insurance journal west 2015-02-23

WEST

Jones’ National Ridesharing Outline Climate Change and Hawaii Island Storms

Calif. Agents Inform on FinancialResponsibility

ACTION-READY

With our unique blend of products and

a skilled multi-line underwriting team,

we are building value, enhancing

relationships, and responding to our

customers’ needs. And as a wholly

owned subsidiary of Nationwide® , with an

A.M. Best rating of A+ (Superior) FSC XV,

all the pieces are in place to make great

things happen.

The iron is hot. Now is the time to strike.

Scottsdale Insurance Company and design is a federally registered service mark of Scottsdale Insurance Company.

a Nationwide Insurance® company

A.M. Best Rating of A+ (Superior), FSC XV

www.scottsdaleins.com

SCOTT16754.indd 1 2/7/15 4:51 PM

ACTION-READY

With our unique blend of products and

a skilled multi-line underwriting team,

we are building value, enhancing

relationships, and responding to our

customers’ needs. And as a wholly

owned subsidiary of Nationwide® , with an

A.M. Best rating of A+ (Superior) FSC XV,

all the pieces are in place to make great

things happen.

The iron is hot. Now is the time to strike.

Scottsdale Insurance Company and design is a federally registered service mark of Scottsdale Insurance Company.

a Nationwide Insurance® company

A.M. Best Rating of A+ (Superior), FSC XV

www.scottsdaleins.com

SCOTT16754.indd 1 2/7/15 4:51 PM

SIAA.Helping independent

insurance agents soar to new heights.

2020celebrating years

[email protected] | www.siaa.net

ACCESS TO COMPANIES

LOCAL &NATIONAL

INCENTIVES

BUSINESSINSURANCE RESOURCES

AGENCYDEVELOPMENT

MARKETINGASSISTANCE

SIAAJL16316.indd 1 2/7/15 4:49 PM

4 | INSURANCE JOURNAL-WEST February 23, 2015 www.insurancejournal.com

Inside This Issue

WEST

February 23, 2015 • Vol. 93 No. 4 • West

8 Agency-Broker Profitability Reaches Record 21% for 2014: Reagan Consulting

11 Commercial Lines Softening to Continue in U.S. in 2015: Marsh

11 Fraud Adds Up to 17% to Auto Insurance Injury Claims: IRC

18 Closer Look: 5 Things to Consider When Insuring Yachts

20 Closer Look: How to Calm the E&O Waters When Insuring Marinas

22 Spotlight: 10 Things to Know About Boats & Marinas

24 Special Report: Who’s Worth What in the Independent Agency System Exclusive Results from the 2015 Agency Salary Survey

NATIONAL COVERAGE

32 Strategies for Young Professionals in Salary Negotiations

34 Growing Your Property Casualty Agency: Alan Shulman

36 How Agents and the Industry Help Protect Farmers, Ranchers

38 Minding Your Business: Catherine Oak

42 Closing Quote: Low Minimum Auto Limits Unfair

IDEA EXCHANGE

DEPARTMENTS10 Declarations10 FiguresW6 People12 Business Moves16 MyNewMarkets

W8 W10

W2 City Council in Oregon Says Uber Must Follow Traditional Taxi Rules

W2 Climate Change Affecting Hawaii Island Storms, Researchers Say

W4 Lawsuit: Acupuncture Treatment Punctured California Woman’s Lung

W4 Montana Licensed 34 Captive Insurance Companies in 2014

W8 Earthquake Warning System in Obama Budget Pleases Lawmakers

W8 California Agents Asked to Inform Customers on Auto Financial Responsibility

W10 Heading a National Ridesharing Outline a Political Gain for Jones?

WEST COVERAGE

18 36

On The CoverSpecial Report:Who’s Worth What

in the Independent Agency System

IMPATIENCE IS A VIRTUE.

Here’s to the need for speed.Quote and order standalone personal umbrellas online in 3 minutes100% direct billNo MVRsNo signed applicationsAdmitted, rated A+ XV by A.M. Best

Family-owned and operated. Proudly dog-friendly. Available nationally. Underwriting criteria varies by state. Visit us online for guidelines. California Insurance License 0D08438A.M. Best rating effective February 2015. For the latest rating, visit ambest.com.

PERSONALUMB16625.indd 1 2/13/15 2:23 PM

6 | INSURANCE JOURNAL-NATIONAL February 23, 2015 www.insurancejournal.com

NATIONAL COVERAGE

FOR QUESTIONS REGARDING SUBSCRIPTIONS: Call: 855-814-9547 or you may subscribe or change your address online at:

insurancejournal.com/subscribeInsurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published semi-monthly by Wells Media Group, Inc., 3570 Camino del Rio North, Suite 200, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 2014 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc.

POSTMASTER: Send change of address form to Insurance Journal, Circulation Department, PO Box 708, Northbrook, IL 60065-0708

ARTICLE REPRINTS: For reprints of articles in this issue, contact: Ly Nguyen at 1-800-897-9965 ext. 125 or [email protected] Visit insurancejournal.com/reprints/ for more information.

Opening Note

Andrea WellsEditor-in-Chief

Is online dating a good business model?

Insurance and Online Dating

With today’s technology the world of knowledge, commerce, and even love, are at people’s fingertips. So Answer Financial asks, why not insur-

ance? If 40 million people choose to find love online, maybe they should buy insurance the same way. Answer Financial, which sells personal lines insurance online through its agencies Insurance Answer Center and Right Answer Insurance, offers eight reasons to think of insurance like online dating. Among them:• People get to see if they are compatible before they commit.• Technology does the work.• Online services expand the pool of prospects and options.• They can find the partner who wants them just the way they are. Answer Financial is having some fun. Nothing wrong with that. At the same time, they and many others take online insurance very seriously. So is online dating a good business model? Do insurance agencies and carri-ers want to be compared with dating services? What can insurance pros learn from the likes of match.com? Independent agents and carriers have been criticized for being slow to adopt new technology. There is some truth there. However gradually, more and more have gotten into the online business and more will in the future. While Answer Financial caters exclusively to online shoppers, most inde-pendent agents don’t do this, not because the agents themselves have anything against technology but because many of their customers do when it comes to buying insurance. Just as most people do with dating. Thirty-eight percent of Americans who are “single and looking” say they’ve used an online dating site, according to Pew Research. But only 10 percent

overall say they’ve actually tried online dating. While about half of auto insurance customers shop online, less than half end up actually buying online, according to market research. As with dating, those most active online are younger insureds. There is some evidence to suggest that overall, there is actually less shopping around for insurance. Apparently, some people are happy in their current insurance relationships, or not unhappy enough to bother shopping around. No doubt the numbers for both online dating and insur-ance are changing, and both will probably eventually increase. Clearly, online dating, like many online experiences, is not

for everyone. Neither is online insurance a perfect match for everyone. Thus, selling online may not be the answer for every provider. The majority of insurance buyers — and lovers — still like a little human interaction before they commit to a long-term relationship. That’s where local inde-pendent agents come in.

Publisher Mark Wells | [email protected]

EDITORIALChief Content OfficerAndrew Simpson | [email protected] Wells | [email protected] EditorYoung Ha | [email protected] EditorMichael Adams | [email protected] Central Editor/Midwest EditorStephanie K. Jones | [email protected] EditorDon Jergler | [email protected] EditorCharles E. Boyle | [email protected] EditorSusanne Sclafane | [email protected] EditorDenise Johnson | [email protected] Associate EditorAmy O’Connor | [email protected] Catherine Oak, Curtis Pearsall, Alan Shulman Contributing Writers Michael Biesecker, David E. Coons, Melinda Deslatte, Bill Hendrick, Bill Martin, Craig McGinnes, F.E. ‘Rick’ Russell II, Elly Yu

SALESChief Marketing Officer Julie Tinney (800) 897-9965 x148 | [email protected] Manager Lauren Knapp (800) 897-9965 x161 | [email protected] Dena Kaplan (800) 897-9965 x115 | [email protected] Central Mindy Trammell (800) 897-9965 x149 | [email protected] Howard Simkin (800) 897-9965 x162 | [email protected] Dave Molchan (800) 897-9965 x145 | [email protected] Markets Sales Manager Kristine Honey | [email protected], Jobs, Agencies Wanted/For SaleLy Nguyen (800) 897-9965 x125 | [email protected]

MARKETING/NEW MEDIAMarketing Administrator Gayle Wells | [email protected] Coordinator Erin Burns (619) 584-1100 x120 | [email protected] Media ProducerBobbie Dodge | [email protected]

DESIGN/WEBChief Technology Officer/Chief Innovation OfficerJoshua Carlson | [email protected]. of Design Guy Boccia | [email protected] Development Elizabeth Duffy | [email protected] Director Derence Walk | [email protected] Developer Jeff Cardrant | [email protected] Developer Chris Thompson | [email protected]

IJ ACADEMY OF INSURANCEOnline Training CoordinatorBarbara Whiffen | [email protected]

ADMINISTRATION Chief Executive OfficerMitch DunfordChief Financial Officer Mark Wooster | [email protected]

CHART YOUR OWN COURSE

When you partner with Continental Underwriters, you’ll have the confidence to

take your business wherever it needs to go. Our team has a 40+ year track record

of developing custom solutions that fit our clients’ specific insurance needs —

marine, inland marine, cargo and excess marine liability — from the highest-rated

carriers both domestic and abroad. Wherever you want your business to go, we’ll

help you stay the course. Call or visit our website for more information today. www.cultd.com | 844.879.9686

CONTUND001.indd 1 1/22/15 8:56 AM


NATIONAL COVERAGE

News & Marketsfirm for the insurance dis-tribution system, attributes the climbing agent-broker profitability rates in recent years to three trends. “First, agencies have become more and more efficient,” McNeely told Insurance Journal. “Second, the industry is growing,” he said. Reagan Consulting’s study found that median organic growth for agents-brokers in 2014 was 6.2 percent, matching 2013 and 2012. “They [agents-bro-kers] are growing their revenues faster than their expenses,” McNeely said. The survey showed that the fastest grow-ing segment of business was once again commercial lines, with an organic growth rate of 7.0 percent. Group benefits grew at a 5.7 percent clip. “Finally, there has been an increase in contingent income, which has a material impact on profitability,” McNeely added. “Contingent incomes were up about 14 per-cent in 2014.” That growth stems from the lack of “material catastrophic events” in the United States last year, McNeely said, as well as the overall growth in the insurance market. The survey also noted that the median Rule of 20 score was 16.9, up from 16.5 in the prior year. The Rule of 20 is the sum of an agen-cy’s organic growth rate and one-half of its EBITDA margin; if the sum equals or exceeds 20, an agency is driving strong shareholder returns. Reagan Consulting uses the Rule of 20 to measure agency value creation. “The agent/broker world grew in profit-ability for the fifth straight year — while sustaining positive revenue growth for a third straight year,” said Kevin Stipe, presi-dent of Reagan Consulting, in a statement. “These two metrics drive valuation, largely determine operating health, and are imper-

Agent-Broker Profitability Reaches Record 21% for 2014By Andrea Wells

Agent-broker profitability reached 21 percent for 2014, a new record for the

Reagan Consulting Organic Growth and Profitability (OGP) survey that began track-ing profitability for agencies in 2008. That median profitability for EBITDA (earnings before interest, taxes, deprecia-tion and amortization) for 2014 was up from 19.3 percent in 2013 and 18.4 percent in 2012, the survey revealed. Brian McNeely, partner at Atlanta-based Reagan Consulting, a management consult-ing and merger-and-acquisition advisory

ative to a firm’s ability to perpetuate.” High agency valuation is one reason why the market is experiencing a surge in M&A activity recently, McNeely said. “The basic fundamentals of the business are good for everyone right now,” he said. However, there are other issues driving the M&A trend as well. “The market is rewarding public brokers in the public markets; they are trading at all-time highs and they have an arbitrage opportunity when they do an acquisition,” McNeely said. There’s a lot of private equity money that has entered the space. “So at some level it’s simply a supply and demand issue — there is a lot of demand for qual-ity agencies and brokers to be sellers and there’s just not enough supply to meet the demand.” Reagan Consulting has conducted its quarterly survey of agency growth and profitability since 2008, using confidential submissions from approximately 140 mid-size and large agencies and brokerage firms. Roughly half of the industry’s 100 largest firms participated in the most recent sur-vey. Median revenue of the firms complet-ing the survey is more than $17 million. Brokers surveyed forecast a median organic growth rate of 6.0 percent in 2015, the fourth consecutive year for a forecast in that range. Brokers are projecting a “pullback” in profitability for 2015 to 20.0 percent, Stipe reported.

Readers’ Choice: What’s Important to Agents’ Careers InsuranceJournal.com asked readers which of the following has been the most important in their insurance career advancement. Passion for the job ranks tops.

25.75% (69 votes)

Passion for my work

16.79% (45 votes)

Success in previous job or assignment

16.04% (43 votes)

Mentor or superior who took special interest 11.57% (31 votes)

Networking

8.21% (22 votes)

Luck

5.97% (16 votes)

Working long hours

3.36% (9 votes)

College education

2.99% (8 votes)

Family or personal connections

Total Votes: 268

www.TheInstitutes.org

will impact their growth*

Stay ahead of cyber risk with The Institutes’ Managing Cyber Risk course.

Designed to provide a comprehensive look at the state of cyber security, the Managing Cyber Risk course will enable you to:

• Respond to cyber risk exposures from an enterprise risk management (ERM) perspective

• Accurately analyze cyber risk coverages in traditional and emerging insurance policies

• Effectively manage cyber threats by applying strategic best practices

Earn your certificate today—Register now. www.TheInstitutes.org/CyberRisk

© 2015, American Institute For Chartered Property Casualty Underwriters* PwC’s 2014 U.S. State of Cybercrime Study

69%of U.S. CEOs

are worried that

cyber threats

INSTBRA16779.indd 1 2/10/15 1:25 PM


NATIONAL COVERAGE

$17 Million

Anthem Data Breach“The personally identifiable information apparently hacked at Anthem is exactly what tax fraud thieves use to make false refund claims that appear to be legiti-

mate.” — Kevin Sullivan, commissioner of

Connecticut’s Department of Revenue Services, on dangers of tax fraud following the recent Anthem data breach that exposed millions of health insurance records. Sullivan

urged taxpayers expecting income tax refunds who may be affected by the Anthem data

breach to file their taxes quickly.

40 Percent Fraud?“Our examination of workers’ compensa-tion estimates that 40 percent of workers

costs are related to abuse or outright fraud.”

— Gov. Pat McCrory says workers’ comp fraud has cost North Carolina taxpayers

$896 million during the past six years, but the veracity of the 40 percent claim has been questioned by workers’ comp experts and an organization that represents state employees. Ardis Watkins, State Employees Association

of North Carolina, says it can’t find a credible source to confirm the fraud percentage claim.

Uber More “The idea that Uber is simply a software platform, a service provider and nothing

else, I don’t find that a very persuasive argument.”

— U.S. District Judge Edward Chen was skeptical of Uber’s bid for a pretrial ruling its drivers are contractors. Uber and Lyft face lawsuits in San Francisco federal court from drivers who contend they are employees and

entitled to reimbursement for expenses.

Quakes and Wells“What’s very difficult is to point to a specific earthquake and say a specific

disposal well caused that. … So, how to mitigate the earthquakes is what we’re

struggling to resolve.”— Kansas geologist Rex Buchanan estimates

that for the past 15 months he’s spent 90 percent of his time studying something once

relatively rare in the state — earthquakes. He says while much is still unknown, he has found there is a correlation between the majority of the 120-plus earthquakes recorded in Kansas last year and the injection of wastewater from

fracking into deep disposal wells.

$500,000

FIGURES DECLARATIONS

The approximate total value of sewer grates that two brothers in Pennsylvania

allegedly stole from suburban Philadelphia streets and parking lots. Authorities said in January that Brian and John Vetrulli Jr. were charged for

allegedly taking more than 1,000 of the $475 covers and selling them to scrap

dealers for $9 each.

The amount a lawsuit filed by the Washington State Department of

Transportation seeks to recover for costs related to the 2013 Skagit River bridge

collapse. The suit names several parties as responsible: William Scott, the truck driver

whose oversized truck hit the bridge; the driver’s employer, Mullen Trucking LP; the

pilot car driver, Tammy Detray, and her company, G&T Crawlers; and the owner of the metal shed being transported, Saxon

Energy Services Inc.

10The number of fingerprints that are no

longer needed for an individual to be issued a driver’s license in Texas. A 2005 state

law requires the department to collect “an applicant’s thumbprints or fingerprints,”

but doesn’t say how many. The Texas Department of Public Safety started collect-ing 10 fingerprints from license applicants

last year. Citing privacy issues, conservative lawmakers pressured the agency to stop

printing all 10 fingers.

46The number of workplace fatalities in Ohio in 2014. Federal officials say that such fatalities have been rising in Ohio in recent years. They cite lack of atten-

tion to safe work practices and training, and the existence of younger and newer manufacturing and construction work-forces. By early February, an estimated

17 workplace fatalities had been recorded statewide so far in fiscal year 2015.

29,544The number of DUI arrests made in

Tennessee in 2014. A report from the Tennessee Bureau of Investigation says

more residents of the state were charged with driving under the influence in 2014

than 2013. State officials said the bump is due to new techniques that include using

analytic software to predict when and where drunken drivers might crash and

focusing more efforts around bars.

joyfuldesigns / Shutterstock.com

Chubb - 153026Project: Vegas Lady

Campaign: February

Creative: 153026_CHUBB_VegasLady_InsuranceJrnl_Feb28

AE: Dave Wood

Publication: Insurance Journal

IO #: None

Issue: February 28th 2015

Ad Type: single

bleed = 8.625” X 11.125”

trim = 8.375” X 10.875”

safety = 7.875” X 10.375”

Insurance Journal

3570 Camino del Rio North

Suite 200

San Diego, CA 92108

Attn: Production Dept

t: 800.897.9965 f: None

Ship Info:

Contact Ad Production with any questions regarding these materialsph: (973) 952-8273 email: [email protected]

TM

Chubb Group of Insurance Companies (“Chubb”) is the marketing name used to refer to the insurance subsidiaries of The Chubb Corporation.

For a list of subsidiaries, please visit our website at www.chubb.com. Actual coverage is subject to the language of the policies as issued.

Chubb, Box 1615, Warren, NJ 07061-1615. © 2015 Chubb & Son, a division of Federal Insurance Company.

PROPERTY / LIABILITY / EXECUTIVE PROTECTION / WORKERS COMPENSATION / MARINE

SURETY / HOMEOWNERS / AUTO / YACHT / JEWELRY / ANTIQUES / ACCIDENT & HEALTH

www.chubb.com

INSURANCE AGAINST REGRETTALK TO YOUR CLIENTS ABOUT CHUBB.

S:7.875”S:10.375”

T:8.375”T:10.875”

B:8.625”B:11.125”

153026_CHUBB_Vegaslady_InsuranceJrnl_Feb28.indd 1 1/29/15 11:45 AMCGMLV16502.indd 1 2/7/15 4:54 PM

W2 | INSURANCE JOURNAL-WEST February 23, 2015 www.insurancejournal.com

WEST COVERAGE

News & MarketsCity Council in Oregon Says Uber Must Follow Traditional Taxi Rules

While Uber may be a new kind of ride service, it should comply with the same

rules as traditional taxi companies — and that means being licensed by the city, the Eugene City Council has decided. The council voted 8-0 earlier this month to approve a code change that makes it explicit that ridesharing services such as Uber must be licensed. Councilor Greg Evans said the change is designed to ensure that such companies follow the safety and other regulations the city requires of other transportation providers. “We are not trying to put Uber out of business,” Evans said. The change also lets traditional taxi companies use smartphone applications to calculate fares. Uber relies on local drivers and mobile applications to let custom-ers hail rides. The company’s Northwest manager, Brooke Steger, said the code change would jeopardize Uber’s operations in Eugene. Uber has refused to comply with Eugene’s licensing and other requirements since it began operating in the city last summer. The city began fining it $2,000 a day in December. The fines now total $116,000 and Uber is appealing them. Copyright2015AssociatedPress.

Most California drivers would pay an extra $52 a year under a proposal to raise $2 billion a year to fix the state’s crumbling

roads, bridges and highways. Assembly Speaker Toni Atkins’ proposal released in February didn’t spell out how the money would be collected, but she said the fee could be charged as part of insurance plans and vehicle regis-tration. The fees could be higher for trucks and for electric vehicle drivers who don’t pay gas taxes. The San Diego Democrat’s plan responds to a call by Gov. Jerry Brown for the Legislature to tackle a $59 billion backlog in infra-structure repairs. The shortfall is driven in part by declining gasoline tax revenues as more fuel-efficient cars use roads that continue to age and deteriorate. A California Department of Transportation review found 16 percent of the state’s highway miles were in poor condition in 2013. That’s already impacting driv-er’s wallets, Atkins said. The proposal would need Republican support because a two-thirds vote of the Legislature is required to pass new fees. Copyright2015AssociatedPress.

Climate Change Affecting Hawaii Island Storms, Researchers Say

Two university of Hawaii researchers say climate change is affecting rainfall

on Hawaii Island. The researchers say heavy rainstorms are occurring more often on the Big Island. Ying Chen and Pao-Shin Chu reported their findings in a paper published in the International Journal of Climatology.

The researchers reviewed storms on Hawaii Island over 50 years. Through 1960, a storm that dumped 12 inches of rain on the Big Island occurred once every 20 years. That has picked up in recent years. By 2009, stronger storms occurred every three to five years, dumping down more than 16.5 inches of rain. The study says there’s a need to rethink flood control standards and other guidelines related to rain. Copyright2015AssociatedPress.

The U.S. Agriculture Department has declared most of Nevada a natural disaster area due to lingering drought. And state water

officials say more trouble is brewing for ranchers and farmers in western Nevada where cutbacks have been ordered in irrigation supplies. The USDA announced the des-ignation of primary disaster areas in Carson City, Churchill, Clark, Douglas, Esmeralda, Humboldt, Lander, Lyon, Mineral, Nye, Pershing and Washoe counties.Farmers and ranchers there will be eligible for low-interest emer-gency loans. So will those in the neighboring counties of Elko, Eureka, Lincoln, Storey and White Pine. In February the state water engineer ordered a 50 percent reduction in the amount of groundwa-ter that can be pumped for crops in the Smith and Mason valleys. Copyright2015AssociatedPress.

California Lawmaker Proposes Annual $52 Fee for Road Repairs

Disaster Declaration for Most of Nevada Due to Drought

Nick CorteziCEO, All Risks HunterGeneral Star Broker

“We’re On The Hunt”

Beyond Security®

© 2015 General Star National Insurance Company is licensed in the District of Columbia, Puerto Rico and all states. General Star National Insurance Company has its principal place of business in Stamford, CT and operates under NAIC Number 0031-11967. Insurance is placed with General Star National Insurance Company by licensed producers. General Star Indemnity Company is an eligible surplus lines insurer in all states, the District of Columbia, Puerto Rico, and the Virgin Islands. It has the status as an unlicensed insurer in California and operates

under NAIC Number 0031-37362. Insurance is placed with the General Star Indemnity Company by licensed producers and, for risk that qualify, by licensed surplus lines brokers.

Atlanta 404 239 6777 Chicago 312 267 8600 Los Angeles 213 630 1930 New York 212 859 3950 Stamford 203 328 5700

A.M. Best A++ XV S&P AA+ A Berkshire Hathaway Company

“I’ve loved duck hunting since my father got me started as a kid. It requires skill, discipline and the ability to focus accurately on a

moving target.

“These fundamentals drive our partnership with General Star. With Berkshire Hathaway behind them, their strength and dependability are unrivaled. But it’s their skill in gauging distressed risks and unusual prospects – within their trademark disciplined approach – that impress me most. They can hit the moving target.

“Together, we’re on the hunt for new opportunities to expand our reach and build our businesses. We’re aiming high, together.”

To locate the General Star broker nearest you, visit our website atwww.generalstar.com.

GENSTA16331.indd 1 1/14/15 9:07 AM


WEST COVERAGE

News & MarketsPalomar Specialty in California Raises $17.5M in Surplus Capital

Palomar Specialty Insurance Co.

announced that it has successfully completed a $17.5 million surplus note issuance in a private placement to RenaissanceRe Ventures Ltd. and funds under management by a premier asset manager. Proceeds from the transaction will be used for general working capital purposes and will increase its policyholder surplus, the com-pany stated. Willis Capital Markets & Advisory acted as exclusive placement agent in the transaction. Michelman & Robinson, LLP and Ropes & Gray LLP acted as legal counsel. Palomar Specialty is a recently established catastrophe insurer that has initially focused on writing residential earthquake insur-ance, commercial earthquake insurance and difference in conditions in earthquake-exposed states including California, Oregon and Washington. In recent months, the company has expanded its licen-sure and is now an admitted carrier in 16 states.

A New Mexico lawmaker has introduced a bill to reduce workers’ compensation in cases when an employee’s death or injury

results from being drunk or high on the job. Republican Rep. Dennis Roch of Logan said being under the influ-

ence on the job puts lives at risk and the legislation would help protect workers and hold violators accountable.

Currently, an employee is eligible to receive 90 percent of his or her workers’ compensation

if alcohol or drugs contribute to injury or death on the job. Under the legislation, benefits would decrease by 35 percent to 85 percent. An Albuquerque Journal poll conduct-ed in September found 67 percent of New Mexicans supported reducing workers’

comp when drugs or alcohol result in injury or death.

Copyright2015AssociatedPress.

Lawsuit: Acupuncture Treatment Punctured California Woman’s Lung

A San Diego, Calif. woman is suing a chiroprac-tor she claims collapsed her lung during an

unlicensed acupuncture treatment. Jamie Del Fierro says she was injured about a year ago during a treatment for tension headaches at the office of Chula Vista chiropractor Walker Scott. Her lawsuit says Scott inserted fine needles in her chest even though he isn’t licensed to perform the procedure. Her lawyer said doctors drilled a hole in Del Fierro’s chest and hooked her up to a machine to regulate her breathing, which she car-ried for a week while her body healed. Copyright2015AssociatedPress.

Federal investigators say selfies were a likely factor in a small plane crash near Denver, Colo., last year that killed two people.

The National Transportation Safety Board says recordings from a GoPro camera found near the wreckage show the pilot and a passen-ger were taking flash “self-photographs” with their cellphones before the May 31 crash. An NTSB report said cellphone use likely disoriented the pilot and he lost control of the plane. It says the cause of the crash was probably an aerodynamic stall and that the aircraft spun into the ground. The crash killed 29-year-old pilot Amritpal Singh and his passen-ger after they took off from Front Range Airport in Adams County. The wreckage was found about a mile west of the airport. Copyright2015AssociatedPress.

New Mexico Bill Would Reduce Benefits if Workers Are High

NTSB Says Deadly Plane Crash in Colorado Linked to Selfies

State insurance department officials report that Montana licensed 34 new captive insurance companies in 2014, bringing the state’s

total number of licensed captives to 177. In addition to the 34 new captive insurance company licenses, the number of series business units grew by 19 and there were 29 new captive cells added during the course of last year, according to the department.

Montana Licensed 34 Captive Insurance Companies in 2014

PACIFICG16661.indd 1 7/10/13 1:31 PM


WEST COVERAGE

People Property/casualty insurance media company Wells Media Group announced four C-suite and managerial staff promotions. Julie Tinney now serves as chief marketing officer, Josh Carlson has been promoted to chief technology officer/chief innovation officer, Andrew Simpson became chief content officer and Lauren Knapp is now the com-pany’s sales manager. Tinney, most recently vice president for sales and marketing, is now responsible for leading the company’s promotional and branding strategies, sales management, corporate communications and public relations. Her media career began with a position at Petersen Publishing Co. in Los Angeles. She was the Western regional sales manager for Selling Power Magazine, and also owned an indepen-dent media rep firm. Carlson, previously vice president of technology, heads the team responsible for all aspects of web publishing, including server and database administration, email deliv-ery, online ad trafficking and creation and development of online products. Simpson, formerly vice president of content, will con-tinue to oversee team coverage for Wells Media’s multiple print and digital platforms, and will also be responsible for multi-channel publication and syndication of Wells Media’s content across brands online, in print and mobile, and via audio and video platforms. Simpson is a veteran of insurance publishing and journalism. He is based in his home state of Massachusetts. Knapp has served as the 12-state Midwest sales manag-er for the company for the past seven years. In her new role, she will be providing day-to-day leadership of the Insurance Journal, ClaimsJournal.com, MyNewMarkets.com and Carrier Management sales team members. Her career has included marketing and sales positions with Maclean Hunter Publishing, Thomson Financial Publishing and Ball Publishing. San Diego, Calif.-based Wells Media Group serves the property/casualty insurance industry. In addi-tion to Carrier Management website and magazine, its services include: national and regional Insurance Journal magazines; the P/C insurance industry’s lead-ing website, InsuranceJournal.com; a website, www.ClaimsJournal.com, for P/C claims professionals; an online database of available P/C markets, www.MyNewMarkets.com; a media site featuring insurance industry videos and podcasts, www.InsuranceJournal.TV; and the Academy of Insurance, an online learning center for P/C insurance professionals.

The American Insurance Association has named

Jay F. Day vice president of state affairs for the Western region. The appointment is effective March 9. Day, who will join AIA’s Assistant Vice President Steve Suchil in the associ-ation’s Sacramento, Calif. office, will oversee AIA’s state affairs activities in the following states: Alaska; Arizona; California; Hawaii; Idaho; Montana; Nevada; Oregon; Utah; and Washington. Day joins AIA from the office of California Assemblyman Jim Frazier, D-Oakley. Prior to that Day worked as a con-sultant for former Assembly Speaker John Perez, D-Los Angeles. He has also served in various capacities for a variety of legislators in the California Assembly and Senate since 1994. AIA is a property/casualty insurance trade organization representing roughly 300 insurers that write more than $100 billion in premiums each year.

Hub International Limited added Bobbi Curry and Robyn Welch to its entertainment practice in Los Angeles, Calif. Curry, named managing director of entertainment, focuses on commercial risks, including live event produc-tion, and music and touring risks. Welch, named managing director of entertainment, focuses on personal insurance and risk services for high profile and high net worth indi-viduals. They will report directly to Andrew Forchelli, president of Hub’s entertainment practice. Both women have more than 30 years of experience working with entertainment and risk services. Prior to Hub, Curry and Welch led the entertainment division at Lockton Cos. Based in Los Angeles, Hub’s entertainment practice offers risk management and insurance solutions across the U.S. for film and television productions, music tour and festivals, theatres and performing arts centers, business management firms, high-risk live events and video game companies. Chicago, Ill.-based Hub International Limited is a global insurance brokerage that provides property/casualty, life and health, employee benefits, investment and risk management products and services.

Berkshire Hathaway Specialty Insurance named Akshay Gupta senior vice president and head of catastro-phe engineering and analytics. Gupta is based in the San Francisco Bay area. Gupta has more than 20 years of experience in catastro-phe risk analysis, engineering, mitigation and model-ing. Most recently he was senior vice president at AIR Worldwide, where he led a practice providing engineer-

Julie Tinney

Josh Carlson

Andrew Simpson

continued on page W8

Lauren Knapp

Mark Kaufman to the rescue. Before slaying the dragon

and rescuing the fair maiden, Mark makes sure you

have the quote you need to secure the account.

Commercial Lines:

• Artisans & General Contractors

• General Liability - Manufacturers,

Various Mercantile, Special Events

• Packages - Apartments, Property

Owners, Various Mercantile Property

(Including Vacant Property)

• COC

• Product Liability

• Program Business

Your quote – on time, with expertise and nay a

complaint. Isn’t that how you should be treated?

Mark Kaufman, at your service.

Your Quote,Your Majesty.

You’ll Get the Royal Treatment

Watch our videos at MonarchExcess.com

La Crescenta 818-249-0100 • Simi Valley 805-577-6800 • San Diego 619-521-2170 • Rancho Mirage 760-779-5555Novato 415-883-1411 • Fresno 559-226-0200 • Arizona 877-406-8026 • Hawaii 818-425-9847 • License 0697233

One Who Serves

Mark KaufmanChief Operating OfficerLa Crescenta Office x225 [email protected]

MONARCH16798.indd 1 2/13/15 9:22 AM


ing-based risk modeling and assessments for complex industrial and commercial facilities and operations. His background also includes catastrophe model research and development, supply chain risk modeling, and disaster risk financing and mitigation projects for corpo-rations and sovereign states. Boston-based Berkshire Hathaway pro-vides commercial property/casualty, health-care professional liability, executive and professional lines, surety, travel, programs and homeowners insurance. Berkshire Hathaway has regional underwriting offices in Atlanta, Boston, Chicago, Los Angeles, New York, San Francisco, Toronto, Hong Kong and Singapore.

Liberty Mutual’s national insurance property operation has named Melissa Kayali division underwriting manager in

its West region. Based in Los Angeles, Calif., Kayali is responsible for expanding Liberty Mutual’s global property presence in the West. She oversees a team of property underwriters, risk engineers and service professionals. She has more than 30 years of experi-ence. Prior to Liberty Mutual, Kayali served as vice president and senior property underwriter at XL Insurance. She also held underwriting and risk engineering positions at Royal and Sun Alliance, Zurich-American Risk Engineering and American International Underwriters. Liberty Mutual’s national insurance prop-erty operation provides commercial proper-ty products, including single carrier, shared and layered, multi-national, equipment breakdown and inland marine. Boston, Mass.-based Liberty Mutual has operations in 30 countries around the world.

continued from page W6

WEST COVERAGE

News & MarketsEarthquake Warning System in Obama Budget Pleases Lawmakers

President Barack Obama’s recommenda-tion to spend $5 million next year on

an early earthquake warning system for the West Coast represents a significant break-through, congressional supporters of the project said. It’s the first time Obama has included funding for the project in his annual budget recommendation. Sen. Dianne Feinstein and congressman Adam Schiff, both Democrats,

say the change shows the president recognizes

the importance of moving

ahead with the project more quickly. “We couldn’t agree more,” Schiff said. Lawmakers had secured $5 million for the early warning system in this year’s spending bill and were seeking at least $16 million more in the next fiscal year, which begins in October. The money allows for the installation of more seismic detection stations and sensors. Several universities along the West Coast are working with the United States Geological Survey to put an early warning system in place. A limited system has already been deployed for test users. Supporters of the project in Congress said the test users at the University of California at Berkeley received 10 seconds of warning when an earthquake hit in Napa Valley this past September. A few extra seconds can be critical, allowing doctors to pause surgeries, utilities to shut off the flow of natural gas, or train operators to brake before the shak-ing starts. Copyright2015AssociatedPress.

California Agents Asked to Inform Customers on Auto Financial Responsibility

California Insurance Commissioner Dave Jones and state Sen. Ricardo

Lara in February urged Californians to make sure they are meeting their obliga-tion to carry minimum liability insurance coverage on their vehicles and announced resources to help educate motorists and make it easier to get afford-able coverage. Since Jan. 2, when a new law was put in place more than 76,000 new drivers have been issued driver’s licenses under Assembly Bill 60, which enables those who can’t prove they entered the United States legally to get driver’s licenses. The California Department of Insurance also sent a letter to insurance agents and brokers licensed to sell auto insurance reminding them that new drivers may need help navigating and understanding the financial responsibility law and their obligation to carry auto insurance, and to help watch out for scammers and schemes targeting the new population of drivers. The next step in reducing the number of uninsured drivers and making California’s roads and highways safer is to reduce the number of uninsured motorists, Jones and Lara, D-Bell Gardens, said. Additionally the two addressed Lara’s Senate Bill 1273, which passed in 2014, that made changes to California’s Low Cost Auto Program that make it easier for new licensed drivers to qualify for the affordable coverage program. “Getting auto insurance is the law and for some who can’t afford it, we have the Low Cost Auto Program,” Lara said. CDI is offering workshops through com-munity based organizations.

www.mjhallandcompany.com

WORLDS OF EXPERIENCE

SURPLUS LINES BROKER GENERAL AGENT

Since our inception in 1973, M.J. Hall and Company, Inc. has earned aname for dependable surplus lines insurance. As one of California’s mostexperienced general agents, the M.J. Hall team of insurance professionalssets the standard for customer service, product knowledge and reliability.

(209) 948-8108

COMMERCIAL PROFESSIONAL BINDING BROKERAGE

LICENSE #04889001

MJHALLCO16800.indd 1 2/10/15 1:23 PM


WEST COVERAGE

News & Markets Congressman John Garamendi, a Democrat from Central California, served as the state’s insurance commissioner from 1991 to 1995 and again from 2003 to 2007,

before becoming lieutenant governor and then getting elected to Congress. Like Garamendi, Jones has positioned himself as a staunch consumer advo-cate, and in 2014 he turned his pro-consumer stance up a notch when he stood behind propositions 45 and 46 on the November 2014 bal-lot. Prop. 45 was a measure to require approval before health insurers can change

rates, and Prop. 46 would have raised the medical malpractice cap on pain and suffer-ing. Both consumer advocate-backed ini-tiatives were defeated, but they turned into high-profile battles with Jones’ name

attached. Jones this year was handed a major victory

against Mercury Casualty Co. and

a slew of insur-ance associations when the Sacramento Superior Court issued a decision rejecting a challenge on

the regulations under Proposition 103 that limit

the amount of advertising costs insurers may pass on to consumers

through insurance premiums. “He’s really doing a lot of things that are designed to get media attention,” Adams

said. Chairing an NAIC committee on a hot topic like ridesharing is a way for Jones to call attention to the fact that California has led the way on ridesharing regulation, and

Heading a National Ridesharing Outline a Political Gain for Jones?By Don Jergler

A committee of regulators led by California Insurance Commissioner

Dave Jones is working on standards on ridesharing that departments of insurance in states across the U.S. can look to as an example. Whether the National Association of Insurance Commissioners Sharing Economy Working Group’s efforts will eventually yield recommendations, guidelines, or even a model law, remains to be seen. They may just offer what amounts to a friendly sug-gestion. This isn’t merely a question of semantics.Asked to detail the goals of the committee, California Deputy Commissioner Chris Shultz pointed out that the NAIC has a pro-cess for guidelines or model laws, but what is underway now is a working white paper. Pressed if the committee may eventually come out with guidelines or a law, Shultz did his best to charac-terize the committee’s objective without com-mitting to anything beyond the white paper. “Commissioner Jones and the NAIC Sharing Economy Working Group are trying to provide a set to things to think about,” he said. Shultz was cautious about his wording, he said, because he doesn’t want it to seem like the committee is planning to act authoritatively and by seeming to tell other states what to do. But one conservative political think tank believes the caution being shown is so the Democrat and former state Assemblyman, and Harvard University law school grad-uate, doesn’t come off as being politically motivated.

Next Campaign Ian Adams, Western Region Director at R Street Institute, believes Jones is using his role on the commission as a podium to cam-paign for his next office as he enters his final four-year term in office and begins looking down the road. There those who believe Jones has his eye on California Attorney General Kamala Harris’ post. Harris in January formally entered the U.S. Senate contest to replace retir-ing Sen. Barbara Boxer. Harris is so far considered by most to be the front-runner. “You’ve got Kamala Harris, who in two years will be leaving office early, and I think Dave Jones does have his eye on higher office and he probably likes the idea of attorney general,” Adams said. “Jones is going to be essentially campaign-ing for the next three-and-a-half years for


whatever office comes next.” Jones hasn’t announced his intentions, but he wouldn’t be the first California com-missioner to ride the office and a reputation for consumer protection to higher success.

California Insurance Commissioner Dave Jones

CA Ins. Lic. #0359417/0443957

Get appointed and get started quoting with GQRater, today.

COMMERCIAL LINES • Artisan Contractors (75 Classes) • Day Care - Commercial • Day Care - In Home • Landowners - Vacant Land • Owner & Contractor Protective Liability- • Apartment or Mixed Use • Commercial • Residential • Renovations • Special Events (Non-Admitted) • Vacant Building • Child Care - Residential (Admitted) • Concessionnaires & Venders (Admitted) • Home Based Business • Land Leased to Others (Admitted) • Special Events (Admitted) • Specialty Training Schools (Admitted) • Office • Truckers (GL) • Vacant Land (Admitted)

PERSONAL LINES • Tenant Occupied Dwelling • Vacant Dwelling • Renovations • Comprehensive Personal Liability • Personal Umbrella • Excess Personal Umbrella • Excess Comprehensive

Personal Umbrella

PROFESSIONAL LINES • Community Associations

Professional Liability • Community Associations Package • Condo Mini • Employment Practices Liability • MicroTek Pak - Technology Package

with Errors & Omissions • Non-Profit Directors &

Officers Specified Professions

For questions or more information:

800.437.6616 • 818.507.0900

Try the GQRater at

www.gorstcompass.com

“A” Rated Carriers

Over 100 Classes

Available 24/7

Finance Options

Exclusive

Our GQ Comparative

Rater

An Easier, Faster Path to 24/7 Online

Quoting

GorstAd_07-vF.pdf 1 1/9/15 6:25 AM

GCOMP16763.indd 1 1/13/15 7:29 AM


WEST COVERAGE

News & Markets

rides. Before that there was a coverage gap in question pertaining to when a TNC driver was covered under a personal policy, or a TNC’s commercial auto policy. California is also considered to be the first state to divide the ridesharing process into three periods — when a smartphone app is on and when a driver is looking for a ride, when there’s a match and a driver is on the way to pick up a ride and when a driver has a ride. “I think that’s why we, as an industry, and other state legislatures are looking at California,” Whittle said. Cited throughout the white paper are measures taken to address ridesharing and insurance taken by California, which was the focus early on for calls for greater regu-lation of the ridesharing industry following a tragic accident that kicked off the ride-sharing debate when an Uber driver went through a San Francisco crosswalk and killed 6-year-old Sophia Liu.

White Paper Shultz said the committee has yet to decide how to follow up on the white paper, or whether to follow it up. The com-mittee is also tasked with examining other parts of the evolving sharing economy, such

a way for him to show everyone he can help lay groundwork for dealing with issues of national importance, Adams said. “If he does have another office in mind this is a great way of raising his profile,” Adams said. “There’s been a larger push by the California Department of Insurance with consumer-friendly, relatively high-pro-file, attention-getting moves.”

California Showing Way The 2014 NAIC committee was com-prised of Jones and several insurance com-missioners whose states are tackling the ridesharing conundrum — how to regulate and mandate insurance for these app-based ad hoc taxi services. Members include: Connecticut Insurance Commissioner Thomas B. Leonardi; Nevada Insurance Commissioner Scott J. Kipper; Oklahoma Insurance Commissioner John D. Doak; and Washington Insurance Commissioner Mike Kreidler. Most if not all are expected to return to the committee for the 2015 year, according to committee staff member Jennifer Gardner, an NAIC research analyst. The group has put out a draft white paper that outlines suggestions from the committee. An open comment period on the paper was expected to close Feb. 20.

Mirroring California So far, suggestions in the white paper closely resemble the laws and regulations in place in California for dealing with rideshar-ing companies. That’s not surprising because Jones is chairing the committee, however there is a solid argu-ment that the state has led the way when it comes to dealing with this issue and that California should serve as an example for the rest of the states to consider following. “From our perspective it’s a good model with which to build and hopefully use around the country,” said Jim Whittle, assis-tant general counsel and chief claims coun-sel for the American Insurance Association.

Since California passed its regulations, AIA through lobbying efforts and informal conversations has pushed California as a model for other states to consider. “We’ve been putting it out there in a lot of places and we’re getting a lot of interest,” he said. “I’ve seen this legislation pretty much around the country now showing up as drafts and bills.” States like Iowa, Georgia and Maine seem to be closely following in California’s footsteps, he said, adding, “I think all of the states are looking at what California has done.” One of the most notable breakthroughs

California made was to deal quickly with the gaps between rideshar-ing activities — when a TNC driver has an app on, but hasn’t gotten a ride match, according to

Whittle. Regulations pushed for by Jones and proposed by California’s Public Utilities Commission, which oversees ridesharing operators in the state, define ridesharing operators — transportation network com-panies — and ridesharing activities, and require a $1 million commercial liability pol-icy to be in place whenever a TNC driver has a smartphone app turned on to accept continued on page W14


‘From our perspective it’s a good model with which to build and hopefully use around the country.’

GOLDBEA15088.indd 1 5/9/11 1:44 PM


WEST COVERAGE

News & Marketsor various combinations of the above.

One of the more conservative suggestions in the white paper is to recommend that regulators consider requiring underinsured/uninsured motorists coverage in the same amount as liability coverage. “While TNCs argue that some taxicabs are not required to provide UM/UIM, the better practice is to require TNCs to main-tain this coverage,” the white paper states.

“Otherwise, a pas-senger injured in an accident caused by an uninsured or underinsured motorist may be left without

recourse.” Spokespersons for major TNC providers Uber, Lyft and Sidecar did not respond to a request for comment. All three groups are free to offer input into the white paper, but to date Gardner the NAIC staffer for the committee says she has yet to receive any input — although she did say that on such documents most people wait right up until deadline to submit comments. One area Whittle with AIA sees as a potential sticking point for Jones and his NAIC committee is if they push for higher limits. “The truth is when talking about these things you probably don’t want insurance limits so high that few insurers will want to take that on,” he said. “If it’s a big man-datory minimum coverage, you can see some saying ‘That’s too rich for our blood.’ They need to look carefully at managing the needs of the public, the needs of the businesses so we have good lively products that are priced well and everybody can be satisfied.” R Street’s Adams shares the fear that the committee could make overreaching sug-gestions in terms of insurance coverage and make future innovations from the budding ridesharing more onerous for companies to introduce. “You don’t want to strangle the industry in the crib,” Adams said. “I think there will

as rental property sharing — like Airbnb — so members may move on to other top-ics after the white paper is completed and approved, he said. There is a lot to be looked at in terms of the sharing economy, which has myriad insurance implications. PricewaterhouseCoopers estimates that the five traditional sharing economy sectors — equipment rental, bed and bath and hos-tels, car rental, book rental and DVD rental — generate roughly $22 billion in global revenues, making up just 5 percent of total revenue generated by the 10 sectors PwC looked at. However, by 2025, these same five shar-ing economy sectors could generate more than half of overall sales in the 10 sectors for a potential revenue opportunity worth $508 billion, according to PwC. The committee hopes to adopt the white paper at the NAIC Spring National Meeting, then send it to the Property and Casualty Insurance Committee — called the C Committee. The Executive Committee gets a crack at it, and then the Plenary Committee is the last stop. Typically once it’s adopted by the C Committee, such a document is unlikely to change and will probably remain in it’s in final form at that point, Garner the NAIC staffer said. “I think we can expect that it will be finalized by the C Committee by hopefully spring, and then it’s pretty much out there and available for the states,” Garner said.

Among its assertions, the 23-page white paper

points out that ride-share operators

initially

relied on drivers’ personal auto insurance policies for coverage, which conflicted with the livery exclusion in most policies. It was a practice that drew calls by insurer associ-ations like the Property Casualty Insurers Association of America and AIA for regu-lators to run interference with rideshare operators by demanding they provide their drivers coverage. The white paper states: “From the personal auto insurer’s perspective, this activity translates into increased risk of loss due to: 1) additional miles driven; 2) heightened geographic hazard caused because TNC drivers typically find matches in urban, high traffic locations; 3) more people in the car that can be injured; and 4) the additional risk caused as drivers rush to accept matches and pick-up and deliver passengers in a timely manner.” Recommendations in the white paper include advice on how to deal with gaps in coverage in the face of new insurance prod-ucts coming on the market. Assuming hybrid policies become readily available, regulators may be able to require TNCs and TNC drivers to share the burden of insurance for ridesharing activities, so the paper suggests regulators require:• TNC drivers to maintain coverage in peri-

od 1 (app on but no ride accepted) and TNCs to maintain coverage in periods 2 (when there’s a match and a driver is on the way to pick up a ride) and 3 (when a driver has a ride).

• TNC drivers to maintain primary cov-erage up to a certain limit (for example $100,000), while requiring TNCs to maintain excess coverage that pays for accidents resulting in damages above the primary limit.

• TNC drivers to maintain primary cover-age in period 1 up to a certain limit (for example $100,000), while requiring TNCs to maintain excess coverage in period 1 and primary coverage in period 2 and 3,


‘The new products present many concerns for insurance regulators, including but not limited to, the cost for the new hybrid coverage.’


From our family to yours.Who do you trust more than family? Century-National Insurance Company has been family owned and family run for more than 40 years.

At Century-National Insurance Company, the security of you and your client’s family is our only business. From Business Auto to a full array of Personal Lines products, our family is here to protect your family.

As a prominent insurer in the West, our promise is to care for your customers in their time of need. Rated “A” Excellent by A.M. Best, we have the resources to back up that promise.

If you’re looking for a company that treats you and your customers like family, you’ve come to the right place. Give us a call or visit our website to learn more about our suite of competitive products and apply to become a producer.

HOMEOWNER’S EARTHQUAKE MOBILE HOME COMMERCIAL AUTO PERSONAL AUTO UMBRELLA

800.733.0880, ext. 2576 | www.cnico.com

CenNatInsAd9a.indd 1 8/19/14 10:41 AMCENNAT16796.indd 1 2/7/15 4:56 PM


WEST COVERAGE

News & Marketsbe a lot of pushback on the issue of cover-age expansions across the board in terms of coverage amounts.”

Endorsements Also budding are insurance products for

ridesharing activities. Early this year policy endorsements began to be offered for per-sonal auto policies to fill coverage gaps. The white paper calls these endorsements “a valuable tool to close gaps for TNC drivers willing to purchase them.”

These hybrid insurance products, which add some level of coverage for TNC activities onto personal auto polices, are being intro-duced by insurers willing to take on the risk and gain market share in an evolving and growing space, according to the white paper. “Because the products are not being stan-dardized, but are being developed by differ-ent insurers, they will likely establish cover-age via different methods for different time periods,” the white paper states. “The new products present many concerns for insur-ance regulators, including but not limited to, the cost for the new hybrid coverage.” In January, Jones approved a filing that will enable Uber drivers purchasing cov-erage through Metromile, which has part-nered with National General Assurance Co. to add a new coverage endorsement to their personal policy. The endorsement will provide coverage during period 1, when the ridesharing app is open but the driver is not matched to a passenger. Outside of California, Erie Insurance Co. began offering an endorsement that makes the TNC driver’s personal policy excess for TNC activity for any insured with a busi-ness classification on their personal auto. It covers all three time periods, but is current-ly available only in Illinois and Indiana. USAA announced its plans in January to offer coverage in Colorado for TNC driv-ers from the moment their mobile apps are turned on until they are matched with a passenger. The pilot program, which began in February, extends a member’s existing auto policy coverages and deductibles, and costs about $6-$8 more per month, according to the carrier. “In developing these new hybrid insur-ance products, TNCs may need to share with participating insurers any statistical information they track regarding driver and passenger characteristics, delivery patterns, hours of operation and any other factors rel-evant for determining insurance rates,” the white paper states. “One way to accumulate information on TNC driver behavior may be the use of telematics installed in driver vehicles.”


ABRAM16735.indd 1 2/9/15 9:53 AM

February 23, 2015 INSURANCE JOURNAL-NATIONAL | 11www.insurancejournal.com

NATIONAL COVERAGE

News & Marketsappears poised to soften in 2015, following a stable 2014 in which rates generally edged upward, but the pace of increase slowed, according to the report. Of particular note, 2014 is projected to be the first profitable year for workers’ compensation since 2006, although insurers are still pressing for rate increases.

Cyber Market Cyber remains one of the fastest growing sectors in the insurance market, as evi-denced by continued growth in premium and policy count, as well as the steady influx of new capacity. Marsh reports that continued growth in supply and demand for cyber insurance, coupled with unex-pected loss activity, led to significant vola-tility in pricing during 2014, which is likely to continue in 2015, Marsh notes. Cyber insurance rates were up on aver-age between 2 percent to 10 percent in the fourth quarter of 2014 for clients with aver-age to good loss profiles. “Strong capital positions, ample capacity and competition within the U.S. property/casualty market are leading to favorable conditions for insureds, especially those

Commercial Lines Softening to Continue in U.S. in 2015: Marsh

Competition among property/casualty insurance carriers and the flow of capi-

tal into the industry are continuing to drive down rates in most U.S. commercial lines and conditions are particularly favorable for clients with attractive risks and good loss histories, says global insurance broker Marsh. Cyber insurance is an area where demand is strong and rates are volatile, the broker notes. In its annual U.S. Insurance Market Report 2015, Marsh says that the U.S. commercial property insurance market is expected to continue to soften into 2015. Barring unforeseen events, clients with non-catastrophe exposed risks should expect competition for their property insur-ance programs in 2015 with favorable terms and conditions and price decreases typical-ly averaging between 5 percent and 15 per-cent, depending on the insured’s specifics. Catastrophe-exposed clients also can expect typical rate decreases in the 10 percent to 15 percent range, depending on their risk profile and concentration of catastrophe prone areas, Marsh predicts. The U.S. casualty insurance market also

with well-managed risks,” said Robert Bentley, president, U.S. and Canada divi-sion. “While this is good news, organiza-tions need to remain vigilant in their efforts to stay abreast of the changing marketplace, where new and emerging risks can quickly escalate if not properly managed.” Other predic-tions:• The release of the revised Fair Labor Standards Act reg-ulation is likely to increase wage and hour claim filings, a key issue to watch in employment practices liability in 2015.• The captive insurance market is expected to continue to grow this year; captive own-ers should be focused on evolving regula-tions in domiciles foreign and domestic.• With political risk insurance capacity at record levels, buyers in 2014 experienced generally favorable market conditions, which are expected to continue into 2015.• Bankruptcies in the U.S. retail sector caused some trade credit insurers to express concerns and reduce their exposure.

Fraud Adds Up to 17% to Auto Insurance Injury Claims: IRC

A new study estimates that fraud and claim “build-up” add between $5.6 bil-

lion and $7.7 billion in excess payments to auto injury claims paid in the United States. The excess payments represented between 13 percent and 17 percent of total payments under the five main private passenger auto injury cov-erages, according to the study from the Insurance Research Council (IRC) of 2012 claims data. Twenty-one percent of bodily injury (BI) claims and 18 percent of personal injury protection (PIP) claims closed with payment had what the

study terms the “appearance” of fraud and/or build-up in 2012. The most common type of abuse was claim build-up, defined as the inflation of otherwise legitimate claims; claims with

appearance of build-up accounted for 15 percent of dollars paid for BI and

PIP claims in 2012. Claims with the appearance of fraud and/or build-up were more likely than other claims to involve chiropractic treatment, physical

therapy, alternative medicine, and the use of pain clinics. The prevalence of appar-ent fraud and build-up varied widely among states, especially

no-fault states. States with highest rates of fraud and build-up among PIP claims included:• Florida (31 percent)• New York (24 percent)• Massachusetts (22 percent)• Minnesota (22 percent) “The costs associated with auto injury claim abuse make auto insurance more expensive for everyone,” said Elizabeth Sprinkel, senior vice president of the IRC. “Efforts to lower insurance costs must include measures aimed at reducing the amount of fraud and buildup in the system.” The study, Fraud and Buildup in Auto Injury Insurance Claims, is based on more than 35,000 auto injury claims.

Cyber remains one of the fastest growing sectors in the insurance market.


NATIONAL COVERAGE

Business Movesand business intelligence. Robert Buhrle, former partner at Agile, has joined Majesco as vice president of client servicing. Majesco provides core policy administration, distribution man-agement, underwriting, billing applications and portals to insur-ance carriers. The firm is based in New York and has offices in Edison, N.J.; Glastonbury, Conn.; Toronto, Ontario, Canada; India; the United Kingdom; Malaysia; Singapore; and Thailand.Agile has offices in New Jersey, Georgia and Ohio.

MAPFRE, MiddleOak Insurance Spanish insurance giant

MAPFRE SA has said it wants to expand and is eying acquisitions in Europe and the United States, most recently closing on a deal in New England. Carrier Management, a sister publication of Insurance Journal, reported on February 5 that MAPFRE, in an email to affected agen-cies, revealed its U.S. arm inked a deal with MiddleOak Insurance to take over its per-sonal lines insurance business. MiddleOak, which was formed by Massachusetts com-panies Holyoke Mutual Insurance Co. and Middlesex Mutual Insurance in 2006, will continue with its commercial lines busi-ness. MAPFRE USA, which has its U.S. headquarters in Webster, Mass., writes in 17 states, offering private passenger auto, home and commercial auto and property through various underwriting companies that include The Commerce Insurance Co., American Commerce Insurance Co. (Columbus, Ohio), and Citation Insurance Co. MAPFRE primarily focuses on New England, where it writes $1.6 billion in Massachusetts, New Hampshire, Connecticut and Rhode Island combined. MiddleOak’s book will add business in Maine and Vermont. MiddleOak writes commercial residential property for apartments and community associations across the country, and person-

Majesco, Agile Insurance technology firm Majesco has completed the acquisition of the insurance business of Agile Technologies, a technol-ogy consulting firm with revenues of more than $9 million. Terms of the deal were not disclosed. In December 2014, Majesco announced the acquisition and said it also planned to merge with Cover-All Technologies, another insurance tech company. The Cover-All deal is expected to close in the second quarter of 2015 and will create an operation with $100 million in annual reve-nue and a global reach. Cover-All provides browser-based commercial lines policy, business intelligence, and claims programs. Majesco said the addition of Agile’s con-sulting services will support and accelerate the company’s growth plans. Agile is fully integrated into Majesco and will operate under the Majesco brand, the firm said.All employees including the leadership team at Agile have joined Majesco. Bill Freitag, founder of Agile as well as its managing partner and CEO, has joined Majesco as executive vice president. He will lead Majesco’s consulting business. John Johansen, former partner and co-founder at Agile, has joined Majesco’s executive team as senior vice president with responsibility for leading data strategy

al home, auto and boat insurance in New England. MiddleOak CEO Gary Vallo said his operation will begin to withdraw from per-sonal lines on March 1, and that MAPFRE USA “will offer a policy of insurance to most MiddleOak policyholders who would otherwise have been renewed by MiddleOak.” MiddleOak is exiting personal lines because it is a “high risk/low return busi-ness for MiddleOak” and that “associated catastrophe reinsurance expenses impose a significant burden on personal lines profit-ability,” Vallo said. Additionally, evolving financial regu-lation is burdensome and expensive, and “diversifying personal lines outside of New England is infeasible given MiddleOak’s agency relationship-based strategy,” he added. Vallo said, however, that MAPFRE USA will make the transition seamless, and “MiddleOak personal lines agents and pol-icyowners will be better served aligning with MAPFRE USA, a provider committed to making the investments required for future success in personal lines with inde-pendent agents.” John Kelly, MAPFE USA’s senior vice president of business development - Eastern region, worked to assure MiddleOak agents about the transition. He said MAPFRE would make MiddleOak specialty products available to affected agents late in 2015. He also said that MAPFRE has offered jobs “to some MiddleOak employees ... to assist our efforts in minimizing any disruption.” Brown & Brown, Liberty Insurance Brokers Brown & Brown Inc. announced that its subsidiary Brown & Brown of Pennsylvania LP has acquired certain assets of Liberty Insurance Brokers Inc. and its related affili-ate companies in Philadelphia. Terms of the transaction were not disclosed. Founded in 1996, Liberty Insurance Brokers and its affiliate companies provide commercial and personal lines insurance for the multi-family residential industry

continued on page 14

Specialty casualty insurance | acegroup.com/us-westchester-specialty-casualty

© 2015 ACE Group. Coverages underwritten by one or more companies of ACE Group. Not all coverages available in all jurisdictions. ACE®, ACE logo®, and ACE insured.® are trademarks of ACE Limited.

Our ACE Westchester Specialty Casualty team delivers a broad range of primary and excess insurance

products for the construction, public entity, energy, manufacturing, hospitality and transportation industries.

As one of the strongest insurers in the world, ACE has the financial strength and underwriting expertise to

deliver tailored, creative solutions for complex risks.

CASUALTY ISOUR SPECIALTY

ACE16717.indd 1 1/14/15 9:05 AM


NATIONAL COVERAGE

Business Movesprimarily in Pennsylvania and New Jersey. Liberty Insurance Brokers and its affiliates report annual revenues of approximately $4 million. As part of the transaction, Liberty Insurance Brokers’ President and Founder Scott Engel and his team will combine with Brown & Brown of Pennsylvania’s existing Plymouth Meeting, Pa., location under the leadership of Rob Heller. Florida-based national insurance broker Brown & Brown Inc., through its subsid-iaries, offers insurance and reinsurance products and related services. Additionally, certain Brown & Brown subsidiaries offer a variety of risk management, third-party administration and other services. Brown & Brown serves business, public entity, indi-vidual, trade and professional association clients nationwide. Smith Brothers, McMahon Company Smith Brothers Insurance LLC, an independent insurance agency based in Glastonbury, Conn., has acquired the assets of the McMahon Company Inc., an indepen-dent agency in Rocky Hill, Conn. Terms of the transaction were not disclosed. The McMahon Company, founded in 1970 and led by Blaine Kaiser, provides insurance and risk management services for businesses and individuals in the great-er Hartford community. The McMahon Company plans to retain the company name, and the firm’s team of six employees will remain in the Rocky Hill location. Smith Brothers Insurance provides insur-ance, surety, risk management, employee benefits, and financial services to indi-viduals and businesses. Headquartered in Glastonbury, Smith Brothers has addi-tional satellite locations in Waterford, Conn. (operating as Atlantic Insurance); Chester, Conn. (Archambault Insurance); Northampton, Mass.; and also in Rocky Hill, Conn., following the McMahon Company acquisition. In total, Smith Brothers has approximately 115 employees. Spencer Capital, USA Risk Group Spencer Capital Holdings Ltd., the par-

ent company of reinsurer Spencer Re, has agreed to acquire USA Risk Group, an inde-pendent captive insurance manager based in Barre, Vt. Financial terms of the transac-tion were not disclosed. The transaction is subject to customary closing requirements and regulatory approv-al, and is expected to close during the first quarter of 2015. Founded in 1981, USA Risk Group is an independent provider of alternative risk management services with captive man-agement operations in Arizona, Barbados, Bermuda, the British Virgin Islands, Grand Cayman, Malta, South Carolina, Tennessee and Vermont, managing companies in 20 domiciles. USA Risk serves more than 300 clients, holding $9 billion assets under management. USA Risk has 70 employees on- and offshore. Spencer Capital Holdings Ltd. said its reinsurance subsidiary Spencer Re and USA Risk are expected to be mutual beneficiaries from cross-selling opportunities. Spencer Re is a reinsurance company focused on the U.S. auto dealership industry. After the transaction closing, H. Lincoln Miller, Jr., group chairman of USA Risk, will join the board of directors of Spencer Capital. Gary Osborne, president of USA Risk, will join the Spencer Re board of directors. Arthur J. Gallagher, Aequus Trade Credit Arthur J. Gallagher & Co. announced the acquisition of Aequus Trade Credit LLC in Warren, N.J. Terms of the transaction were not disclosed. Established in 1997, Aequus Trade Credit is a specialist insurance broker that offers credit risk mitigation products and services.Aequus Trade Credit focuses on credit and political risk insurance and accounts receivable puts for middle-market and Fortune 1000 clients throughout the United States. Marc Wagman and his associates will continue to operate under the direc-tion of Douglas Brown, head of Arthur J. Gallagher’s Northeastern region retail prop-erty/casualty brokerage operation.

Arthur J. Gallagher said Aequus Trade Credit’s team and its expertise will comple-ment Arthur J. Gallagher’s Trade Credit and Political Risk practice group. Headquartered in Itasca, Ill., Arthur J. Gallagher & Co. is an international insur-ance brokerage and risk management ser-vices firm. It has operations in 30 countries and offers client service capabilities in more than 140 countries through a network of correspondent brokers and consultants. United Insurance, Shiretown Agency United Insurance, an independent insur-ance agency headquartered in Falmouth, Maine, announced the acquisition of the Shiretown Agency in Farmington, Maine. Terms of the transaction were not disclosed. United Insurance has 16 Maine locations and one in Rochester, N.H. The firm pro-vides personal and business insurance, employee benefits and risk management services. Shiretown Agency and its six staff mem-bers will continue to operate from their Farmington location. Clark Insurance, James L. Cooney Clark Insurance, an employee-owned independent insurance agency with offices in Maine and New Hampshire, has acquired the James L. Cooney Insurance Agency of Lowell, Mass. Terms of the transaction were not disclosed. The James L. Cooney Insurance Agency began business as the Cooney and Lynn Agency in 1946. The agency offers personal, commercial and employee benefits insur-ance to families and businesses throughout the region. The office will remain in its location in Lowell. The James L. Cooney Real Estate Agency, the real estate agency part of the James L. Cooney company, was not part of the sale and will continue to be retained by the James L. Cooney company owners. Clark Insurance is an employee-owned agency founded in 1931 in Portland, Maine, and has grown to more than 100 employees in four Maine locations, one in Manchester, N.H., and now an office in Lowell, Mass.

continued from page 12

Accident & Health I Aviation I Casualty E&S I Energy Liability I Environmental I Equine I Healthcare Liability I Marine I Multiline E&S I Professional Liability

Service & Customization

Our combined strengths are what set Catlin apart. We’ve built a culture that ensures we satisfy each customer’s specific needs, whether it’s through personalized client service or responsive and thorough claims handling. It’s our combined dedication to service and customization to meet your needs that help us stand out in the industry. Consider the specialty insurance company that gives you more. Visit CatlinUS.com/strengths today.

AM Best rating of A (Excellent) XV

CTLN-10632 BrandAd_CoffeeCup_8.375x10.875_InsJrnl.indd 1 1/19/15 11:17 AMCATLINUS16780.indd 1 1/22/15 9:02 AM


NATIONAL COVERAGE

MyNewMarketsWater Treatment and Water Handling Industry ProgramMarket Detail: Watercolor Management (www.watercolor management.com) has an A++ specific liability insurance program for the water treatment and water handling business. Includes boiler and cooling system service providers; industrial and commercial water treatment companies; water system scale and corrosion pre-vention; water treatment chemical suppliers; and water treatment equipment servicers, providers, suppliers and manufacturers. This program provides liability coverage including commercial general liability; completed operations liability; products liability, pollution (onsite and work site, including HAZMAT); employee benefits liabil-ity; and employment practices liability. Other coverages are bonds; crime; commercial auto; excess pollution; excess liability; equipment breakdown; hired and non-owned auto; inland marine; property and workers’ compensation. Additional features include: $1 million occur-rence/$3 million aggregate limit - general and professional; $1 million defense costs; $500,000 onsite pollution coverage; $25,000 offsite pol-lution cleanup; $250,000 employee benefits liability; $250,000 employ-

ment related practices liability; $100,000 fire legal liability; $10,000 medical payments (on request); $1 million hired and non-owned auto (on request); up to $25 million excess pollution (on request).Available limits: Minimum $1 million, maximum $10 million Carrier: Unable to disclose, non-admitted States: All states except Alaska and Hawaii Contact: Customer service at 256-260-0412

Nonprofit OrganizationsMarket Detail: Donald Gaddis Co. Inc. Insurance Services (www.gaddiscompany.com) writes all lines of professional liability; direc-tors and officers liability; media liability; cyber and employment practices liability. Difficult or unusual commercial property, casual-ty, or package coverages, liquor liability and hard-to-place homeown-ers are also available. Workers’ compensation or automobile liability coverage are not available. The company represents 70 excess and surplus lines and specialty carriers on a brokerage basis.Available limits: As needed Carrier: Unable to discloseStates: All states Contact: Chris Gaddis at 312-853-0071 or email: cgaddis@ gaddiscompany.com

A+ Programs Commercial BOP Market Detail: Northern Underwriting Managers Inc. (www.northernum.com) offers an all lines commercial BOP product for a wide spectrum of small business P/C clients. The small-business product is designed around the philosophy of speed to market and flexibility in everything from processing, rating, issuance and pay plans. All lines are available combined as a package or monoline based on need. Clients are able to choose from a variety of direct bill plans including: EFT monthly, semi-annual, quarterly, 10-pay, 11-pay and 12-pay plans with down payments starting at 15 percent. Available Limits: As neededCarriers: Unable to disclose, admitted States: All states except Ala., Alaska, Ariz., Colo., Conn., D.C., Dela., Fla., Ga., La., Maine, Mass., Md., Miss., N.H., N.M., Ohio, Ore., R.I., Utah, Vt., and Wash. Contact: Mike Doak at 816-728-1847 or email: [email protected]

Cannabis InsuranceMarket Detail: Teso Insurance Service Inc. (www.tesoinsurance.com) offers a cannabis insurance protection program for the med-ical cannabis industry and the cannabusiness, including: growers; dispensaries; collectives; cooperatives; laboratories; doctors; events; lawyers; and manufacturers and suppliers.Available limits: As neededCarrier: Unable to discloseStates: All statesContact: Customer service at 714-329-2448

Condominium Owners Market Detail: Preferred Property Programs’ (www.ppp-quotes.com) coverage includes: boiler and machinery; commercial excess; environmental liability; equipment breakdown; umbrella; and excess liability.Available limits: As neededCarrier: Unable to disclose, admitted and non-admitted availableStates: All states Contact: Customer service at 888-548-2465

Construction - Casualty - All kindsMarket Detail: Peachtree Special Risk Brokers (www.psrllc.com) offers capacity up to $500 million with minimum premiums starting at $7,500 for primary CGL and $5,000 for excess/umbrella. Coverage is available nationwide with underwriting authority in house in Florida. The New York contractor insurance marketplace also is avail-able with a minimum $75,000 CGL with comprehensive coverage.Available limits: As needed Carrier: Various, non-admittedStates: All states except Alaska and Hawaii Contact: David O’Keeffe at 201-913-8030 or email: [email protected]

CONSTRUCTION

Build your commercial property business with Burns & Wilcox.Prevent construction projects from becoming

a risky venture with Burns & Wilcox.

Building restoration projects are a complex business with multiple risks. This presents multiple opportunities for you if you partner with Burns & Wilcox. From builder’s risk, to the contractors and architects doing the work, we have solutions for every exposure related to any project. Find the structure you need to capitalize on this opportunity. Work with the global leader in wholesale insurance – Burns & Wilcox.

Commercial | Professional | Personal | Brokerage | Binding | Risk Management Services

800.521.1918 | burnsandwilcox.com

37095_BURNS_BuildingRehabAdRSZ-Ins. Journal-Nat'l.indd 1 2/9/15 12:59 PMBURNWIL16621.indd 1 2/10/15 8:39 PM

CLOSER LOOK


Boats & Marinas

Driving by a marina or boatyard, most of us admire the beautiful yachts, and

may even daydream about a weekend on the water. Insurance agents likely also envision easily selling coverage to recreational boat-ing customers. However, even as other areas

of insurance become increasingly automat-ed, insuring yachts requires a specialized focus on five import-ant considerations: relationships, informa-tion, value, losses and experience.

Relationships A successful yacht insurance agent needs to maintain connections with various relat-ed marine professionals, to benefit from their knowledge and experience (and refer-rals). These include manufacturers, dealers, banks and finance brokers, and marine sur-veyors. Few carriers specialize in yacht insur-ance, and many agents may lack the experi-ence or expertise to evaluate a prospective customer and secure the best coverage. It takes effort and commitment to develop, but specialized knowledge and experience can assure the necessary exchange of infor-mation between insurer and prospect.

Information Email and the internet make it easy to communicate quickly, but in yacht insurance brevity often can lead to overlooking important details. Electronic submissions can be insufficient on such key details as the actual ownership of

and encourage them to seek additional ref-erences and evaluate their work product in order to choose wisely.

Value Many owners overestimate the value of their vessels, perhaps biased by emotional attachments or equating the significant funds invested in maintaining or custom-izing their yacht with the market value. Unfortunately, it is also not uncommon for less professional marine surveyors to state valuations above market conditions, with-out any supporting evidence. Most yacht policies are written based on “agreed value” coverage, representing the current market value of a yacht at the time

5 Things to Consider When Insuring Yachtsa vessel, the loss history of all its owners, or the navigation needed by the policyholder — in other words, the waters the vessel will navigate throughout the year. Complete disclosures are crit-ical. For example, warranting that a yacht will be “in layup” (decommissioned and out of use, often during winter months) for an extended time generally results in a premium discount. But it also restricts coverage, and an owner inadvertently using the vessel during the layup period forfeits protection if a loss occurs. An essential resource for yacht insurance transactions is a thor-ough marine survey. Reputable marine surveyors have unique training and skills to provide detailed assessments of the condi-tion of a vessel. The credibility of an objective, experi-enced surveyor is beneficial to the owner and insurer alike. It can be challenging to choose a marine surveyor, since there is no licensing, government regulation or industry standard that applies to assure competence or professionalism. While it is not the agent’s or insurer’s place to choose a surveyor, they can provide their customers with names of multiple qualified candidates

By Craig McGinnes


professionals. Experienced agents provide invaluable analysis of competing terms and conditions among various

insurers’ policies. While most contracts have broad similarities, there can be subtle but meaningful distinctions among them. Insurers can vary in their underwriting and risk appetites, and knowledge of those distinctions is needed to guide customers to the best fit for their needs and circum-stances. For those that are called to venture out to sea, the specialized knowledge of an experi-enced yacht insurance agent is important to every voyage.

McGinnes is yacht manager for Catlin US.

a policy is written. Agents and yacht own-ers should be wary of cheaper options that

may only provide for actual cash value. Also, over-insuring a vessel can be an expensive mistake, paying for coverage that is of no clear benefit and often results in higher deductibles as well. In contrast, a yacht owner shouldn’t cut cor-ners by purchasing low liability cov-erage. In addition, many marinas are increasingly requir-ing yacht owners to maintain high lia-bility limits in their policies. Fortunately, increasing liability limits typically

doesn’t substantially increase premiums. Umbrella policies, and their require-ments for underlying contracts, are also important considerations and good reason to scrutinize the financial strength of any yacht insurer under consideration.

Losses An insurer proves its mettle in how it handles claims. An agent must not only evaluate an insurer’s ability to pay claims, and the responsiveness of its claims adjust-ers, but understand the unique processes and expertise involved in handling a yacht loss. A yacht claim specialist must know the unique nature and broad variety of vessels, and how to mitigate and evaluate compli-cated marine losses. Experienced yacht claims staff have knowledge of marine construction, elec-tronics, mechanics, navigational rules and regulations, maritime law considerations, weather patterns and more. Insureds will benefit from their established relationships with surveyors, repairers, salvors and others

An essential resource for yacht insurance transactions is a thorough marine survey.

Atlass Special Risks | Laura Sherrod | 866.471.9722 [email protected] | www.atlassspecialrisks.com

e s t a b l i s h e d 1 9 8 1

Only “A” rAted security yAcHts POWer & sAilValues to $200,000,000.Worldwide Coverage Florida 12 months

cHArter BOAtsInsuring Crewed or Bare BoatCharters Including Fleets

MArinAs & BOAt deAlersAll Liabilities and PropertyIncluding Piers & Docks

marine insuranceat l a s s s p e c i a l r i s k s

llOyds | AiG | cHuBB | ZuricH | seAWAve | iMu | trAvelers | stArr

Atlass_INS_JOURN_SR_0112_FINAL.indd 1 1/27/12 10:13 AMATLASS15680.indd 1 2/7/12 10:50 AM

to provide expert claims service. Vessel owners also must maintain focus on loss prevention. Most insurers, for exam-ple, offer incentives to encourage strong prevention of losses due to named tropical storms. There is also a need for owners to be diligent in regular maintenance and usage of their vessels to prevent common, avoidable losses. Insureds frequently look for guidance in such areas as storm plan-ning or vessel security, and experienced agents can help their customers understand the importance of active loss prevention.

Experience An agent who wants to develop a yacht specialty needs to do so by gaining experi-ence firsthand, starting with key relation-ships. Joining local chapters of marine insur-ance or trade associations can give access to current knowledge on yacht-related indus-tries while building a network of marine


CLOSER LOOK

Boats & Marinaswould be extremely difficult to identify the exposure and propose necessary coverages.

Exposures to Consider There are a wide variety of coverages to consider, including property (real and personal), business income, general liability, environmental impairment and workers’ compensation. The checklist will provide important questions to ask such as:• Is there any boat repair? • Do they do any spray painting? • Do they have a liquor liability exposure? • Do they have any exposure to the Longshore and Harbor Workers’ Compensation Act?• Do they lift boats out of the water?• Are they involved in instruction, boat races and contests, demonstrations, and promotions? Sales and Service. The sales and service of boats is a significant potential exposure. If your account has this exposure, you must determine the type(s) of boats sold and/or serviced. This can range from canoes/kayaks and cabin cruisers, to fishing boats and power/racing boats. Tours and Rentals. There is the defi-nite possibility that the marina offers tours or boat rentals. They may also store boats for the season. These all present some unique exposures that the agency needs to understand when presenting the risk to

the carrier and the eventual proposal to the prospect. Environmental Impairment Exposures. There are a host of possible environmental exposures such as:• Do any of the other occupancies in this building pose a catastrophe risk or other hazard to the applicant (explosion, fire, chemical, other)?• How does the marina dispose of waste? Are there any fuel tanks on the applicant’s premises?• What is the procedure in place to control spillage during the filling process? Large losses have occurred in this class of business, so there should be consideration and discussion on limit options/umbrellas, etc. Attention to detail is important, as noted by the following claim. An agent had a marina as a client and procured a policy covering physical damage to boats stored there. The client wanted coverage for theft and vandalism in addition to the other perils. The procured policy excluded loss by theft and vandalism. Coverage could have been bought back for those perils for $400. The agent missed the exclusionary language, and a theft of equipment from a boat occurred. The client claimed $23,000 in damages. Due to the agent’s negligence, the loss was settled for $17,500.

Insuring marinas can be complicated. There are a host of exposures and it is fair to say that no two marinas are the same. By proper use of the var-ious exposure analysis check-lists, agents will be better able to understand the exposure of the specific marina.

Pearsall is president of Pearsall As-sociates Inc. He is also a special con-sultant to the Utica National Agents E&O program. Phone: 315-768- 1534. Email: [email protected]. Blog: www.agentseotips.com.

E&O Insights: How to Calm the E&O Waters When Insuring Marinas

As spring approaches, agencies may have some opportunities to secure com-

mercial accounts dealing with watercraft business. These accounts, typically classi-fied as marinas, boat yards or boat moorage, offer a multitude of services to private

and commercial boat/yacht owners. Understanding the class of business and the variety of these exposures could make a difference in “calm-ing the errors and omissions waters.”

Benefits of Risk Evaluation System Many of these risks offer slips or dock space rental and usually launching slips, too — some to members only and some to the public. Some offer storage facilities, both wet and dry (out of the water). Other ser-vices include: boat rental facilities, service and repair facilities, dry dock facilities for painting, refitting, refueling, refill of water and other supplies, sales of equipment and accessories, and restaurants or bars. The marina might provide lifts to take boats out of the water and also offer recreational opportunities and instruction, boat races and contests, demonstrations, and promo-tions as well. These risks present a wide array of expo-sures. A great place to start learning about these risks is an exposure analysis checklist. This will help your producers to better understand the expo-sures, the applicable coverages and key questions to ask. These checklists provide a full description of this class of business and the exposures broken down by line of busi-ness. They provide tremendous assistance in helping insurance producers become more edu-cated on this class of business. Without the use of this tool, it

By Curtis M. Pearsall

Since 1983GROW with us®

Ever wonder what makes a company hum?

IT’S ABOUT THE PEOPLE.That’s Arrowhead.

CA License #0699809

Get to Know Arrowhead

ArrowheadGrp.com/Know

We’re a national insurance program manager with more than $1 billion in written premium and 20 plus

commercial and personal products. But as we list our products and carriers, online tools and services, we

keep coming back to what those differentiators all have in common: the people. The people who make

Arrowhead the success that it is today are ultimately the driving force that is helping us grow into the

future. From the carriers and producers to the policyholders and our staff, the proof is in the people.

MUSICAL

COMPETITIVE

ACTIVE

MOTIVATED

CRAZY

CHARITABLE

ARROW16791.indd 1 2/10/15 11:21 AM

22 | INSURANCE JOURNAL-NATIONAL February 23, 2015 www.insurancejournal.comwww.insurancejournal.com

10 Things to Know About SPOTLIGHT

Compared to 2012, the number of boating accidents decreased by 10 percent in 2013;

the number of deaths decreased 14 percent; and the number of injuries decreased 12.7 percent. — United States Coast Guard (USCG)

Most marine policies offer pollution coverage, which is a very important coverage to have

if the boat sinks and spills oil or fuel. Especially on larger boats, most marinas are now requiring evidence or proof of pollution coverage. All types of pollution and/or fuel spill losses can cause a lot of damage to the environment. — Kim Loos, St. Louis Marine Service Center from American Modern

Boat and yacht owners should have Agreed Value vs. Actual Cash Value (ACV). If the

vessel suffers a total loss on an ACV form, the owner will receive the current market value, which could be thousands of dollars less than what was paid for the boat. Agreed Value is a set amount and not a depreciated amount at time of loss. — Kim Loos, St. Louis Marine Service Center from American Modern

The 10 states with the highest boating thefts in 2013, according to the I.I.I., were: Florida (1,310),

California (628), Texas (382), Washington (208), Georgia (182), North Carolina (178), Tennessee (167), Alabama (165), Arkansas (157) and South Carolina (151). — Insurance Information Institute

40 percent of the thefts in 2013 were recovered by April 30, 2014 — Insurance Information

Institute

There were 5,537 watercraft thefts in the U.S. in 2013, down 6 percent from 2012,

with jet skis being the most frequently stolen watercraft. — Insurance Information Institute

Wreck removal is another needed coverage. If a boat sinks the owner may be required to

have the wreck removed from a navigable water-way. — Kim Loos, St. Louis Marine Service Center from American Modern

Boats & Marinas

The top five primary contributing factors to boat-ing accidents in 2013 were: operator inattention,

improper lookout, operator inexperience, excessive speed and machinery failure. — United States Coast Guard (USCG)

Recreational boating in 2013 account-ed for 4,062 accidents that involved

560 deaths; 2,620 injuries; and approx-imately $39 million dollars of property damage. — United States Coast Guard (USCG)

It was estimated that 25,000 boats in New Jersey were damaged during

Hurricane Sandy, at a cost of $242 million. — Insurance Information Institute

Corporate Banking | Capital Markets & Advisory Services | Dedicated Industry Experience

© 2015 Regions Securities LLC. Investment banking and business advisory services are offered through Regions Securities LLC, 1180 W. Peachtree St. NW, Suite 1400, Atlanta, GA 30309. Member FINRA and SIPC. Regions Securities LLC is an affiliate of Regions Bank. | Regions and the Regions

logo are registered trademarks of Regions Bank. The LifeGreen color is a trademark of Regions Bank.

Investment and Insurance Products:Are Not FDIC Insured | Are Not Bank Guaranteed | May Lose Value

Are Not Deposits | Are Not Insured by Any Federal Government Agency

Are Not a Condition of Any Banking Activity

Tom Dierdorff | Financial Services Group Head404.279.7436 | [email protected]

We created Regions Securities to provide small- to mid-cap companies with high-quality service and advice from talented, relationship-oriented bankers. That means your business gets our dedicated “A Team” every time. Our seasoned team of bankers understands your business and marketplace, and our capital markets experience enables you to receive creative, customized solutions tailored to meet your company’s strategic and fi nancial objectives. From capital raising in the debt and equity markets to mergers and acquisitions advice, our bankers can set things in motion for your company.

WALL STREET CAPABILITIES. MAIN STREET SENSIBILITIES.

SEC-1002.indd 1 2/4/15 11:07 AMREGIONBK001.indd 1 2/7/15 4:52 PM


SPECIAL REPORT

Agency Salary Survey


Average Salary Paid Average Hours WorkedCommercial lines CSR $59,561 38.75 Personal lines CSR $42,737 38.92 Support staff average $53,183 37.99

CSR Salaries and Hours

How Agencies Base Compensation Incentive Plans

Agency profits 34.8%Productivity 30.7%Revenue growth 25.7%Contingent commissions 15.5%Individual performance 42.1%No incentive plan 24.8%Other 5.3%

Health Insurance: % Paid by Agency for Employee

East 73%Midwest 71%South Central 73%Southeast 78%West 80%

Agencies’ Plans to Change Payroll Expense in 2015

Reduce payroll expenseIncrease payroll expenseKeep the sameNot sure

6.5%5.6%

35.1% 52.8%

Agency Salary Increases in 2014

Higher than 2013 Lower than 2013Same in 2014 compared to 2013

42.8%

6.3%

50.9%

Agency Staff Size in 2014

IncreaseDecreaseStayed the same

39.1%

10.7%

50.2%

Anticipated Agency Staff Size in 2015

IncreaseDecreaseStay the same

50.8%

3.8%

45.4%

Change in Agencies’ Health Plans in Past Year

YesNoNot Sure

4.7%

61.4%

33.8%

Producer Commissions in 2014

IncreaseDecreaseStayed the same in 2014 compared to 2013

45.8%

10.5%

43.7%

Producer Compensationand Fees

Producer receives % of feeProducer receives all of feeProducer doesn’t receive fee

57.7%41.0%

1.3%

Owners Thinking About Selling the Agency

YesNoNot applicable

7.5%

Manager/Owners Producers Staff East $154,144 $70,875 $57,345 Midwest $127,827 $52,965 $50,926 South Central $132,024 $32,583 $53,591 Southeast $108,600 $67,757 $50,863 West $177,094 $68,219 $61,310

Average Agency Salaries by Region

Manager/Owners Producers StaffLess than 3 years $56,429 $44,877 $43,122 3-5 years $90,850 $69,469 $45,944 6-10 years $84,167 $76,832 $45,286 11-20 years $169,437 $65,194 $53,610 21-30 years $143,556 $74,117 $60,637 More than 30 years $142,755 $71,535 $61,366

Average Agency Salaries By Experience

What Benefits Agencies Offer


Under $1 million 27.4%$1 million - $5 million 50.1%$5 million - $10 million 69.4%$10 million - $25 million 74.6%$25 million - $50 million 78.7%$50 million - $100 million 75.1%$100 million or more 76.8%$100 million or more 76.8%

Changes to Health Insurance Plan in Past Year

Increased employee contribution 41.5%Increased deductible limits 63.8%Implemented higher co-pays for participants 39.9%Reduced drug benefit 11.0%Reduced other benefits 10.4%

Agencies' Average Salaries by Premium Volume (Management) Owners/Principals Office Sales Accounting Personal Commercial Marketing P/C Premium Volume President/CEO Manager Manager Manager Lines Mgr. Lines Mgr. Manager Under $1 million $51,500 $45,179 $42,000 $31,000 $30,750 $43,750 $55,000$1 million - $5 million $75,259 $45,631 $53,580 $35,918 $36,500 $45,602 $102,813$5 million- $10 million $101,853 $63,917 $92,593 $50,774 $47,656 $61,198 $54,250$10 million - $25 million $155,257 $77,537 $99,813 $55,303 $60,861 $69,194 $68,143$25 million - $50 million $181,424 $89,143 $168,750 $81,875 $110,161 $106,908 $108,810$50 million - $100 million $244,095 $95,804 $145,441 $88,889 $77,500 $89,808 $85,476$100 million or more $312,500 $97,031 $229,643 $94,342 $108,750 $142,647 $118,269

CSR Average Salaries Commercial Lines Personal Lines Support StaffEast $61,062 $46,422 $57,123 Midwest $55,783 $39,150 $44,608 South Central $57,025 $49,250 $46,400 Southeast $58,059 $29,828 $63,561 West $65,468 $48,014 $60,333

What Strategies Agencies Implemented in 2014 vs. 2013 2014 2013Cut benefits 6.6% 5.9%Shift health plan costs to employees 13.0% 15.1%Increase benefits 6.4% 5.5%Force reduction of employees 6.6% 5.2%Postpone hiring 30.8% 29.2%Postpone raises 20.1% 24.6%Increase hiring 29.8% 34.3%Increase compensation 38.2% 36.5%

What Strategies Agencies Plan to Implement in 2015

How Agencies DetermineFees

% of PremiumFlat fee based on account type

70.4%

33.2%

86.4%

6.1%

2015 2014 2013 2012 2011Group health insurance 75.4% 80.6% 77.7% 76.8% 79.9%Health Savings Account 37.7% 38.3% 32.2% Dental 56.3% 57.2% 52.5% 48.9% 50.1%Group life/disability 55.6% 56.6% 53.7% 56.6% 56.1%401(k) 60.0% 63.4% 57.7% 55.0% 53.9%Profit Sharing 17.5% 18.9% 17.8% 17.4% 20.1%IRAs 11.2% 8.4% 10.4% 9.1% 8.4%Pension Plan 5.9% 6.0% 5.7% 5.4% 5.0%ESOP 4.8% 4.4% 4.6% 4.5% 4.3%Stock Options 5.3% 4.9% 4.5% 1.8% 2.6%Flexible Savings Account 28.2% 29.3% 24.4% 14.0% 12.3%Education reimbursement 30.5% 32.8% 28.0% 44.6% 48.2%Childcare/Daycare* 3.2% 2.2% 3.0% No Benefits Provided 13.7% 10.5% 11.7% 12.6% 10.0%

Agencies’ Plans to Change Commission Structure

Changed in 2014Will change in 2015No changes

84.4%

10.2%5.3%

2014 2013 2012 2011 2010 2009Management/Agency Owner/Agency Principal 3.9% 4.3% 2.8% 1.1% -0.6% -1.2%Producer/Sales 4.4% 5.1% 2.9% 1.6% -0.2% -0.8%Support Staff/CSR/Account Executive 3.4% 2.5% 2.2% 2.1% 0.6% -0.1%

Average Agency Salary Adjustment

2014 2013 2012 2011 Management/Owner/Principal 6.7% 7.2% 4.5% 3.9%Producer/Sales 5.7% 8.8% 5.5% 3.3%Support Staff/CSR/Account Executive 3.5% 2.8% 2.3% 2.2%*Includes all income changes in year

Average Agency Total Income Change* 2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%

2015 2014 2013 2012 Management/Agency Owner/Principal 3.62 3.68 3.51 3.28Producer/Sales 3.12 3.19 3.03 2.87Support Staff/CSR/Account Executive 2.73 2.90 2.75 2.58 * 5 = Most Satisfied; 1 = Least Satisfied

Agency Compensation Satisfaction Index* 2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58

2015 Cut benefits 2.7%Shift health plan costs to employees 7.0%Increase benefits 4.5%Force reduction of employees 3.7%Postpone hiring 18.9%Postpone raises 11.4%Increase hiring 48.8%Increase compensation 41.3%

201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%

Agencies That Give Annual Cost of Living Increase

East 43.4%Midwest 36.0%South Central 24.8%Southeast 26.3%West 28.2%

Compensation Satisfaction Index* vs. Cost of Living Increase No, do not receive annual cost of living increase in pay 3.08Yes, receive annual cost of living increase in pay 3.72* 5 = Most Satisfied; 1 = Least Satisfied

Agency Gives Annual Cost of Living Increase

YesNoNot Sure

7.3%

62.1%

30.5%

Producer Bonus for Exceeding Sales Goal

YesNo

35.6%

64.4%

By Andrea Wells

Agency employees are not happy when it comes to compensation, and money

isn’t the problem. Despite some reported increases in salaries and total compensation, many employees continue to be unsatisfied when it comes to overall compensation, according to Insurance Journal’s annual Agency Salary Survey 2015. Compensation satisfaction declined in 2014 compared with 2013, according to the survey’s “Compensation Satisfaction Index.” While agency staff reported increases in both salary and total income for 2014, their happiness for overall compensation fell in all three categories of personnel surveyed. According to the 2015 Agency Salary sur-vey:• Management/agency owners/agency prin-cipals reported a compensation satisfaction score of 3.62 in the 2015 survey, down from

salary and income adjustments in 2014 the increases overall were less than 2013 adjust-ments, the survey revealed. There’s more to job satisfaction than just salary, says Chris Burand, founder and owner of Burand & Associates LLC, a consulting services organization for the property/casualty industry, based in Pueblo, Colo., and author of Insurance Journal’s “The Competitive Advantage” column. “Everybody is making more money — whether it’s a little bit or a lot — the indus-try and carriers made a fortune last year,” Burand said. “The agency owners I know seem to be making plenty of money right now, too.” However, Burand says, the money is com-ing with a lot more work attached. “My thought is that any decrease in sat-isfaction has to do with how much harder agencies are having to work — for the same amount of money,” he said. “Staff and owners are having to work much harder for

their money right now.” According to Burand, agencies and their staff are stressed now as carriers contin-ue to place additional work on their agencies. “That’s putting a lot of strain on people. The pressure on the agents to grow faster is really intense,” Burand con-tends. He has seen agen-cies that have generated good business in the last year and achieved excellent loss ratios

Employee Pay Up But Morale Down 3.68 in the 2014 survey, based on a scale of 1-to-5 where “5” equaled “most satisfied.”• Producers/sales reported satisfaction of 3.12 in the 2015 survey, down from 3.19 in the 2014 survey. • And support staff/CSR/account execu-tives reported a satisfaction score of 2.73 in the 2015 survey, down from 2.90 in the 2014 survey. “The agency is growing, but not adequate-ly staffing. … Been here 10 years, no incen-tives for support staff, no reports pulled to consider retention rates or new business sold,” one survey respondent commented. Another said: “We are understaffed. We are always asked to do more work for no additional compensation.” And another: “It seems like every agency I've ever worked in, including this one, has underpaid and overworked staff.” While all three categories — manage-ment/owners/principals; producer/sales; and support staff — reported positive



SPECIAL REPORT

receiving a note come year-end from a car-rier partner that says: “’That’s great, but you didn’t grow fast enough.’ That’s really driv-ing a lot of the stress in agencies. Everybody is under intense pressure to find some growth and while the economy is coming back, it’s not growing fast enough to satisfy the companies’ growth appetites.”

Pay Up, Spirits Down Amid the waning compensation satisfac-tion, agency personnel at all levels received a salary boost of between 3 percent to 4 percent on average in 2014:• Agency owners, principals and manage-ment reported salary increases of 3.9 per-cent in 2014, compared with 4.3 percent in 2013.

• Producers/sales reported average increas-es in salary of 4.4 percent in 2014, compared with 5.1 percent in 2013.• Agency support staff reported a 3.4 per-cent increase in 2014, compared with 2.5 percent in 2013. The 2015 Agency Salary Survey revealed higher bumps as well in total income, which includes profit sharing, bonuses and other income:• Agency owners, principals and manage-ment reported the largest jump in total income for 2014, which increased by 6.7 per-cent, compared with a 7.2 percent increase in total income for 2013.• Producers/sales reported a 5.7 percent increase in total income for 2014, compared with 8.8 percent in 2013.










6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%

• Agency support staff reported a 3.5 per-cent increase in total income for 2014, com-pared with 2.8 percent in 2013. Al Diamond, president of the Cherry Hill, N.J.-based Agency Consulting Group (ACG), an independent agency valuation and consulting firm serving organizations nationwide, says that while agencies are showing growth, he agrees that employee satisfaction with pay is down. Compensation for employees is not moving forward the way employees expect it to, Diamond says. “The past 40 years or longer we have been in an era of regular pay increases,” he says. “Now, there’s a great deal of stress on agency commissions and agency contingencies so the growth [in salaries] that has happened in the past is not as con-sistent.” Everett W. Shaw, president of Cheshire, Conn.-based B.H. Burke & Co. Inc., says compensation trends are mixed in agencies today. “In the last year or so some agencies have begun to institute increases going back to the pre-2008-2009 period while others have not,” says Shaw, whose firm offers business-valuation and consulting services for independent insurance agencies and brokerages on matters of agency finance, operations, technology and management. Diamond’s Agency Consulting Group’s own data shows a similar mixed trend. ACG has collected data and published com-posite groups of insurance agency operating performance since 1987. His data show that for small agencies under $1 million, com-pensation has been relatively flat. But the story is different for larger agencies. “The latest composite group productivity table and compensation per employee grew by one-tenth of a percent,” Diamond says. “However, in the larger groups, the agen-cies over $2 million, $3 million, $4 million in revenue, compensation is growing and growing consistently.” What’s different is the method by which many agencies compensate employees today, according to Diamond. Compensation growth no longer comes from simple cost-of-living pay increases — but is now measured in many cases by











6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%









6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%

employee productivity. For instance, in ACG’s intermediate group — the $2 million to $3 million agen-cies — productivity by revenue per employ-ee grew by 5.5 percent in the last year, and compensation grew by 5.4 percent in those agencies. He says that means compensation is tracking almost the same as productivity in those agencies. “The same thing happened in large agen-cies where compensation grew almost equal to the productivity growth,” he said. However, in smaller agencies, those with less than $2 million in revenue, compensa-tion actually slipped or stayed stagnant. In the future, Diamond sees agency com-pensation being measured more and more by productivity. “My recommendation to agency owners is to start measuring your productivity gains … look at your compensation in terms of productivity gains for individuals,” he says. “I think you are going to see in the next five to 10 years a strong growth in productivi-ty-based compensation instead of longevi-ty-based compensation. You don’t get more money because you’ve been here for another year. You get more money because you’ve been more productive.” According to the 2015 Agency Salary Survey, employees who received a cost-of-living pay increase were significantly more satisfied with their compensation than those who did not. (see chart above). Employers in the East region were almost twice as likely to offer a cost-of-living adjustment as the South Central region. Paul Osborne, senior consultant for Demotech Inc., Insurance Journal’s official research partner who assisted with analysis of this year’s survey results, says one reason compensation satisfaction might be trend-ing down could be that some employees believe that salaries are being set capricious-ly or unfairly. “Managers also commented in the survey that bonuses are set by whatever they think is right,” Osborne said. “Sometimes it’s not the amount they are paid, but what they think they are losing to someone else or missing out on.”

What Producers Want Producer pay is one of the most important areas in agency compensation. Producers pay attention to how they are treated, rewarded and supported. “Number one, producers want to know they are receiving fair cash compensation for writing new business and handling the book of business they have written,” says Shaw of B.H. Burke. “They want to know they are being treated fairly in terms of cash compensation.” In the more sophisticated commer-

cial-oriented agencies, producers are paid from 40 percent to 50 percent on new busi-ness for the first year commissions, Shaw says. On renewals, 25 percent to 35 percent is the rule of thumb. Agencies paying much below those marks could find it difficult to attract expe-rienced, sophisticated producers, he says. Number two, the more sophisticated producers want to know there are resources behind them. “They want to know there is some backroom support, they want an



SPECIAL REPORT









6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%

experienced staff, they want to know they are with an agency that has a good rep-utation and has been around the block a number of times with similar accounts they want to write,” Shaw contends. Third, according to Shaw, the best pro-ducers are looking for some sort of equity position in the book of business they pro-duce. “That could be deferred compensation, phantom stock, book equity — it’s called a whole bunch of different things but ulti-mately they are looking to gain some sort of interest in the book of business that they produce,” he says. Agency owners who provide those plans will not only retain good producers, but also will attract quality, new producers, Shaw says.

Owner Awareness When it comes to producer compensation and even staff compensation, it’s import-ant for agency owners to know what’s going on around the agency, says Brian McNeely, partner at Atlanta-based Reagan Consulting, a management consulting and merger-and-acquisition advisory firm for the insurance distribution system. “It’s always important to understand what’s going on around you in the market and what your competitors are paying. It will give you guidance on how you should pay your employees,” McNeely says. McNeely adds that when it comes to pro-ducer compensation, it’s not just about pay. “If I had one area of advice to give owners regarding producer compensation it would be that producer compensation is largely not going to impact the performance of an individual,” he says. “People will often call us and say, ‘Hey if I pay them more in commission splits will their book auto-matically grow?’ We have found that is not true. Someone’s core behavior is not going to change just by changing their compen-sation,” McNeely said. “Compensation is not going to materially impact someone’s performance from a production perspective. Paying above market is not going to improve someone’s performance.”




Agency Salary Survey Average Salary Paid Average Hours WorkedCommercial lines CSR $59,561 38.75 Personal lines CSR $42,737 38.92 Support staff average $53,183 37.99








6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%









6.5%5.6%

35.1% 52.8%



42.8%

6.3%

50.9%



39.1%

10.7%

50.2%



50.8%

3.8%

45.4%


YesNoNot Sure

4.7%

61.4%

33.8%



45.8%

10.5%

43.7%



57.7%41.0%

1.3%


YesNoNot applicable

7.5%
















70.4%

33.2%

86.4%

6.1%




84.4%

10.2%5.3%





2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2011 3.9%3.3%2.2%



2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2012 3.282.872.58


201179.9%

50.1%56.1%53.9%20.1%

8.4%5.0%4.3%2.6%

12.3%48.2%

10.0%





YesNoNot Sure

7.3%

62.1%

30.5%


YesNo

35.6%

64.4%


SPECIAL REPORT

Happier Employees McNeely says in his view compensation packages overall are still competitive in independent agencies. “If there’s any area that people are constantly evaluating that’s their health insurance premiums which is more of a macro-eco-nomic issue more than anything.” Other than that McNeely sees compensation and agency staffing moving in the right direction. Increased staffing levels in agencies is one good sign for the industry. “Agencies are having to invest more because their cli-ents are requesting more and more of them and they are having to hire people to meet those requests,” McNeely says. According to the 2015 Agency Salary Survey, 39.1 percent of respondents reported that agency staff size increased in 2014, and 45.4 percent of agency managers/owners reported they plan to increase their agency’s staff size in 2015. Growth is both a function of a growing industry and an increasing level of services that clients are demanding. “It’s a great thing to see that trend happening,” McNeely says. ACG’s Diamond says keeping employees happy is both simple and very complicated. “Frankly, the way to make employees happy is to appreciate them and that isn’t necessarily in tangible ways,” Diamond says. “Agency owners aren’t the best human relations managers that we’ve seen and we are trying to convince them to identify the best employees for what they do and give them credit; they are not just drones in a factory. Those that do I find the employees are much more satisfied.” Shaw says agency owners should make every effort to under-stand the needs of the staff by listening and asking questions about what’s important to them. “Have you ever asked your employees what they would like? You may not be able to give them what they are asking for but at least ask them. They will appreciate it,” Shaw says. Burand sees agency owners putting more thought into how they can make their agency a better place to work. “Whether it’s a better break room, maybe bowling party, or even better computer monitors,” Burand says. Owners are struggling to find the right balance when it comes to compensation, workload and people, he says. “They are trying really hard to not hire any more people than they abso-lutely have to. There’s just a higher level of consciousness to pay the right amount, limit hiring and not overpay.” Burand’s bottom line: “It’s not one specific thing but overall the workload for a lot of different reasons really has increased. I could see that being the cause of stress and lower satisfaction — not just pay — but all of the little things that are adding up.”

Insurance Journal’s Agency Salary Survey collected 1,342 responses from independent insurance agencies and brokerages nationwide via an online survey. Demotech Inc., Insurance Journal’s official research partner, assisted with analysis of this year’s survey results.


Salary Only

Salary plus commission

Commission only

Draw against commission

Other

18.2%

30.8%

22.2%

Non-Owner ProducerCompensation

8.6%

5.6%

Fees are charged in addition to commissions

Fees are charged in lieu of commissions

54.1%

45.9%

How Agencies Charge Fees

No Incentive

Trips

Contests

Club memberships

Education

Cash bonus

Car

41.4%

13.5%

Incentive for Non-Owners Producers

17.7%

8.3%

27.8%

40.8%

7.4%

No. of policies sold

New business commissions

Renewal commissions

Set dollar amount

Do not offer incentive comp

14.4%

30.3%

11.7%

How Incentive Compensation for CSRs is Determined

6.5%

42.9%


Dennis Biewer, Great American

Divisional AVP and farmer

Matt Ness, farmer and

Great American policyholder

‘

www.GAIG.com/WeLiveIt

Coverage is underwritten by Great American Insurance Company, Great American Insurance Company of New York and Great American Alliance Insurance Company, authorized insurers in all 50 states and DC; and Great American Lloyd’s Insurance Company, authorized in Texas only. ©2014 Great American Insurance Company. 301 E Fourth Street, Cincinnati, OH 45202

With specialty insurance expertise like this, it’s hard to tell our people from our policyholders

Agriculture • Annuities • Environmental • Equine • Excess & Umbrella • Fidelity & Surety • Financial Institutions • Inland & Ocean Marine

Non-Profits • Professional Liability • Transportation • Workers’ Compensation

In hundreds of niche industries, Great American’s expertise is built on the knowledge and experience of people who know our insureds’ business as well as our own. People like Dennis who grew up farming and still plants and harvests with his family. His passion has been cultivated through every growing season—on the farm and on the job.

That’s expertise you and policyholders like Matt can count on when looking for a company that provides protection for specialty business risks.

We live it. ®

GREATCO16593.indd 1 1/29/15 10:43 AM


IDEA EXCHANGE

Compensation

By David E. Coons

Salary negotiation is a key factor in get-ting one’s career off to the right start.

In fact, the first salary discussion often sets the tone and track for future success.

Research has shown that professionals who do not discuss their salary often enter the industry with a much lower salary than their counterparts who do negotiate. This is particularly true

for today’s young professionals and recent graduates. Wage disparity is an important issue that must be addressed to ensure today’s insurance professionals start their careers off on the right foot. So what is the state of compensation for young professionals and graduates? How can these individuals suc-cessfully negotiate their starting salaries?

The State of Workplace Compensation Having experienced deteriorating wages in the midst of the recession, young pro-fessionals still find themselves earning less than their predecessors. According to the National Association of Colleges and Employers, the average starting salary for college graduates increased just 1.2 percent in 2014 — placing the median 2014 salary at nearly 16 percent lower than the average starting salary in 2002. In addition, salaries for young profes-sionals have grown at only half the rate of all workers in the United States since the recession. Between 2006 and 2013, median earnings for recent graduates rose only 6 percent, 7 percent lower than the earnings growth for the workforce at large. Despite recent gains, young professionals are strug-gling to reach the median starting salaries of their pre-recession counterparts.

Negotiation and the Wage Gap Many young professionals do not understand the key role that salary nego-tiation can play in bridging the wage gap.

Individuals who do not nego-tiate their starting salaries stand to lose hundreds of thousands of dollars over the course of their careers. With concern over land-ing their first professional position, recent graduates and job seekers worry that negotiating their salary or pushing too hard will result in a potential employer rescinding the offer. As a result, young professionals are the least likely to negoti-ate their salaries compared to more experienced professionals. A perceived lack of job skills and appli-cable experience are the top impediments to salary negotiation among recent gradu-ates, who often believe that several years of experience is required in order to ask for a higher starting salary. By jumping on the first offer provided, they often undervalue their true market worth.

Successful Salary Negotiation Salary negotiation has become a standard part of the employment offer process. In fact, many employers build room for negoti-ation into their initial offers. Yet negotiating a salary can be intimidating, especially for recent graduates and young professionals who have not done so previously. Young professionals looking to enter the workforce or move to a new opportunity must take the time to fully understand their value to an employer. They must research to determine reasonable salary expectations for their roles. Comparing average salaries and pay scales in their area will provide a base line. A thorough self-evaluation and appraisal of the skills and experiences they are bringing to the table will allow them to build upon that base line. Young professionals must be prepared to articulate how their accom-plishments and job history can translate to success in their desired roles.

Strategies for Young Professionals in Salary Negotiations

Recent graduates and young professionals must avoid using their peers as benchmarks — salaries and compensations very widely depending on industry, job role and expe-rience. They must be realistic about their salary history and experience. Negotiations should be seen as a collabo-ration — a conversation between both par-ties. If there is little flexibility in regards to starting salary, there may be room to nego-tiate other portions of the total compensa-tion package, so the key is understanding the package. What else is being included along with the base salary? What are the benefits? Is there bonus potential? Is there a flexible work option? How does the PTO policy compare with the industry standard? Negotiating for flex time, more vacation days and telecommuting options can be a great way to supplement a lower starting salary. Preparation is key to success. By doing the necessary research and self-evaluation, young professionals can enter the salary negotiation stage from a position of strength and knowledge. It is from this position that they can negotiate an advantageous starting point upon which to build a lucrative insur-ance career.

Coons is senior vice president of The Jacobson Group, a provider of talent to the insurance industry. Phone: 800-466-1578. Email: [email protected].

NAUTIL16661.indd 1 1/29/15 10:42 AM


IDEA EXCHANGE

By Alan Shulman

It’s easy to overlook the continued impor-tance of email as a marketing device

with today’s digital focus set firmly on social media. Email, as we know it, has been around for about a quarter of a centu-ry and it has gone through relatively few

changes in that time, compared to the dynamism of social software. But in many ways, its relative stag-nation is its primary appeal. With email, there is no significant learn-ing curve, making it

fairly painless to enhance its effectiveness as a marketing medium. Here are nine reminders to help you get the most out of this still popular digital dinosaur.

1. Email isn’t free. Treat it as something of value, rather than a throwaway. It’s costly to build a qual-ity, permission-based e-list and to design a viable mailing, regardless of whether you do this yourself or hire it out. Furthermore, you must buy software, or pay a service,

Growing Your Property Casualty Agency

to distribute your emails, and to track and report back the results.

2. Know what to expect. There are two key metrics when measuring emails: the open rate (those who actually open it) and the click-through rate (those who also click on your URL). For marketing emails, the typical open rates are about 20 percent and the click through rate is around 3 percent. While your percentages for some mailings may exceed these levels, it isn’t common, so keep your expectations in check.

3. Target your mailings. Don’t send emails to just anyone in your marketing territory. To be effective, your message and its intended recipient must align. Also, be certain to follow all applicable CAN-SPAM rules and that you have permission to send.

This is usually the case when emailing to insureds, but it’s not always so when mailing to prospects.

4. Send actual information. Don’t focus exclusively on selling. Instead, send your recipients useful tips and information, in addition to the periodic pitch. Examples:

Seasonally-driven emails (weath-er-related, back-to-school, etc.) … Coverage of the month … Overlooked cover-age of the quarter, etc.

5. Subject lines. Test a variety of subject lines in your mailings to entice recipients to open, read and click through them. Compare the results and learn from your

9 Marketing Basics to Recall about Email in the Age of Social Media

victories and failures. Compare phrases such as, “5 money-saving [auto] policy dis-counts you want” against questions like, “Which of these 5 [auto] insurance discounts are you missing?”

6. From lines. Specify from whom your emailings are sent via your email authoring software. Options include sending it from your agency’s name, a particular producer or CSR, or from something generic like “Your Insurance Agency.”

7. Images. Include tie-in images with your message to attract interest and drive your click-through rates. Note: Some recipients don’t allow their incoming emails to auto-matically display images, so never make them integral to the message itself.

8. Links. Just because you can add multiple URLs to an email, doesn’t mean that you should. Keep each message as simple as possible. Author your text so that recipients need only click on one primary link to direct them to your mailing’s Web landing page (or elsewhere).

9. Experiment. Test variations of your targets, messages, subject lines, “from” lines, images and links to find the combination that consistently generates the best results.

Email has its flaws, including limited open/click-through rates and myriad deliv-ery issues (spam filters, blacklists, Do Not Mail restrictions, etc.). But it also has its virtues, particularly the fact that virtually everybody with a PC or mobile device has an active email account. You can’t say the same thing about social media.

Shulman, CPCU, is the publisher of Agency Ideas, a subscription-only sales and marketing newsletter. He is also the author of the many tools posted on the Agency Ideas Instant Download Store. Phone: 800-724-1435. Email: [email protected]. Website: www.agencyideas.com.

NAVMCI16676.indd 1 2/13/15 2:21 PM


IDEA EXCHANGE

Risky Business: How Agents and the Industry Help Protect Farmers, Ranchers

try to not just transfer risk, but to assist in reducing costly accidents. Thus the agents, managing general agents, and companies that specialize in the agricultural segment play an important role in the overall health of our food supply. Diana Trachier, farm and ranch manager at South & Western General Agency, says agents who work directly with small farm-ers can make a big difference when writing new business. “In order to make a quality submission to the insurance marketplace, the retail agent has to assess the hazards intrinsic to farm-ing and ranching,” Trachier says. “As part of this task, the agent is ideally suited to identify areas of concern and is positioned to offer loss control measures that can elim-inate accidents or minimize their effect on the business should the unfortunate take place.”

Farm Hazards As with most commercial concerns,

fire is typically the most debilitating event for farmers and ranch-

ers. From 2007 to 2011, the National Fire Protection Agency (NFPA) studied the number of fires and

their effects on America’s farms. During the study period,

fire accounted for more than $55 million in damages to farm structures. Hence, reduc-ing the number and severity of farm fires should be the number one goal for both the insured and insurer. Joe Haynes, president and CEO of Sanger & Altgelt LLC, a large independent agency located in San Antonio, Texas, that special-izes in farm and ranch business, says that many fires can be eliminated by taking a common sense approach to farm risk assess-ment. “Nothing replaces the eyes and ears of an onsite visit to an account,” says Haynes. “When an agent takes the time to under-

When you think of hazardous jobs, what comes to mind? First respond-

ers, military profes-sionals, even NFL football players are typically associated with some of the most dangerous jobs on earth. But what about farmers and ranchers? The National Safety

Council reports that of the approximately 3.1 million people who work on farms and ranches, 1,300 die each year and 120,000 are injured. In fact, statistics show farmers are 800 percent more likely to die while work-ing than other workers. Without question, those that provide us

with our breakfast, lunch and dinners

work in

one of the

most dangerous

sectors of the economy.

Although the farm and ranch industry has transi-

tioned over the years from small, family-owned operations to larger

corporate entities, the backbone of the agriculture sector firmly remains

small business. And no different than any other small business, farmers and

ranchers depend upon the insurance indus-

stand the risk before making the submis-sion, it’s a natural for him to offer simple, common sense risk management and safety assistance. Obviously it’s in everyone’s inter-est to eliminate losses.” “Looking at how fire accelerants like common fuels are stored can be the dif-ference between a major catastrophe and business as usual,” Haynes says. “In addition, knowing where hay stacks or bails are posi-tioned and what brush control measures are in place is critical in farm and ranch risk assessment.” Hazards related to hunting, fishing and other non-agricultural exposures like caliche and water sales to oil and gas oper-ators need to be identified and properly addressed, Haynes says. “Checking for hold harmless and indemnity agreements with lessors along with insurance compliance is immensely important. Aviation operations like crop dusting and runways should not be overlooked.” Along with fire, farmers and ranchers

Farm & Ranch

By Bill Martin


face other daily hazards that can make the difference between not just profit and loss, but life and death. Farmers and ranchers work with heavy machinery on a regular basis, and when injuries occur, many are fatal. The National Agricultural Tractor Safety Initiative reports that the common

farm tractor causes about 130 deaths annually. In addition to tractors, hay bal-ers, grain augers, skid steer load-ers, corn pickers, combines and brush hog mow-ers cause thou-

sands of deaths and injuries annually. “Knowing the operations of a farmer or rancher is the single-most important thing an agent can do for his customer,” says Trachier. “If he is growing cotton, the expo-sures with equipment are very different than an equine operation. The smaller the operation, the more important it is that the insurance industry, from agent to company, is able to provide

the risk management ser-vices he needs. “It’s more than just selling a policy … it’s providing a valuable service the farmer or ranch-er may not even know is needed.”

Risk Management Help There are thousands of resources available that pro-mote farm and ranch safety on the internet. For example, the web-sites for the National Safety Council (NSC.org) or the Farm Safety Association (farmsafety.ca) are two good places to start. However, carriers and MGAs that specialize in agribusiness are also more than willing to assist.

Acquisition & Perpetuation Loans • Working CapitalEquipment Leasing • Cash ManagementOnline Banking

CashManagement

Today’s investment rate environment can lull agency owners into thinking that cash management doesn’t make a difference. But agencies who pay attention to where and how funds are allocated do improve their financial position.

Review your agency’s business banking with InsurBanc – the only financial institution dedicated to serving America’s independent insurance agencies. We’re uniquely positioned to provide agency principals with financial insights for enhancing agency value.

Professionally managed agencies are “optimizing cash flow” to get the best return on their investments. Are you ready to do the same?

(866) 467-2262Visit InsurBanc.com

IB Cash Mgmt 2C half IJ (042913).indd 1 4/29/13 10:04 AM

INSBAA16720.indd 1 2/7/15 4:58 PM

So the next time you sit down to eat, remember the dangers and hazards farmers and ranchers undertake every day, along with the role the insurance industry has in making not just the food safer, but the

one responsible for bringing it to your table safer.

Martin is vice president at South & Western, a managing general agency based in Addison, Texas. Website: www.southandwestern.com.

Statistics show farmers are 800 percent more likely to die while work-ing than other workers.


By Catherine Oak

IDEA EXCHANGE

Minding Your Business

What ingredients make up a good account manager? What do you look

for in terms of skills, knowledge, educa-tion and experience? Which responsibili-ties should management give them? The answers to these questions — which will

vary by agency — determine the profile of that agency’s per-fect account manager. The account man-ager role requires a responsible, knowl-edgeable person with excellent customer service skills. Is there

a perfect blend of these abilities? Yes, and it changes from agency to agency because each firm has a unique personality and approach to customer service. The type and style of an agency’s account managers

will be directly related to the type and style of the agency’s producers.

Major Strength When asked to list the major strengths of their agency, most owners usually include the agency’s quality of service to the client. In the typical agency, the customer service representative is the foundation of good ser-vice. Logically, one can say that the account manager is therefore a major part of the strength of an agency. Because of their personal contact with clients, account managers are a critical com-ponent to the retention of accounts. They must provide consistent, quality support to keep the business on the books. If accounts are lost, revenue drops and the value of the agency diminishes. Account managers account for roughly half of all employees in an agency. The

Profile of a Great Account Managerratio of account managers to producers in the industry is about two or three to one, depending on the size of producer and “house” books. Keeping in mind that payroll is the largest expense in any agency, usually 55 percent to 70 percent of all agency reve-nues, the productivity of account managers is directly related to the profitability of the agency. Hiring and retention of good account managers then becomes a key to increasing profitability and value. Best Profile Before hiring any account manager (or any employee, for that matter) management needs to sketch out a basic profile of what they are expecting. Should the agency hire an experienced account manager? Should they have skills in a particular niche such as construction or should the agency start from scratch? Outline an objective minimum standard and compare candidates to this standard. Don’t hire anyone that fails to meet any minimum requirements. The typical account manager is a woman or man who graduated from high school and took a few college classes but did not graduate. Some account managers get into the business because of family connections. Others were persuaded by their friends to join. However, most account managers (and producers) “fell into” the insurance industry. Working as an account manager in insur-ance was not their specific career goal.

Responsibilities and Testing The responsibilities of an account manag-er vary based on the culture of the agency. Some agencies expect the producer to do a lot of the service work and the account manager to support the producer. Other agencies require the account managers to handle their own book of business with little input from the producer after the account is written. This role is often referred to as an account executive and can be a nice “next step” up for savvy account managers.


Some account managers may be expected to perform other duties as well, such as accounting. It is important to match the tempera-ment of the account manager to the agen-cy’s culture. Don’t hire a “go-getter fireball” when the producers like to control the account service. The basic job of the account manager boils down to the collection, processing and distribution of information. The col-lection of information tends to be the most significant skill. The account manager needs to know what information to gather and how to ask for it. Patience, determina-tion and diplomacy are necessary whether probing the client for pertinent information to complete a claim form or quizzing a pro-ducer when filling out an application. The account manager needs to be a peo-ple person. Good social skills and the abil-ity to act as a go-between for the different parties — clients, producers, underwriters and agency owners — are a must. An account manager needs to be able to handle complaints and negotiate a favorable outcome. A qualified account manaager has the ability to say no, can take criticism from others and provides constructive input to resolve problems. The typical account manager spends about half of her/his time talking to clients or insurance company personnel gathering and distributing information, and problem solving. The balance of her time is spent on paperwork and computer input. Because of this emphasis on listening and talking, communication is an account manager’s most important skill. Look for it when hiring — it is a natural skill that account managers must already possess. Technical knowledge can be easily taught later. It is really important to test for these skills. We suggest the Caliper test or Omnia, in addition to a good interview and even a written coverage test to see if they have cov-erage skills and good writing ability.

Common Issues How does management keep qualified account managers?

First, management must understand why account managers leave an agency. The most frustrating aspect of the job for most account managers is dealing with difficult people. The inability to effectively commu-nicate with someone prevents the account manager from properly doing her/his job. When an account manager can’t get along with a person, management needs to act quickly and decisively. If the problem is with a client, the reassignment of that account to another account manager could solve the problem. A stickier problem is when that difficult person is another employee, such as a producer. The agency needs to make sure that spe-cific ground rules are established and fairly enforced. Management should outline the role of the account manager versus the pro-ducer. Another very common reason why people leave an agency is that management never clearly communicated what they expected

from the employee. When responsibilities and authority are not specifically discussed, then miscommunication and hurt feelings can occur.

Communicate Expectations Write a job description spelling out the

account manager’s tasks and responsibilities and make sure both parties agree to it. A key component that is often overlooked is setting performance standards. An account manager needs to know what size book management expects her/him to handle. It is especially important to look at these standards compared to


Hiring and retention of good account managers is key to increasing agency profitability and value.

MIDRE16806.indd 1 2/9/15 12:28 PM


Advertisers IndexReaders, browse, contact, or do product searches on any of our full page advertisers at: www.insurancejournal.com/adshowcase/

Abram Interstate www.abraminterstate.com W16ACE Insurance www.acegroup.com/us 13Amerisafe www.amerisafe.com SC8Anderson & Murison www.andersonmurison.com 40Applied Underwriters www.auw.com 44Arrowhead General Insurance Agency www.arrowheadgrp.com 21Atlass Insurance Group www.atlassinsurance.com 19Burnett & Company www.bcoinc.com SC6Burns & Wilcox Ltd. www.burnsandwilcox.com 17Catlin US www.catlinus.com 15Century National www.cnico.com W15Chubb Corporate www.chubb.com W1; SC1; SE1; E1; M1Continental Underwriters, Inc www.cultd.com 7General Star www.generalstar.com W3; SE3; E3; M3GeoVera Insurance Company www.geovera.com SC4; SE7Golden Bear Insurance Company www.goldenbear.com W13Gorst & Compass Insurance www.gorstcompass.com W11Great American Insurance Group www.gaig.com 31

InsurBanc www.insurbanc.com 37M.J. Hall & Company www.mjhallandcompany.com W9Midlands Management Corporation www.midlandsmgmt.com 39Monarch E&S Insurance Services www.monarchexcess.com W7Nautilus Insurance Company www.nautilusinsgroup.com 33Navigators Management Company, Inc. www.navg.com 35Pacific Gateway Insurance Services www.pgiainsurance.com W5PersonalUmbrella.Com www.personalumbrella.com 5Philadelphia Insurance Companies www.phly.com 43Regency Insurance Brokerage Services www.regencyinsurancebrokerage.com SE5; E5Regions Bank www.regions.com 23Scottsdale Insurance Company www.scottsdaleins.com 2SIAA www.siaa.net 3; SC3South & Western www.southandwestern.com SC5St. James Insurance Group www.stjamesinsurance.com SE9Tejas American General Agency www.taga1.com 3Texas Mutual www.texasmutual.com SC7The Institutes www.theinstitutes.org 9

the average size of account on his/her desk. Management, on the other hand, needs to offer proper training and support to allow the account manager to get the productivity level expected. Very often, account managers struggle with time management. With the excep-tion of small agencies, account managers should have technical and clerical support. A good ratio to follow is one assistant for three account managers. Delegation is a great antidote for the time management disease. Management can also assist employees in balancing their business and personal life. Flextime is a good start. Some agencies may even pay for daycare or provide the services of a financial planning expert for employ-ees. Sometimes a health club membership is provided to reduce stress and help keep the employees fit. Be creative.

Summary The role of the account manager must never be underestimated — just ask any owner or producer who just lost a great account manager. Take the time to find the person who possesses that “perfect” blend of diverse skills and knowledge. Understanding your agency’s needs and expectations must precede any hiring. Hire only those who will fit the agency’s culture. Don’t allow a candidate’s technical skills or years of experience to cloud one’s judgment — hire only those who have good commu-nication skills. Good account managers will make the operation run smoothly and efficiently. Hiring the right account manager for the agency will enhance agency value, which benefits everyone. If you would like account manager standards based on size of account, let us know.

Oak is the founder of Oak & Associates, an inter-national consulting firm specializing in valuations, financial management, mergers and acquisitions for the insurance brokerage industry. Email: [email protected]. Phone: 707-935-6565. Website: www.oakandassociaties.com.

IDEA EXCHANGE

Minding Your Businesscontinued from page 39

(800) 234-6977or Fax: (323) 255-0957California License #0323106www.andersonmurison.com

One Application. Multiple Quotes.

• 7/24 Access

• Instant Issue

• Nationwide MarketsTo get started, go to andersonmurison.com

A&M Puts You in Control.Control to Rate. Control to Quote. Control to Bind. Control to Issue. And you can do this on the internet, right in front of your client, on the phone with 7/24 access.No more waiting for quotes. No more second (or third) visits with small clients. You get to rate, quote, bind and issue all within a touch of a button.Simple to use, nothing to memorize, all at your fingertips plus 15% commission.

PLUS 15% COMMISSION

C

M

Y

CM

MY

CY

CMY

K

Self Serve.pdf 1 1/6/15 11:41 AM

ANDERS16760.indd 1 1/14/15 10:07 PM

And the winners are...

ALL OF YOU!Family-owned and operated. Proudly dog-friendly. Available nationally. Underwriting criteria varies by state. Visit us for guidelines. California Insurance License 0D08438

a.m. best rating effective NOVEMBER 2014. For the latest rating, visit ambest.com

he’s DoingItWrong.

he probably still waits days for UNDERWRITING APPROVAL. STart quoting online. 4 questions, 3 minutes, $5 million personal umbrella.Admitted, rated A+ XV by A.M. Best.and same-day response to boot. FINDING YOU BETTER WAYS TO MULTITASK.

PERSONALUMB16622.indd 1 11/18/14 8:55 AM

FEMAFL16788.indd 1 9/30/13 5:44 PM

Applied UnderwritersEquity Comp Construction Spread Ad

Bleed: 17” x 11.125”Trim: 16.75” x 10.875”Live: 16.25” x 10.375”

Applied Underwriters2015_EC_Construction_IJ.indd

Contact: Sheila Gallagher P: 707-395-0645 Email: [email protected] Experience. Applied Intelligence.

©2015 Applied Underwriters, Inc., a Berkshire Hathaway company. Rated A+ (Superior) by A.M. Best. Insurance plans protected U.S. Patent No. 7,908,157.

IT PAYS TO GET A QUOTE FROM APPLIED®

Accepting large workers’ compensation risks. Most classes. All states, all areas,

including New York City, Boston, and Chicago. Few capacity and concentration restrictions.

Simplified financial structure covers all exposures.

EXPECT THE WINNING DEAL ON LARGE WORKERS’ COMPENSATION.

Call (877) 234-4450 or visit auw.com to get a quote.

APPLIED PROTECTS THE TITANS OF INDUSTRY.®

AUDIRECT16726.indd 1 12/2/14 11:35 AM

We’ve got you covered.Call the commercial auto experts...

HAVE A RISK THAT DOESN’T FIT?

We offer a wide variety of commercial auto, garage, property, packageand general liability products.

All backed by an A++ financial rating by AM Best.

27200 Tourney Rd Suite 360 Phone: (800) 354-4844 - Fax (661) 257-5988 Valencia, CA 91355 www.pgiainsurance.com - License #: 0C04869

PACIFIC GATEWAY INSURANCE AGENCY

PACIFICG15726.indd 1 2/22/12 12:33 PM

Applied UnderwritersInsurance Journal Back Page Ad

Live 8.125” x 10.625”Trim 8.375” x 10.875”Bleed 8.625”x 11.125”

AU N CoveredBridge IJ C4

Contact: Sheila Gallagher P: 707-395-0645 Email: [email protected]

Applied Underwriters


Expect big things in workers’ 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.

AUDIRECT16723.indd 1 9/24/14 9:45 AM

Congrats to the Winners of the 2014 Recall & Readership Study!Third-party research firm Signet Research, Inc. has conducted a study on behalf of Insurance Journal magazine, measuring the memorability of all full- and half-page print ads in the November 3, 2014 issue.

The five highest-scoring ads in this issue: #1 Applied Underwriters, #2 Pacific Gateway Insurance Agency, #3 FEMA, #4 Applied Underwriters, and #5 PersonalUmbrella.com.

Insurance Journal would like to congratulate the winning companies and thank all the readers who so generously provided their time and feedback.

The Recall & Readership Study is provided annually as a free service to our advertisers, who each receive a personalized report with scores and verbatim reader comments. Interested in participating in the 2015 study? Contact Lauren Knapp at (800) 897-9965 x161.

IJHOUSE16624.indd 1 1/23/15 12:34 PM


IDEA EXCHANGE

Closing Quote

The time has come to push back with logic

and a true pro-consumer agenda.By F.E. “Rick”

Russell II

Low Minimum Limits Unfairly Shift Financial Responsibility

For years, we’ve listened to those who beat the drum to maintain minimum liability insurance limits that have

been in place for decades. They frame their viewpoint as pro-consumer, and on its surface, their message is an easy sell. After all, who wants to burden low-income families, especially in this still-jittery economy? The time has come to push back with logic and a true pro-consumer agenda. As the topic is brushed aside year after year, minimum liability insurance limits continue to stand still in certain pockets of the country while the world continues to spin. While the cost of living continues to increase, so does the cost of medical care and property values. Meanwhile, fiscally responsible drivers are forced to pay more and more in auto insurance premiums because they must add underinsured motorists’ coverage to account for drivers who carry what have become inadequate minimum liability limits. Inaction on this issue is not a victimless pursuit. You see, the driver who carries woefully low liability limits simply spurs another driver to overcompensate with addi-tional coverage. This is an unfair shift of financial responsi-bility.

Overseeing the Insurance Agents & Brokers organiza-tion provides me with a unique perspective because my organization manages independent agents’ associations in three states: Delaware, Maryland and Pennsylvania. In 2010, our Maryland agents successfully spearheaded legis-lation to adjust the Old Line State’s minimum liability lim-its from 20/40/15 to 30/60/15. The change took effect Jan. 1, 2011. We heard the predictions in Maryland — that premi-ums would skyrocket, that the already excessive number of uninsured motorists (estimated at 15 percent of drivers) would jump. But truth be told, we have found no evidence of either since the adjusted liability limits took hold. The experience of their Maryland counterparts is fur-ther ammunition for our Pennsylvania agents who have told us time and again that the state’s severely outdated minimum limits (last addressed in the 1970s and now ranking second-lowest in the nation) are an issue for their customers — actually translating into higher premiums thanks to the need for underinsured motorists’ coverage. We’ve championed this issue at the state Capitol several times in recent years. But in the end, our efforts were met with the same opposition. However, it is time that our agents, with their own pro-consumer logic — logic that is rooted in commonsense and stems from their work edu-cating and guiding their customers — are heard. This legislative session, which features new faces in the state legislature and the governor’s office, provides a new opportunity for our Pennsylvania agents to state their case. They can explain that sim-ply shifting the burden of coverage is not a solution, but that the supposed impact on some consumers does not justify an actual impact on other consum-ers. That financial responsibility is what this issue is truly about. We have our sights set on success this legislative session in Pennsylvania, just like our contemporaries at other agents’ associations in the remaining state strongholds (although their numbers are dwindling) across the nation. Let’s make this the year when logic trumps emotion, when the burden of coverage falls on the appropriate shoulders, and when all insured drivers carry adequate liability lim-its.

Russell is president and CEO of Insurance Agents & Brokers, a part-nership of three agents’ associations: Delaware Association of IA&B, IA&B of Maryland, and IA&B of Pennsylvania.

Having the right insurance carrier in your corner can help your business withstand a changing regulatory environment and put the right policy in place to defend your organization from the risks inherent in doing business today. Philadelphia Insurance Companies offers Management & Professional Liability coverage with a broad product portfolio, including Directors and Officers, Employment Practices, Fiduciary, and Cyber Liability as well as a range of Professional Liability and Crime solutions. Our policyholders know we’re in their corner with across-the-board protection, quality support, and excellent service. We go the distance to help you come out on top.

Call 855.411.0797 or visit PHLY.com/MPL

Philadelphia Insurance Companies is the marketing name for the property and casualty insurance operations of Philadelphia Consolidated Holding Corp., a member of Tokio Marine Group. All admitted coverages are written by Philadelphia Indemnity Insurance Company. Coverages are subject to actual policy language.

Management & Professional Liability Division

Across-the-board protection

Lightweights to heavyweights,

we’re in your corner.

A.M. Best A++ Rating

S&P AA- Rating

Ward’s Top 50 2001-2014

Nationwide Underwriting Presence

14PHLY_InsurJournal_MPL_Boxer.indd 1 2/10/2015 1:55:46 PMPHIIC16669.indd 1 2/10/15 8:37 PM

Applied UnderwritersInsurance Journal Back Page Ad

Live 8.125” x 10.625”Trim 8.375” x 10.875”Bleed 8.625”x 11.125”

AU N Ski IJ C4

Contact: Sheila Gallagher P: 707-395-0645 Email: [email protected]

Applied Underwriters


Expect big things in workers’ 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.

AUDIRECT16730.indd 1 1/29/15 10:45 AM

insurance journal west 2015-02-23

Documents