to their friends and family.

The biggests movers, according to J.D. Power, are in the realm of customer service and customer communications. Satisfaction with billing and payments transparency is up 19 points since last year, and customer interaction is up 13 points in that time. More than 60% of technology-minded users said they have used their insurer's Web site or social media to interact with their carrier in the last 12 months.

As a result of these gains, customers are now less likely to shop for a new insurer in the case of a premium increase.

"A premium increase often triggers shopping behavior, but we're seeing fewer people shopping," Jeremy Bowler, senior director of the insurance practice at J.D. Power, told CarInsurance.com. "This indicates that insurers are more effectively communicating with their customers, making them aware of the premium increases when they occur and why they're necessary, and demonstrating the value of their coverage."

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Moody's finds most U.S. insurers are using social media...but not for selling insurance August 11, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/08/moodys-finds-most-us-insurers-are-usingsocial-med?ref=rss Although most life and property-casualty insurers are currently using and plan to grow their use of social media, many are still ambivalent on how useful it actually is for their businesses, according to a new study by Moody's.

The survey of 66 rated U.S. insurers (42 life and 24 P&C) found that 86% plan to grow their social media use within the next year.

Other key findings include: Most insurance companies using social media do not use it to talk about insurance.

None of the companies believe social media is very effective in increasing direct sales.

Companies’ biggest reason for using social media is brand promotion and their biggest concern is legal and regulatory issues.

Insurers also use social media for marketing, whether between wholesalers and financial advisors, or agents communicating with existing clients.

There is very little difference between how life and P&C insurers use social media.

"For U.S. insurance companies, social media programs are in their early stages but based on our recent survey, many companies expect to make increasing use of social media in the future even if there isn't a direct link to sales," says Scott Robinson, Moody's senior vice president and author of the report. "However, we do see social media use as a potential future credit positive for early adopters, since over time their experience will likely give them an edge in branding and marketing relative to latecomer competitors."

MetLife Re-Launches Retail Term Insurance August 8, 2014 | Business Wire http://www.businesswire.com/news/home/20140811005072/en/MetLife-Re-Launches-RetailTerm-Insurance#.U_SLvsU73ko MetLife announced today that it is reducing rates* on its Guaranteed Level Term product as part of the company’s efforts to enhance its life insurance portfolio. Guaranteed Level Term is a fully underwritten policy and clients who purchase it will have the opportunity to convert to any of MetLife’s permanent policies at a later date.

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“MetLife is committed to ensuring that consumers have access to the life insurance coverage they need,” said Gene Lunman, senior vice president of Retail Life and Disability Insurance Products at MetLife. “By continually evaluating our life insurance portfolio, we are able to evolve our product offerings to help consumers protect themselves and their families, and provide financial professionals with products that can meet the needs of a wide array of customers.”

For current rates and more information on MetLife’s Guaranteed Level Term, please contact your local financial services representative.

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Finance NFP Acquires 2 Agencies in New England August 19, 2014 | Insurance Journal http://www.insurancejournal.com/news/east/2014/08/19/338141.htm National Financial Partners Corp. (NFP) announced the acquisitions of two independent insurance agencies in New England: Poulos Insurance Inc. and Altus Specialty Group LLC. Terms were not disclosed.

NFP said the acquisitions would help expand NFP’s property/casualty offerings. Poulos Insurance, with 19 office locations throughout Vermont, New Hampshire and Massachusetts, is an independent property/casualty agency providing personal and commercial lines coverage in New England.

Altus Specialty Group is based in Boston and provides commercial lines, employee benefits and private client risk management services. The firm would enhances NFP’s Boston-based insurance brokerage services to middle-market business clients, according to the announcement.

NFP, based in New York, is a provider of benefits, insurance and wealth management services. It provides diversified advisory and brokerage services to companies and high net worth individuals.

Prudential profits rise on strong US and Asia results August 12, 2014 | BBC http://www.bbc.com/news/business-28751671 Prudential has seen profits rise in six months to the end of June after a strong performance in the US and Asia.

The UK insurer reported a 17% rise in operating profit to £1.5bn compared with the same period last year.

It said its US business, Jackson, had generated operating profit of £686m, up 28% on the same period last year.

The group has been "focusing on growing high quality insurance margin and fee income," said Prudential's chief executive Tidjane Thiam.

Prudential shares made the biggest gains on the FTSE 100 share index on Tuesday morning, up over 2%.

Fee income from Prudential's US business and sales for health and protection products in Asia helped drive up profits, Mr Thiam said.

'Significant disruption' Prudential's operating profit in Asia rose 19% to £525m, in spite of "challenging conditions" in Southeast Asia.

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The firm's UK profits also saw a 10% rise to £374m, despite the market "undergoing significant regulatory change", he said.

There has been "significant disruption in the UK life and pension market where annuities sales decreased markedly following the Budget announcement," he added.

The Budget heralded a change in the pensions rules that will mean a retiree can draw their entire pension in cash in one go if they want. The rule change will fully come into force in April but temporary rules are in effect already.

The UK pensions market has already been affected by the change in rules.

Insurance group Legal and General said individual annuity sales were down 49% in the first half of the year to £383m. It expects a 50% fall in sales in both the second half of this year and in 2015.

Insurer Aviva said that the value of new annuity business had fallen by 41% since the Budget reforms were announced.

Weather hits Nationwide's Q2 results; No standard commercial competition on E&S business yet August 12, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/12/weather-hits-nationwides-q2-results-nostandard-co Commercial-lines rates are under pressure, but so far that has not correlated to standard carriers competing for business traditionally written by the excess and surplus lines market, a Nationwide executive says.

Speaking to PC360 about the company’s Q2 results, CFO Mark Thresher touched on the state of the market, saying, “I think we’re seeing clearly some pressure on *commercial-lines business+.” He says rate increases for new business are evaporating away to some degree.

“The good news,” he adds, “is I think we’re seeing exposure growth and an opportunity to grow anyway. But I think the run of commercial pricing over the last couple of years is coming slowly to a halt.”

As Thresher talked about the growth opportunities in Nationwide’s specialty businesses, such as Nationwide Agribusiness and Scottsdale Insurance Company, he said standard carriers have not tried to take Scottsdale's E&S business despite the competition in the commercial-lines market.

“Scottsdale is still growing double digits,” Thresher says. “So I don’t think the standard players are back into that market yet, but we’ll just have to watch that.”

Weather impacts P&C results Nationwide saw its Q2 net income fall to $57 million, compared to $657 million in 2013’s second quarter. While Financial Services saw a net operating income gain—to $313 million from $185 million—the property and casualty business suffered a Q2 net operating loss of $134 million, compared to a gain of $113 million in Q2 2013.

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Thresher faults higher weather-related losses. In particular, he cites storm losses in states where Nationwide has higher market share. “We had some pretty big hail storms in Pennsylvania; we had storms in Iowa,” he says. “A number of locations where we happen to have fairly high market shares in.”

Weather losses hurt the company in Q1 as well, when net income fell to $140 million compared to $484 million in Q1 2013. Thresher noted at the time that January “was probably as high of weather losses as we’ve had historically.”

In Q1, Thresher said he was comfortable with Nationwide’s geographic spread, noting that the losses were the result of a prolonged freeze that affected many states stretching as far south as Georgia and beyond.

This quarter, Thresher likewise does not point to any state or region where he believes the company should reduce its exposure, but he does talk about growing more in areas west of the Mississippi River. “All we try to do continually is to monitor our concentrations across the country,” he says.

“We want to grow, but we want to grow in a diversified way.”

Speaking to the opportunities further west, Thresher says before the company acquired Allied Insurance, its business was mostly east of the Mississippi. “Allied is more west, but we have plenty of room and wide open states where we can continue to do that,” he says.

He also says the company will look to balance personal-lines growth with growth in commercial businesses, “which actually tend to be a little less impacted by weather than individual personal lines.”

Nationwide’s results were also impacted by $179 million in net realized investment losses compared to a gain of $547 million in Q2 2013, but Thresher points out the loss is a mark-to-market issue, rather than selling securities at a loss. “It’s two things,” he says. “We have a derivatives program in place to shorten the duration of our P&C investment portfolio, and that’s sensitive to interest rates.

If interest rates go up, we’ll have a gain in that program.

“And then the hedging program behind the variable annuity guarantees is fairly complex and, due to some unusual terms in statutory accounting we have an interest rate hedge in place also there, so when rates go down" the results go down, but when interest rates go up, it can go in the other direction.

Financial services Regarding the year-over-year successes in the financial-services segment, Thresher says the equity markets have helped out some, but also points out that sales growth “was very nice again, I think up 8% year-over-year.” He says the company and distribution partners—mostly financial advisors— have done “a great job” focusing on the right products to sell.

The plan, he adds, is to keep a good balance between life, annuities and retirement plans.

Overall, Thresher says, “We are really pleased with the continued growth of the business, both on the property and casualty side as well as the financial services side.”

Despite the impact of weather losses, premiums and policy charges were up in the quarter, to $5.2 billion compared to $4.8 billion in Q2 2013.

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“Obviously we had some weather challenges for our members in the first half that had an impact on earnings in the property and casualty business,” Thresher says, “But overall, I think *it’s+ a story of a diversified set of businesses, and I think that came through in the first half of the year for sure when you see the nice results in financial services when you have a tough P&C weather year.”

We're in the middle of an insurance agency M&A boom, and there's one big reason why August 5, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/05/were-in-the-middle-of-an-insurance-agencyma-boom?ref=rss Merger and aquisition activity is swirling around insurance agencies like never before through the first half of 2014, according to a report released Tuesday by OPTIS Partners, a financial services firm focused on the insurance-distribution industry.

In fact, the 165 deals announced so far this year rank as the second-most active six month period that OPTIS has ever recorded, with the agency M&A market 40% ahead of 2013 through the same time period.

And we're just getting started.

“We predict there will be robust M&A activity going forward as more agencies owned by retiring Baby Boomers continue to go to market,” says Timothy J. Cunningham, OPTIS managing director, in a statement annoucing the report.

That's right, owners are retiring and it is time for the next generation to move up in the industry.

According to OPTIS, private equity-backed firms have been the most active buyers in the space so far this year, accounting for 67 total agency purchases. Privately-owned brokers accounted for another 54 deals, followed by publicy-head brokers with 27 deals, banks with nine deals and insurance companies/other with eight deals.

“It looks like the first half of 2014 is the start of a prolonged active period for agent-broker M&A transactions,” Cunningham says. “The agency-brokerage business is awash with Baby-Boomer principals. It’s estimated that more than 30% of all the equity in the system is owned by them. The industry has not adequately addressed perpetuation/succession planning. Without a sound perpetuation plan in place, the only option for many of aging principals will be to sell to a third party—often PE-backed and public brokers—to capitalize the value of their agency.”

Arch Capital 2014 Q2 Net Income: $202.5M August 3, 2014 | Bernews http://bernews.com/2014/08/arch-capital-2014-q2-net-income-202-5m/ Bermuda-based Arch Capital Group Ltd. reports that net income available to Arch common shareholders for the 2014 second quarter was $202.5 million, or $1.48 per share, compared to $171.5 million, or $1.26 per share, for the 2013 second quarter. The Company also reported after-

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tax operating income available to Arch common shareholders of $160.7 million, or $1.17 per share, for the 2014 second quarter, compared to after-tax operating income available to Arch common shareholders of $135.0 million, or $0.99 per share, for the 2013 second quarter.

The Company’s after-tax operating income available to Arch common shareholders represented an annualized return on average common equity of 11.2% for the 2014 second quarter, compared to 10.9% for the 2013 second quarter. The Company’s net income available to Arch common shareholders represented an annualized return on average common equity of 14.1% for the 2014 second quarter, compared to 13.8% for the 2013 second quarter. The Company’s book value per common share was $43.73 at June 30, 2014, a 5.3% increase from $41.52 per share at March 31, 2014 and an 18.8% increase from $36.80 per share at June 30, 2013.

After-tax operating income or loss available to Arch common shareholders, a non-GAAP measure, is defined as net income available to Arch common shareholders, excluding net realized gains or losses, net impairment losses recognized in earnings, equity in net income or loss of investment funds accounted for using the equity method and net foreign exchange gains or losses, net of income taxes. See ‘Comments on Regulation G’ for a further discussion of after-tax operating income or loss available to Arch common shareholders. All earnings per share amounts discussed in this release are on a diluted basis.

In March 2014, the Company invested $100.0 million to acquire approximately 11% of Watford Holdings Ltd.’s common equity and a warrant to purchase additional common equity. Watford Holdings Ltd. is the parent of Watford Re Ltd., a multi-line Bermuda reinsurance company [together with Watford Holdings Ltd., “Watford”+. Watford is considered a variable interest entity and the Company concluded that it is the primary beneficiary of Watford in accordance with GAAP. As such, 100% of the results of Watford are included in the Company’s consolidated financial statements.

Watford, which is included in the ‘other’ segment, reported $51.8 million of net premiums written and a net loss attributable to common shareholders of $1.4 million [net income less dividends attributable to redeemable noncontrolling interests] for the 2014 second quarter. For additional details regarding Watford, please refer to the Company’s Financial Supplement dated June 30, 2014.

All discussions of line items in this release exclude the ‘other’ segment amounts.

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Technology TCS unit Diligenta wins multi-million pound deal from Friends Life August 19, 2014 | Mint http://www.livemint.com/Companies/VPfcsEYXH17jkh6HpEaamI/TCS-unit-Diligenta-winsmultimillion-pound-deal-from-Friend.html Tata Consultancy Services Ltd (TCS) has informed BSE that its subsidiary in the UK, Diligenta Ltd, a life insurance and pensions business process outsourcing (BPO) provider, has secured a multi-million pound, multi-year contract with Friends Life Management Services Ltd (Friends Life) for the latter’s international operations. Under the deal, Diligenta will configure and implement TCS BaNCS, a financial solutions platform, to support the international operations of Friends Provident International Ltd in Asia Pacific and the Middle East. Phiroz Vandrevala, managing director and vicechairman of Diligenta, and director at TCS, said: “This is a landmark deal for Diligenta, which demonstrates our capability to support new business for international life insurance, savings and investments market. We look forward to developing this long-term partnership with Friends Provident International to help transform their international operations.” John Van Der Wielen, chief executive officer, UK and international, at Friends Life, said: “This new deal will enable us to streamline our systems, improve services to our customers and put us in a strong position to continue growing new business.”

TrustedChoice.com reaches 46 states, 44 carriers and affiliates August 18, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/18/trustedchoicecom-reaches-46-states-44carriers-and TrustedChoice.com now offering live comparative quoting capabilities in 46 states, announced Consumer Agent Portal (CAP), which operates the growing national consumer-facing web portal for the independent agency channel in concert with the Independent Insurance Agents & Brokers of America (IIABA).

Forty-four carriers and their affiliates participate on TrustedChoice.com as investors, participating carriers providing insurance quotes and/or providers of marketing support to affiliated independent agents.

CAP and TrustedCoice.com have also announced that 2,100 independent agencies have enrolled as Advantage subscribers in TrustedChoice.com, giving the organization greater online visibility with consumers in local markets. The site provides a basic listing for all 20,000 IIABA member agencies, and advantage subscribers receive enhancements including a personalized profile page, preferred placement in search results and unlimited leads from consumers who ask for price insurance quotes.

"We've seen steady growth in both agency and carrier participation in the past year since we expanded the capabilities and information on the portal," said Charles "Chip" Bacciocco, CEO of CAP/TrustedChoice.com. "The swell in participation from property/casualty carriers is a vote of confidence -- in the independent agency system at large and in the many agencies aligned with

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TrustedChoice.com."

According to Bacciocco,"Carriers are seeing benefits of greater visibility for their brands both to agents and consumers; business intelligence insights about consumer shoppers; and increased consumer interaction. Meanwhile, agencies are getting visibility as well as leads through CAP's lead funnel -- both from consumers who are getting quotes and from those who are simply looking for the right independent agent from their family or business."

In July, TrustedChoice.com generated more than 190,000 site visits, and is on pace to attract more than 1.5 million in 2014. The portal, which provides insurance shoppers with accurate and useful insurance shopping information, allows consumers to compare real-time quotes on personal auto and homeowners’ insurance, as well as find local independent insurance agents.

Aim of Nolan/Novarica Alliance: Improve IT Investment ROI August 11, 2014 | Insurance and Technology http://www.insurancetech.com/management-strategies/aim-of-nolannovarica-alliance-improveit/240168848 The need to accommodate customers' evolving needs and expectations -- often through untraditional partnerships and even "coopetition" -- isn't just a priority for insurance companies. It's also a priority for technology companies, management consultants and analyst firms. This is the context for a new alliance between The Nolan Company, a management consulting firm that specializes in process and operational effectiveness for insurance companies, and research and advisory firm Novarica. The two companies also announced that Chad Hersh, formerly managing director with Novarica, is joining the Nolan Company as senior vice president of its insurance practice. He will manage the alliance.

Hersh's focus will be on helping clients with business transformation, change enablement, process redesign, "and other areas that carriers often underinvest in when taking on system improvement projects," he said in a Nolan press release. "In my new role at Nolan, I will be ideally positioned to help carriers achieve the business value they are counting on when upgrading or replacing their core systems."

This is the "sweet spot" that the two firms are hoping to address in their new alliance, which will provide enhanced offerings to both firm's clients. "We believed there were synergies [between us], given complementary focuses of the two firms," says Matt Josefowicz, managing director, Novarica.

Much of the IT strategy and vendor selection work that Novarica takes on "is related to some kind of process reengineering or process transformation work. We're asked to be involved in that but we're not organized to dive deeply into those kinds of projects," he explains. "We're not a traditional management consulting firm where we can do long-term process reengineering or process management projects. Nolan does lot of that kind of organizational work. It's a very reciprocal relationship for both firms. We already have joint clients."

Josefowicz also emphasizes, "Neither Novarica nor Nolan does implementation, so we are both completely neutral when it comes to IT services or vendors or platforms. That's an important criteria for us in working with any partner."

The two firms do have "numerous" clients in common, notes Rod Travers, executive vice president, The Nolan Company. "Our services are complementary, so we have informally referred business to

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each other in the past and that will continue," Travers says in an email to Insurance & Technology. " Going forward, when circumstances warrant, we will work jointly on client projects and opportunities -- capitalizing on the synergy of the deep research, solution provider knowledge, and advisory capabilities of Novarica and the operations, process design, and change management/implementation expertise of Nolan. … For example, if Novarica assists a client with a system selection, that client may need assistance with operationalizing that system and redesigning their processes to achieve the desired results from the new technology -- Nolan provides those services. Likewise if Nolan is helping a client redesign an underwriting function and part of that redesign involves finding new technology, Novarica can assist that client to find the right system for their needs. And along the way Nolan and Novarica can collaborate on critical content such as business and technical requirements, change roadmaps, and metrics that are essential to a successful business transformation initiative."

Insurance company CIOs continue to face challenges around obtaining and measuring meaningful ROI around IT investments, especially when it comes to the big core systems modernization efforts, Hersh notes. "So many of these transformation and process reengineering projects really are driven by or end up driving to a core systems transformation," whether a policy admin, claims, billing or underwriting system, he says. "It starts or end with process change, whether the company plans to do it or not."

SWBC streamlining insurance operations through Mphasis August 5, 2014 | Business Journal http://www.bizjournals.com/sanantonio/news/2014/08/05/swbc-streamlininginsuranceoperations-through.html SWBC is already seeing results from its new relationship with its business process outsourcing vendor Mphasis.

New York-based Mphasis is managing complex data validation processes for SWBC’s lender placed insurance business.

“This is a critical juncture for us as we continue to grow at a rapid pace and are looking to build an even stronger technology foundation for future growth,” said Mark Ulmer, executive vice president of Lender Placed Insurance Operations at SWBC in a release. “Mphasis has a solid track record in delivering BPO services with strong domain knowledge in the insurance sector. In the first few months, we have shortened our cycle time from what was two-to-three days to one day, and we are seeing consistent improvement in our overall accuracy month over month.”

2014 IT Spending: Getting More For Less August 1, 2014 | Insurance and Technology Fierce competition in a rapidly changing IT industry has resulted in bargains for enterprise IT buyers this year, but don't expect the good deals to last long. I like nothing better than a bargain. Even a 3%-5% discount on infrastructure equipment can make the difference between buying today and holding off until next year. And if you're a bargain hunter like me, you'll likely know that we're in the midst of one of the largest enterprise IT sales in a long time.

There's so much competition and jockeying for customers by IT vendors that some really great deals

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can be had. If you've been holding off on that major upgrade, this may be the best chance to get some rock-bottom pricing.

Gartner's recent lowering of its 2014 global IT spending estimate to $3.7 trillion may seem linked to a slumping global economy, but it isn't. Actually, equipment purchases are still on pace to meet the research firm's original projections; the decrease is due to vendors offering better deals than they have in years past.

"Price pressure based on increased competition, lack of product differentiation and the increased availability of viable alternative solutions has had a dampening effect on the short-term IT spending outlook," Richard Gordon, managing vice president at Gartner, said in a press release announcing the lowered projection.

We're seeing these bargain-basement prices from technology vendors and service providers because they're desperately fighting to build, protect, and maintain market share in an IT world that's increasingly consolidated and homogenized at the same time. Vendors that were once allies are now direct competitors in areas like cloud computing, SDN, and mobility.

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Strategy ACE is expanding its life sciences business as the market for biotech coverage takes off August 19, 2014 | Property Casualty 360 http://www.propertycasualty360.com/2014/08/19/ace-is-expanding-its-life-sciences-business-asthe?ref=hp ACE Group today announced that the ACE Medical Risk Group has enhanced its Life Sciences capabilities to include a commercial package offering comprised of general liability, inland marine, crime, umbrella liability and business automobile coverages to help address the unique needs of life sciences companies. The enhanced ACE Life Sciences Commercial Package Policy provides higher limits and is offered in conjunction with ACE’s products-completed operations liability offerings for U.S.-based life sciences companies.

“Today’s life science companies need business partners who can provide comprehensive solutions for the daily risks and challenges they face,” said Tristan Gabriel, Senior Vice President, ACE Medical Risk Group. “Enhancing our comprehensive package with additional coverages and increased limits allows us to round out our insurance program to meet the unique needs of our life sciences customers.”

“As a result of current growth in the life sciences market, and with the rapid advances in science and technology relating to clinical trials, it is critical for ACE to offer our customers effective risk management strategies in addition to a complete insurance solution,” said Caroline Clouser, Executive Vice President, ACE Medical Risk Group.

Key features of ACE’s Life Sciences Commercial Package Policy available include: •

Property (with Business Income option)

•

Inland Marine coverages

•

Crime

•

Equipment Breakdown

•

General Liability

•

Business Automobile

•

Umbrella Liability

ACE offers flexible global solutions for the risks and exposures that life sciences companies face.

With a highly trained and experienced staff, ACE takes a strategic approach to underwriting, offering specialty liability products focusing on biotechnology, specialty pharmaceutical, medical device companies and human clinical trials.

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ACE Medical Risk Group, a business division of ACE USA, provides primary and excess medical professional liability for hospitals, miscellaneous healthcare facilities, and managed care errors and omissions coverage. In addition, ACE offers products-completed operations liability for clinical trials, biotechnology, and specialty pharmaceutical companies, as well as a package policy that includes property, auto and crime coverages through its Life Sciences unit. To learn more about ACE’s Medical Liability products and services, please visit our website. Insurance is provided by ACE American Insurance Company, Philadelphia, PA, and in some jurisdictions, other insurance companies within ACE Group. All products may not be available in all jurisdictions. The product information above is a summary only. The insurance policy actually issued contains the terms and conditions of the contract.

Metlife opens FTZ sub-branch August 11, 2014 | ECNS http://www.ecns.cn/business/2014/08-11/128793.shtml Sino-US United Metlife Insurance Co opened its sub-branch in the free trade zone on Friday to become the first joint-venture life insurance company to tap prospects in the zone.

It was three months after China Insurance Regulatory Commission approved the insurer to set up a sub-branch in the zone. Metlife, the third-largest foreign invested life insurance company in China, said it is interested in ongoing financial reforms and innovations in the zone, and is dedicated to the development of life insurance industry in the zone.

A blueprint released last December said that companies and individuals can open special accounts with banks, insurers and brokerages in the FTZ that can eventually be used to move local and foreign exchange funds into and out of China without being subject to the strict capital controls.

Auto insurance affordability is American government’s next focus August 6, 2014 | Live Insurance News http://www.liveinsurancenews.com/auto-insurance-affordability-american-governments-nextfocus/ Over the last few years, the federal government has started to amass a list of consumer complaints and has built a database about credit card companies and banks, which has more recently included auto insurance companies.

A FEDERAL OFFICE HAS NOW ANNOUNCED THAT THEY WILL BE PLACING THEIR FOCUS ON CAR INSURANCE PREMIUMS. The office first made the announcement back in April that it would be increasing the efforts that it was making to investigate the affordability of auto insurance, which is a sector that is typically regulated by the individual states. Almost every state across the country requires that drivers obtain a certain amount of coverage. However, at the same time, it is estimated that approximately 15 percent of motorists do not have a policy.

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NOW THE OFFICE IS USING ITS AUTHORITY TO HELP TO MAKE SURE AMERICANS WILL HAVE ACCESS TO AFFORDABLE AUTO INSURANCE. auto insurance carThe Federal Insurance Office was first created through the Dodd-Frank Wall Street Reform & Consumer Protection Act, which went into effect in 2010. It brought about a number of changes across the country for financial service firms. The office is currently making an effort to “monitor the extent to which traditionally underserved communities and consumers have access to affordable” home and vehicle insurance coverage.

According to the director of the Federal Insurance Office, Michael McRaith – who was previously the head of the Insurance Department in Illinois – the office “is evaluating that public input and looking to identify areas of consensus as we move to define affordability … in a reasonable manner.”

The issue of affordability is based on the income of a given household. The amount that a driver earns plays an important role in determining how much he or she will consider to be affordable when it comes to a policy. That said, there are a number of other issues that come into play when deciding whether or not auto insurance can actually be deemed affordable. The office will be working to help to ensure that drivers will be able to purchase their coverage without financial hardship.

ACE Strengthens European Cyber Practice with Added Third Party and International Expertise; Appoints Kyle Bryant to New Management Role August 5, 2014 | ACE Website http://news.acegroup.com/press-release/europemiddle-eastafrica/ace-strengthens-europeancyber-practice-added-third-party-andACE Group today announced the appointment of Kyle Bryant as Regional Cyber Manager, Continental Europe, as it further invests in its cyber risk practice to meet evolving customer needs.

Kyle, previously Assistant Vice President at ACE USA, will have management responsibility for ACE’s growing cyber risk business across Continental Europe. He will focus on bringing together ACE’s extensive international first and third-party expertise, underwriting capabilities, risk management and incident response services to deliver bespoke, market-leading solutions to brokers and clients.

The appointment follows the launch of ACE’s global cyber risk practice, established to facilitate the sharing of global expertise and drive seamless solutions for the benefit of buyers. Working with Toby Merrill as head of the practice and his colleagues across ACE’s global network, Kyle will contribute to the development of the practice and execute its strategy across Continental Europe, paying close attention to proposition development, underwriting strategy and market relationships locally.

Kyle will report to Grant Cairns, Regional Manager, Financial Lines for ACE in Continental Europe and will work in close partnership with Gilbert Flepp, Cyber Risks Manager (First Party) for ACE in Continental Europe. His appointment is effective 1 August and he will initially be based in London.

Kyle has over eight years of insurance industry experience in underwriting, product management, claims and legal roles focused on technology and professional liability risks. He joined ACE six years ago and, most recently, his responsibilities included Regional Manager for technology and professional liability in ACE’s US Mid-Atlantic region, where he oversaw successful the growth of a broad portfolio of professional liability, technology errors and omissions (E&O), data privacy and

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cyber insurance risks. Previously, he was executive underwriter for technology and professional liability in ACE’s New York metropolitan region.

Grant Cairns, Regional Manager for Financial Lines for ACE in Continental Europe, said: “At ACE, we are committed to bringing together our global cyber risk experience for the benefit of our local customers. European brokers and clients tell us that the insurance industry still has some way to go in meeting their expectations for clearer, more comprehensive cyber risk solutions. With his extensive experience in the fast-maturing US cyber market and deep expertise in third-party liability risks, I am confident that Kyle’s appointment will help us to enhance our customer proposition in a way that responds to these market challenges in Europe.”

Steven Reiss, Chief Operating Officer for ACE in Continental Europe, said: “In ACE’s research last year, European companies ranked cyber as one of the top three emerging risks most likely to have a financial impact on their business – while those in Germany and France awarded it first and second place respectively. Yet every company’s risk profile is different and there is no ‘one size fits all’ solution. This investment will allow us to build on our strong market position, enabling us to unlock our first and third party underwriting, risk engineering and incident response capabilities for middle-market and global accounts alike, in a tailored way that meets their needs.”

Coverys Finalizes Acquisition of PPIC August 5, 2014 | Cliams Journal http://www.claimsjournal.com/news/east/2014/08/05/252813.htm Boston-based Medical Professional Mutual Insurance Co. (ProMutual), a Coverys company, said it has finalized the acquisition of Preferred Professional Insurance Co. (PPIC), located in Omaha, Nebraska.

PPIC was formerly owned by 18 Catholic healthcare systems, seven of which are in the top 25 largest nonprofit hospital systems in the entire United States. The transaction had previously received unanimous shareholder support before regulatory approval was obtained. hrough the acquisition of PPIC, Coverys will expand its presence across the country and as a leading medical professional liability insurer.

“We view the acquisition of PPIC as a critical pivot point in our growth strategy providing additional scale on a national level in our marketplace,” said Gregg L. Hanson, CEO and president of Coverys.

Coverys is the eighth largest medical professional liability insurance provider in the country based on direct written premium. Coverys member companies insure medical providers in 27 states. Coverys had net admitted assets of $3.4 billion and direct written premium of $363 million as of December 31, 2013. Coverys member insurance companies include ProMutal and ProSelect Insurance Co., as well as ProMutual-sponsored Coverys RRG Inc., MHA Insurance Co. and Washington Casualty Co. Sherman & Company LLC acted as financial advisor and Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor for Coverys. Raymond James acted as financial advisor and Kutak Rock LLP served as legal advisor to PPIC.

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