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Unintended Risks of Social Movements

Posted By Kim Noble, CPCU, Wednesday, May 15, 2019


Social movements have attracted much attention in recent years. Movements such as #MeToo, Time’s Up and Black Lives Matter are just a few modern examples of social justice movements with strong intentions to reform the status quo in industries once thought of as impervious like Hollywood, media, sports and government. These movements have revealed the systemic issues of discrimination, sexism and sexual harassment in nearly every area of the professional world, as evidenced by the upticks in claims and allegations being made in the public domain.

Nevertheless, the innocuous actions of these movements to push for a more equitable and safer environment for humanity have, in fact, had unanticipated counter-effects on equality and diversity initiatives for public and private companies, when looked at through a professional liability lens.

Potential liability impacts

To dive deep into this critical issue, a discussion at the 2018 PLUS International Conference in November 2018 addressed the hidden risks of social movements, including how they could upend a company’s culture and retention initiatives, ultimately impacting the diversity and equilibrium of the employee base and potential talent profile.
#MeToo and Time’s Up exposed the misbehavior of professionals from the corner office to the cubicle. As a result, many professionals were exposed and often terminated. While disrespectful behavior toward anyone in the workplace is unacceptable, what has also surfaced since the onset of these exposures are the hidden professional liability risks stemming from the well-intentioned changes these movements aim to have on society.

Stress among diverse talent

Employment claims brought against companies as a result of inappropriate workplace behavior have a high probability of impacting not only the company’s current employee base, but the future talent pool as well. For example, a sexual harassment scandal and the reputational implications may endure long after a claim is resolved, resulting in an adverse effect upon current employees and the pool of potential candidates. This, in turn, may disrupt the balance of diverse employees. In addition, this type of outcome can be detrimental to a company’s bottom line, as traditionally male-dominated industries like finance and technology seek to broaden their talent base to hire, train and retain women and minorities.

The professional liability impact of such exposures has also resulted in significant stress to and in some situations, impairment of professionals, especially among female employees. This consequence has ultimately led to a lower quality of work, productivity and morale, at times leading to high levels of turnover among valuable and diverse talent pools.

Career advancement challenges

Loss of career and training opportunities are also hidden risks professionals are grappling with as a result of social movement outcomes. According to the National Law Journal, 56% of men are nervous about one-on-one interaction with women at work, based upon a concern for the potential for allegations of impropriety to occur. Meanwhile, women and minorities may feel left out of advancement opportunities, such as socializing with bosses and mentors, due to those concerns. According to a Pew Research Center survey, women are roughly four times as likely as men to say they have been treated as if they were not competent because of their gender.

Environment of fear

Many employees today find themselves in a workplace environment that is characterized by fear — a situation that is causing a reduction in collaboration and mentoring in the workplace and is preventing employees from achieving their career goals. Indeed, employees are no longer taking advantage of mentors and advisors due to fear of misconduct and the potentially serious consequences that could result from it. Fear is divisive and counterproductive to the progress social movements intend to accomplish; yet, it is, unfortunately, one of the most significant hidden risks arising from them.

The insurance industry must now work to align the new pieces of the risk management puzzle brought on by these social movements. Currently, there are more questions than answers, as insurers aim to get people thinking — what could be the future risk management implications of these social movements? What type of risk mitigation techniques could be applied to effectively manage the potential exposures?

Insurers need to be active participants in the discussions that address those types of issues that may have consequences for certain types of insurance coverage. We should proactively seek to identify and understand the risks and respond as forward-thinkers to develop the right solutions to mitigate these risks.

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Hot Insurance Markets of 2019

Posted By Andrea Wells & Amy O'Connor, Tuesday, May 14, 2019


Insurance Journal examined industries experiencing changes, challenges, expansions and growth in the past year. Here are five industry sectors and insurance market sectors that could offer opportunities for agents and brokers in the property/casualty insurance industry in 2019.


The telemedicine market will generate significant growth in the next few years due to the rising geriatric population, growing demand for accessible healthcare services especially in remote areas, and technological improvements related to mobile and the internet. Telemedicine is transforming the healthcare industry and is expected to become the most used method of diagnosis and prescription worldwide. The U.S. telemedicine market alone is projected to surpass $64.1 billion by 2025, according to a new research report by Global Market Insights Inc.

As the U.S. market for telemedicine continues to expand, so does demand for insurance coverage for these providers, according to Beazley, which launched its Virtual Care product in 2017. Telemedicine has been an exciting industry to insure, Jennifer Schoenthal, Beazley Group's healthcare underwriter/specialty lines, told Insurance Journal. Every day is a new risk in telemedicine, she says. "And no two accounts are alike," she said.

"Think 'tele massage' and a device that can detect concussions during sports games."

Beazley's Virtual Care insurance product targets companies falling into the three main categories of telemedicine: platform and tech product designers, providers, and companies utilizing platforms and contracting with providers.

"The policy was designed to be very versatile so that we were able to capture most of the companies that are in the telemedicine field," Schoenthal said.

The market continues to evolve and expand. "We are seeing both standalone telemedicine companies and current allied health companies that are starting to add telemedicine to their suite of services," she said. "I don't see this slowing down anytime soon, especially as telemedicine continues to become a more main stream way of delivering healthcare services."

Telemedicine is also increasingly being used by workers' compensation insurers, although usage in workers' comp lags behind the commercial health setting, according to Dr. Stephen Dawkins, medical director at Cadaceus USA, an Atlanta, Ga.-based provider of medical management services in occupational health.

However, Dawkins, a panelist at a recent Workers Compensation Research Institute event, thinks that may be changing. He has seen an uptick in interest by workers' compensation carriers for virtual physical therapy, also known as telerehab, which provides virtual access to physical therapy and is intended to be a replacement for an in-person visit to an outpatient facility.

While telemedicine has benefits for both users and the healthcare industry, it presents a few challenges for insurance professionals looking to target the market.

"I think the biggest hurdle is that while there are many brokers out there that either focus on tech or on healthcare, the number of experts in both of these lines is somewhat limited," Schoenthal says.

That's where specialty insurers can help, she adds.

"We include affirmative coverage for bodily injury from technology failure and we don't limit how medicine can be delivered," she said. "Because of this we can write both tech companies that are designing technology for this field and allied health companies that are delivering medicine in this fashion."

Despite its potential, telemedicine is currently a specialty niche. A study published in December in the academic journal Health Affairs combed 2016 survey results from the American Medical Association to find that only 15.4 percent of physicians worked in practices using telemedicine.

But that may change. Private health plans, Medicare, most state Medicaid programs, and the U.S. Department of Veterans Affairs all cover some virtual doctor's visits and the majority of states now have laws requiring private insurance companies to reimburse providers for care delivered remotely.

A search on showed limited availability specifically for telemedicine classes, but Ultra Risk Advisors listed it as part of its imaging program that provides broad coverage and loss control services for stand-alone diagnostic imaging facilities and radiologists.

Breweries and Cideries

Craft brewers and cideries, especially the smaller "local" shops, represent a growing niche market.

While overall U.S. beer volume sales were down 1 percent in 2017, craft brewery sales continued to grow at a rate of 5 percent by volume, reaching 12.7 percent of the total U.S. beer market by volume. Retail dollar sales of craft brew also increased by 8 percent, up to $26 billion, and now account for more than 23 percent of the total $111.4 billion U.S. beer market.

Craft production grew the most for the "local" and microbrewery space.

Small and independent American craft brewers contributed $76.2 billion to the U.S. economy in 2017, according to the Brewers Association for small and independent craft brewers. The industry also provided more than 500,000 total jobs, with more than 135,000 jobs directly at breweries and brewpubs, including serving staff at brewpubs.

Cider grew faster than beer, wine or spirits last year but remains less than 1 percent of the overall alcoholic beverage market share. Even so, cider retail sales were up 8.4 percent in 2018, generating more than $500 million in sales. Cider retail sales dollars are 10 times more than they were 10 years ago, according to the U.S. Association of Cider Makers.

Today the growth is driven by a focus on local, Paul Martinez, program manager for Brewery PAK Insurance Program, told Insurance Journal. The Brewery PAK program insures around 1,000 craft breweries in 42 states.

The program has been operating for the past eight years with steady growth of around 25 percent each year. Last year was a banner year -- the program grew by 51 percent in 2018, driven primarily by growth in the smaller, local, or nano-breweries, Martinez said.

"So as long as you have a local presence, in the local community, they like your beer, they're behind you," he said. The bonus, "I find the smaller the brewery is, the better their beer tastes because they're making it on such a small scale and they're putting their heart and soul into it as opposed to when breweries get larger, they get larger systems, the quality gets sacrificed."

Nano-breweries and cideries are finding their place in the market, Martinez added. "They're not really looking to take over the world. They're just looking to make great product, make great friends and make a little money in the process," Martinez said.

An online search on for breweries, revealed three other markets targeting the specified class of business: Glencar Underwriting Managers Inc., Philadelphia Insurance Companies, and Worldwide Facilities LLC. These include individual coverages as well as broad offerings for this segment.

Intellectual Property

Intellectual property theft is a little understood and often overlooked financial risk to businesses, and with new and emerging technologies being introduced all the time, the risk is increasing.

According to the World Intellectual Property Organization (WIPO)'s "World Intellectual Property Indicators 2018" report, intellectual property filing activity around the world reached 3.7 million in 2017, representing a 5.8 percent increase over 2016. In the U.S. specifically, there were 606,956 patent applications in 2017, up from 605,571 in 2016.

According to WIPO, the U.S. holds 19.2 percent of the world's patents; China is the leader with 43.6 percent and Japan falls below the U.S. with 10.1 percent.

The growth of new technologies such as 3D printing, as well as the increasing digitalization of society and business, continue to increase liabilities for businesses and insurers, according to Thomas Varney, regional manager, Americas, for Allianz Global Corporate & Specialty, in a piece for Insurance Journal.

"...[I]n today's and tomorrow's world of connected industries, where intangible assets such as data, networks, customer relationships and intellectual property can represent the major source of corporate value, more is also at stake if things go wrong," Varney wrote.

A shift among businesses from tangible to intangible assets makes protecting intellectual property more important than ever. According to Aon, $19 trillion -- or nearly 85 percent of the value -- of the S&P 500 is represented by intangible assets. IP alone accounts for more than 45.5 million U.S. jobs, Aon said.

Aon launched a new Intellectual Property Solutions (IPS) team in March as part of its New Ventures Group formed at the end of 2018.

"Firms need to both identify and manage risks surrounding business-critical and proprietary data and develop and execute strategies for maximizing shareholder value from their [intellectual property] portfolios," Aon said in a statement.

The IPS team, headed up by Chief Commercial Officer Brian Cochrane, has developed consulting, valuation and risk transfer offerings to help clients secure their intellectual property.

Marsh is also investing in its intellectual property offerings for U.S. companies. In February, it launched the IP Protect product backed by Ambridge Partners. The policy offers defense coverage for losses relating to patents, copyrights, trademarks, and trade secrets (by endorsement). More than $60 million in primary coverage is available from Ambridge with additional capacity available from excess liability insurers.

"As the importance of IP rights and their related expenditures continue to rise, many organizations have sought an effective solution to protect their IP assets, products, and services, only to find inadequate coverage at a high cost," said Jason Sandler, a vice president in Marsh's U.S. Financial and Professional Practice. "With IP Protect, we now are able to provide clients with the broad coverage and meaningful limits they have been seeking -- at a more affordable price."

An online search on for intellectual property revealed three other markets targeting this specified class of business: New Empire Entertainment Insurance Services, Cooper & McCloskey, Inc., and Intellectual Property Insurance Services Corp. These include individual coverages as well as broad offerings for this segment.

Greenhouses / Nurseries

The greenhouse and nursery market is blossoming after enduring a disappointing period during the Great Recession.

The horticulture industry, which also includes garden centers and landscape design firms, began to rebound in 2013, according to a report by the American Society for Horticultural Science.

Direct industry output for all sectors was estimated at $136.4 billion, the report said. Greenhouses, nursery and floriculture production accounted for 240,809 jobs in the U.S. and $20.3 billion in revenues.

"Although the green industry has grown slowly in recent years, it remains an important contributor to national, state and local economies," the report stated.

In its state of the industry report, Nursery Management magazine found that about 66 percent of nursery owners expect sales to improve in 2019 versus last year. More than a quarter (35 percent) expect a 1-9 percent increase in gross sales compared with 2018 while about 16 percent expect gross sales to be 10-19 percent higher this year.

One segment of the industry set to take off is cannabis growers. According to a 2018 article by Forbes, in Arizona, Colorado, California and Oregon, "cannabis is being cultivated in greenhouses in excess of 250,000 sq. ft. that are capable of yielding more than 50,000 pounds of flower."

Though obtaining insurance for cannabis operations, particularly large scale ones, can be difficult, more insurers are offering products for growers as more states legalize the plant.

A recent A.M. Best report identifies a number of marijuana-related market segments that need insurance coverage. They include cultivation, dispensaries and retailers, infused products and landlords. Some insurers have responded.

Approximately 25 carriers (mostly non-admitted) provide coverage in the space in both the U.S. and Canada, A.M. Best said. The Lloyd's Market offers coverage in Canada but doesn't offer coverage U.S. businesses because the federal government still considers it illegal.

Carriers that have entered the marijuana market are typically partnering with "agencies and producers that have a better understanding of the industry and the needs of cannabis businesses," A.M. Best said. One example: Topa Insurance Group, which supports Cannasure, an Ohio-based MGA and wholesale brokerage solely focused on the cannabis industry.

NIP Group, which offers a GrowPro program for greenhouse growers, nurseries and retail garden centers, recently entered into an underwriting agreement with AXA XL to expand its coverage offerings. The program includes proprietary stock coverages, including hydroponic stock.

Some projections call for legal marijuana sales to reach $22 billion by 2022, with illegal sales of the drug to drop to less than $5 million over the same period, as more states legalize use of the drug.

While there is opportunity for the insurance industry, there is also risk. Ian Stewart, a partner in Wilson Elser and chair of the law firm's cannabis law practice team, told Insurance Journal that he sees a potential wave of consumer class action lawsuits over cannabis as well as increasing risks for doctors.

An online search on for nurseries/greenhouses revealed three other markets targeting this specified class of business: Agricultural Insurance Management Services, and Mark D. Fredricksen Insurance Services, as well as GP Insurance Brokers LLC which offers coverage for cannabis dispensaries and growers. These include individual coverages as well as broad offerings for this segment.

Cottage Foods

The cottage-food industry -- foods cooked in a person's home or other designated location and sold directly to a consumer -- is growing.

U.S. local food sales, including cottage-food sales, have jumped from $5 billion annually in 2008 to a projected $20 billion this year.

Every state except New Jersey now allows home-kitchen cooks to make and sell non-hazardous foods with a low risk of causing foodborne illness such as baked goods, jams, jellies and other items that do not require time and temperature controls for food safety. Maine, North Dakota, Utah and Wyoming have gone further, enacting "food freedom" laws to expand upon cottage food laws to include potentially hazardous products like meat and poultry.

These laws are stirring debate at the state level. Part of the debate centers on the economic rights of "small-batch" home bakers and cooks versus public health and safety concerns. These private bakers, canners, and cooks want the liberty to sell their products to consumers free from the licensing requirements required of their larger commercial counterparts, restaurants and food processing plants. At the same time, the existing regulations are designed to protect consumers from foodborne illnesses that can be caused by improperly prepared foods.

While the federal government has authority over food in interstate commerce, it is state law that has traditionally regulated food produced for sale within state lines, according to "Cottage Food Laws in the United States," updated in 2018 by the Harvard Law School Food Law and Policy Clinic.

During the past few years, many states have passed cottage laws to regulate the industry adding increasing risk to cottage food makers.

For example, what would happen if a customer had an allergic reaction to a cottage-made food and sought payment for related medical bills?

Or a customer who might be injured at the home of a cottage food vendor? An insured may be liable and their homeowners insurance coverage may not respond to such risks, according to the experts at the Food Liability Insurance Program, or FLIP, based in Pleasant Grove, Utah.

FLIP, part of the managing general agency Veracity Insurance Solutions, developed a business liability program in 2012 dedicated to insuring exposures associated with home cottage businesses and other food related vendors

FLIP is an online platform where someone can quote, bind and issue their own policy within 10 minutes, says Chris Van Leeuwen, vice president of business development at Veracity Insurance Solutions.

"It's very user friendly and efficient to help those in the food industry to purchase with ease," he said. "A lot of people are buying this coverage on mobile apps."

Great American Insurance is the underwriting carrier.

FLIP isn't just for cottage food insureds. The program is available for broad class codes in the food industry, including caterers, mobile bartenders, mobile food trucks, and other mobile food vendors.

The entire food industry is a market where Van Leeuwen says Veracity has seen consistent growth.

"We have been able to develop specific coverages that respond better to these types of insureds," he added.

One example is its endorsement for stationary trailers.

"A typical general liability policy will exclude trailers in their auto exclusion. But what if someone hits their head on that trailer or trips and falls over the trailer -- coverage could be denied based on the auto exclusion," Van Leeuwen said. "We try to recognize some of the unique exposures and field them if possible."

An online search on for cottage food listed a large number of markets for food trucks, caterers, push carts, including but not limited to: TAPCO Underwriters Inc., Mobile Food Trucks and Vendors Insurance Program, and McClelland and Hine, a division of Worldwide Facilities LLC.


Tags:  insurance industry  markets  trends 

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Strong Growth Ahead for Independent Agents

Posted By Denny Jacob, Wednesday, March 13, 2019


Independent agents and brokers have a lot to look forward to in 2019. After closing the books on their best year since 2014, Reagan Consulting’s Organic Growth and Profitability (OGP) survey for the fourth quarter of 2018 shows “a convergence of impressive upward trends in each major line of business,” Kevin Stipe, president of the firm, said in a press release.

OGP participants generated organic growth of 6.1% in 2018, surpassing the projected organic growth rate of 5% for the year. Growth was driven by continued increases in U.S. GDP and commercial pricing. For 2019, OGP participants are forecasting growth of 7%, which would be the highest growth rate since Reagan Consulting began its quarterly OGP survey in 2008.

Employee group benefits was the channel’s leading performer of 2018, growing organically at a rate of 7.3%. This growth rate was more than 2 percentage points higher than last year’s. Commercial lines’ growth rate also increased by more than 2 percentage points from 2017, as the median firm grew its commercial property & casualty business by 6.5% in 2018.

Personal lines business accelerated its growth rate for the third consecutive year to 3.9%, “which… is the fastest growth rate recorded for personal lines in the 11-year history of the OGP survey,” Stipe said in a press release.

Buyer optimism of agent and broker performance and seller concerns of scale and internal perpetuation have fueled what Stipe characterizes as a “frenzy” of mergers and acquisitions (M&A) in 2018, much like 2017′s record-setting activity. Small agencies whose owners are facing retirement without a succession plan are also contributing to the increase in transaction count.

“Without a viable path to continued independence,” these agencies turn to an M&A transaction, said Stipe.

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2019 Agent Study: Business Challenges and Much More

Posted By Rosalie Donlon, Wednesday, March 6, 2019

Part 1 of 3


Since 2017, NU has partnered with the National Association of Professional Insurance Agents (PIA) to develop insights into the commercial lines segment from the perspective of independent Property & Casualty insurance agents and brokers throughout the U.S. This “Voice of the Agent” analysis forms a subset of the analysis developed by NMG Consulting as a part their annual Flaspöhler Study, used by carriers to help them best meet agents’ needs.

The study is a much broader exploration of competitive performance and the success drivers within the U.S. commercial lines industry, incorporating the views of 1,500 agents and brokers on a national basis, covering more than 200 insurance carriers. It provides significant insights into the books of business and challenges faced by P&C agents.

Most interesting to carriers should be the responses to this question: In your opinion, what are the top three challenges facing competitors in your industry over the next 3 to 5 years?
Agents are clearly concerned about their future, as this respondent noted: “Changing ecosystem of who an insurance agent is. There are less and less small insurance shops, and a growing number of aggregators.”

Other respondents mentioned competition from the internet and carriers themselves. One respondent described it quite eloquently: “Increased commoditization of insurance products removes the service component strength of local producers.”

Another respondent noted that there is “greater demand for fast quotes in a world that gives customers everything in the snap of a finger. Inability to always provide immediate information because of complexity of commercial insurance.”

In reviewing the results, Mike Becker, executive vice president & CEO of PIA, noted: “More than half of the agents participating in the survey reported that their commissions increased, and more than one quarter said they remained the same. In addition, more than half who had a decrease said it was relatively modest, between 1% and 5%. This indicates ongoing stability in agent compensation in the current market conditions.”

He added, “When asked to rate their overall level of satisfaction with the P&C carriers they use for commercial lines, agents responding ‘very satisfied’ (36.5%) or ‘somewhat satisfied’ (50.6%) were more than three-quarters of those responding.

This indicates that the overall agent-carrier relationship remains positive and stable, though we believe specific aspects of the relationship can be improved, such as digital capabilities. Overall, the survey results show a continuing high level of satisfaction with their carrier relationships and stability in commission compensation with more than half of agents responding reporting an increase in their compensation.”

Flaspöhler has long conducted its own larger annual study of agents (the Flaspöhler | NMG Producer Study) on behalf of key P&C carriers, which use the results to help them best meet agent needs. Flaspöhler distributes the expanded questionnaire to NU’s proprietary lists of independent agents nationwide as well as PIA’s national membership, resulting in the most reliable and scientifically sound sample available.

What are the Total Annual Revenues of Your Firm?

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2019 Agent Study: Major Business Lines, Sales Goals and More

Posted By Rosalie Donlon, Wednesday, March 6, 2019

Part 2 of 3


Once again, we teamed up with the National Association of Professional Insurance Agents (PIA) to develop insights into the commercial lines segment from the perspective of independent Property & Casualty insurance agents and brokers throughout the U.S.

This “Voice of the Agent” analysis forms a subset of the analysis developed by NMG Consulting as a part their annual Flaspöhler Study, used by carriers to help them best meet agents’ needs.

Today, we present our second installment of that research, which appears in full in the March 2019 issue of National Underwriter Property & Casualty magazine.

What Lines of Business do you Primarily Write?

Overall Level of Satisfaction with P&C Commercial Lines

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2019 Agent Study: Commissions, Carrier Strengths and More

Posted By Rosalie Donlon, Wednesday, March 6, 2019

Part 3 of 3


This is the third and final installment featuring the results of the 2019 NU/PIA Independent Agent Study conducted by Flaspöhler | NMG Consulting.
Taken as a whole, the survey comprises a comprehensive view of the successes and challenges of today’s independent insurance agents.

“Overall, the study show a continuing high level of satisfaction with their carrier relationships, and stability in commissions compensation with more than half of agents reporting an increase in their compensation,” says Mike Becker, executive vice president and CEO of the National Association of Professional Insurance Agents (PIA), which we teamed up with to produce the Agent Study.

Over the Next 12 Months do you Intend to....?

On a Scale of 1 to 9, How Important are Each of the Following Factors When Selecting & Evaluating a Commercial Carrier?

Over the Next 12 Months do you Intend to?

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5 Digital Trends Impacting Agents in 2019

Posted By Elana Ashanti Jefferson, Tuesday, January 8, 2019


The mobile and digital technology advances that forced insurance innovation in 2018 will continue and intensify in the New Year. But five distinct technology themes will shape insurance in 2019, according to Smart Harbor’s recent Insurance Trends study.

“Every insurance agency needs to focus on what makes their customer experiences and product offerings different,” Smart Harbor Managing Partner Jason Walker said in a recent press release about the survey results. “Then, integrate with tech enablers that deliver on that value proposition in a connected ecosystem.”

Walker said insurance agents will have no choice but to gravitate toward technology solutions that better serve consumers today and in the future. “To help agencies better compete, all parties in the distribution system should be looking to improve the ability to share critical data and analytics between systems,” Walker said.

Here are the top five digital trends that will impact insurance agents in 2019, according to Smart Harbor’s analysis.

No 5: New Micro-Experiences Will Become the Building Blocks for Digital Expansion

Agencies are differentiated by the niche markets they sell to and service better than their competitors. Investments in digital content campaigns and user interfaces that cater to specialized prospect and customer segments will rise in 2019. 

No 4: Texting Will Increasingly Be Used by Agencies to Connect with Customers

The rise of mobile users will have an effect on how agents communicate. Texting is a critical line of communication with millennials and will be the preferred method of contact for the next generation of insurance customers.

No 3: Google Mobile First Will Make or Break Every Agent's Online Brand

Google mobile-first indexing was formally launched in March 2018 and reinforced in September, which means websites will be indexed and ranked based on the mobile version of their content.

No 2: Insurance Agent Bots Will Be Humanized to Create Authentic Interactions

Insurance agencies must adopt technology solutions that transition their client-focused insurance buying experiences to the online environment. 

No 1: Voice Search Will Be a Critical Part of Every Agency's Digital Strategy

The rapid adoption of smart devices powered by manufacturers like Google and Amazon are compelling consumers to speak to robots about their needs from their homes, offices, and on the go. Insurance is no exception.

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How Independent Agents Fared in 3rd Quarter

Posted By Administration, Wednesday, November 14, 2018

And the Past 4 Years


Independent insurance agents and brokers can celebrate a four-year growth trend, reports Reagan Consulting.

In its third-quarter Organic Growth and Profitability (OGP) study, the agency consultant says that the sector’s organic growth rate in the third quarter was 6.1 percent — tied for the highest growth rate in the last 15 quarters. “This strong Q3 performance is another confidence builder for the industry,” says Harrison Brooks, vice president of the firm.

All lines of business contributed to the third quarter and to the strongest nine-month growth performance since September 2013, according to the survey of 200 midsize and large agencies and brokerage firms. The growth was led by commercial lines with 6.8 percent, surpassing group benefits, which grew for the first time since 2014 by 6.3 percent. Personal lines – at 3.8 percent growth – posted its highest Q3 growth rate since Reagan began the OGP survey in 2008.

The survey found that brokers expect strong growth throughout 2018, estimating a full-year growth rate of 6.0 percent versus just 4.5 percent in 2017. “If history is any indication of future performance,” says Brooks, “strong GDP tailwinds are likely to continue to drive strong organic growth for agents and brokers.”

Reagan leadership did express one note of caution around agency profitability.

“It will be important to monitor EBITDA [earnings before interest, taxes, depreciation and amortization] margins, especially in larger agencies,” says Brooks. EBITDA margins declined slightly in Q3 2018 from last year, and it appears that contingent income, which dropped from 8.6 percent of revenue in 2017 to 8.0 percent of revenue in 2018, was the primary driver.

The reduced spread between EBITDA margins and operating margins supports that conclusion, the reagan consultants said. Operating margins exclude contingent income and can be managed by the agency through operating efficiencies and expense controls. Q3 reporting brokers and agents did experience an encouraging uptick in Q3 operating margins, sparking hope that the recent dip in EBITDA margins “can be tempered by agencies continuing to improve their operating margins, which is the best indicator of structural profitability,” says Brooks.

Tags:  industry  insurance  trends 

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What's Trending? A Look at the Factors Impacting Insurers This Year

Posted By Moshe Beauford, Wednesday, December 27, 2017

by Moshe Beauford,, December 19, 2017

Looking Back on 2017 Provides Indicators of What’s Ahead for the Industry

A review of 2017 finds it was littered with everything from natural disasters to large-scale public acts of terror that injured and claimed the lives of thousands in the U.S. alone.

Swiss Re, a wholesale provider of reinsurance, released a study showing that weather extremes like thunderstorms and tornadoes accounted for some of the heftiest losses, with four weather events creating more than $1 billion in damage. According to its preliminary assessment of loss for the first half of 2017 – total economic losses of global natural and man-made catastrophes resulted in $44 billion in losses, although the majority of damage was covered by insurers.

This is lower than the first half of 2016, where losses reached well over $100 billion. However, the second half of the year will see significantly higher numbers as loss totals from multiple hurricanes, wildfires and various acts of terror are tallied.

The study also found that total insured losses for the first half of 2017 reached $23 billion. The human cost was high as well, as nearly 4,400 people lost their lives or went missing during natural disasters, however it was still lower than the 4,800 losses that occurred during the first half of 2016.

There were a number of other contributing factors that impacted the industry, including acts of terror, the now 29 states where marijuana is legal for either recreational or medicinal purposes, cyber security, travel, short-term medical coverage, auto insurance and autonomous vehicles. Each of these will influence the insurance landscape in the coming year.

Acts of Terror

Terrorism is on a steady rise worldwide, increasing by 25% each year, and in October, we witnessed one of the most heinous acts of domestic terror on U.S. soil. In the attack, a lone gunman opened fire during a Las Vegas, Nevada, country music concert. The shooter, Stephen Paddock, killed 58 and injured more than 500 others before taking his own life.

For insurers, this incident raised a whole new set of questions that could one day lead to an all-inclusive terrorism insurance package that extends beyond property damage and loss of business to include coverage for loss of life, limb and more. Early estimates indicate that this event alone could cost insurers more than $1 billion.

This was followed several weeks later by a truck attack in lower Manhattan that killed eight people and injured almost a dozen more along a bike path. The ISIS-inspired terror attack was the worst one New York City had seen since 9/11.

Less than a week later, a lone gunman killed 26 people in a tiny church in Sutherland Springs, Texas. While not deemed a “terrorist” attack, the shooter killed almost half of the church's congregation. (Insurance exposures for either event had not been released by press time.)

Legal Marijuana

With the legalization of marijuana in 29 states and the District of Columbia for either medicinal or recreational purposes, it seems the U.S. is on track to legalize the substance in every state over the next few years. This is because cannabis has many proponents, but seemingly far more who oppose its legalization.

Attorney General Jeff Sessions is one such opponent, and has been described by the LA Times as “fiercely anti-marijuana.” This seems to be the antithesis of popular public opinion following votes in multiple states to legalize the use of marijuana for medical or recreational purposes. According to Pew Research Institute, 57% of Americans say marijuana should be legal.

Intensive care specialist Dr. Ariel Steinberg says cannabis advocates have to do their due-diligence before the substance is fully-approved for medical purposes. He also says that when it is legalized, insurers would be wise to offer coverage to policyholders, as it has many inherent medical benefits.

“Regarding the use of medical cannabis – it has some time before it is fully-legalized, but there is evidence that clearly spells out its many medicinal benefits. Things like seizures have been treated with cannabis, but documented cases are isolated, and before a full medical recommendation is issued, larger and more thorough evaluations are needed. On the other hand, there has been more concrete evidence in cases of terminally-ill patients and the treatment of patients with chronic pain. Cannabis has even been known to improve the quality of life for those with eating disorders, anxiety, etc.,” Steinberg said.

Cyber Security

Nationwide recently revealed that 58% of companies were affected by some form of a cyberattack in 2017, yet many were unaware of it. Among the companies hit were a number in the insurance industry.

Cyber security experts at Sixgill, a company that specializes in monitoring and interpreting activity on the Dark Web, say insurance companies are at risk of further attacks, and the number of attacks will only continue to rise.

“Insurance companies are at risk, as are other financial institutions. In fact, the amount of breaches only continues to rise, with records set in 2017, and currently on track to be worse in 2018. In 2017, insurance companies were among the worst-hit industries in terms of attacks. We saw things like data leaks and data being sold for extortion purposes on the Dark Web. Recently, we learned of an attempt to blackmail a major financial institution in Israel," said Avi Kasztan, co-founder and CEO of Sixgill.

"The main threat was to divulge client identification details. There was also a large healthcare breach in Australia where user identities were put up for sale on the Dark Web. While not an insurance company in this case, the risk, threat and outcome are exactly the same. There are numerous dumps of such information for sale on Dark Web sites literally all the time," says Kasztan. 

Kasztan further warns insurers of the dangers of the ever-growing Dark Web, and how its constant monitoring can contribute to catching criminals red-handed with stolen information.

“One of the main places that needs to be monitored and analyzed to receive this sort of intelligence picture is the Dark Web, which is perhaps the place where cyber criminal activity can be detected the earliest. It is also the place where stolen or leaked data can turn up for sale, and relatively quickly after a breach. Even if it is too late to prevent an attack – it is good for organizations to have the intelligence so they can take the appropriate measures and begin to mitigate the damage,” Kasztan added.

Travel Medical Insurance

“With a rise in terror, world-wide travel still hasn't seen much of a drop,” said Andrew Bard, senior vice president and general manager Americas at travel medical insurance provider Tokio Marine HCC - MIS Group.

With his office seeing over 300,000 claims annually, he says its international travel plan for both students and non-students has seen the largest increase over the past year, with inpatient and emergency room visits seeing the greatest spike. Bard says it should not only be insurer's goal to reduce claims, but to accurately adjudicate them in a timely manner as well.

“The claims process should be simple, and we have been able to expedite the process through our electronic claims form submission. We also see value in updating policyholders throughout the claims process, and have created a unique portal for just that. I also think we will see insurers focusing on improving the customer experience in 2018 – from initial shopping and purchase to claims settlement – making it easier, less confusing and producing better overall response times,” Bard said.

Severe Weather

Alexandra Wallach owns the Indianapolis-based Farmer's Insurance agency, and says her company sees 900 claims each year. The majority are related to auto, home, life and luxury items such as boats, as well as commercial and business insurance (like workers’ compensation).

From all of the claims that came through her office in 2017, severe weather claims were among the agency's highest, which in Indiana, means water damage, tornadoes and other natural disasters. Looking at the country as a whole, we also saw destruction from an overactive hurricane season, where Harvey and Irma caused billions in damage, displacement and a plenty of claims. Analysts from IHS Market estimate damage caused by Harvey will eventually total somewhere between $60 and $100 billion USD, and that Irma will total roughly $30 billion.

“Oftentimes when a client receives an estimate of damage done to their property (whether it's an auto accident or hail damage), the damage is typically only slightly more expensive than their deductible, although it is often less. If these policyholders chose then not to file a claim and pay out of pocket for damage – their next insurance renewal would not be affected,” Wallach said.

Looking to 2018, Wallach says although her agency doesn't deal directly with autonomous vehicles, she is creating a plan of action that consists of educating actuaries and insurers about the risks involved in insuring autonomous vehicles.

“Although we could likely see a decrease in accidents, and the price of auto insurance will likely begin to decrease accordingly – we may also witness a rise in cyber liability coverage. The more integrated technology becomes in vehicles, we simply run a higher risk of cyber attacks. Thieves could theoretically remotely unlock a car or take the computer system for ransom by blocking it from starting,” Wallach said.

For insurers, closing 2017 should be bittersweet after seeing billions in losses, although 2018 is already positioned to be an interesting year as insurers continue dealing with the aftermath of many of these issues.

Tags:  2017  insurance  trends 

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