RiskProNet News

 

Summer Challenges Discussed at Personal Lines Conference Call

George Pester, VP Private Client Group at JKJ and chair of the Personal Lines Managers Practice Group, led a roundtable discussion at a recent conference call on “Summer Challenges” including, managing staff vacations, production challenges, client issue, premium disruption and weather (hurricane season).

One new business initiative was particularly creative. JKJ teamed up with a wealth advisor, and each company invited a dozen clients to a one-hour putting lesson at a local country club, followed by a cocktail hour. It was billed as a client appreciation event rather than a sales presentation and proved to be a successful way to meet prospects.

JKJ also has purchased baseball tickets and receives tickets as part of its sponsorship of a local theater. Calling a client to offer a free ticket to an event is a low-key way of keeping in touch, and clients appreciate it, Pester said said.

Sales Contest

One member has instituted a summer sales contest with gift certificates toward a cruise and air fare as first and second prizes.

To encourage everyone – not just top producers – to participate, all staff members receive a ticket to be entered into a drawing each time they bring in a new account. The company as a whole must achieve a 5 percent revenue growth, plus enough extra to cover the cost of the contest, for the prizes to be awarded. Cross-selling and up-selling, such as an adding an umbrella to an existing account, qualify for tickets for the drawing. Increasing the limits on an existing policy does not qualify.

Quiet Time

A formal “quiet time” is helping one agency maintain productivity in the summer months. Summer work hours are 7:30 a.m. to 4:30 p.m. instead of the usually 8-5, and the phones are turned off until 8:30 a.m. This is meant as a quiet time to catch up on the things that never gone finished the day before because of interruptions. Lunch periods are reduced from 60 to 45 minutes, and employees get an extra half-day off every third week. The program has been popular with employees, and has had minimal impact on clients, as few phone calls typically come in between 4:30 and 5 p.m.

Condominium Owners as Prospects

One agency teamed up with a condominium association it insures to offer seminars explaining to condo owners exactly what the association insurance covers and what the individual owners need to insure. The invitation was a postcard with a photo of the entrance to the condos, a picture guaranteed to attract attention.

Temporary Employees

Several agencies have found college students to be a good source of temporary employees.

Refrigerator Magnets as Vacation Reminders

Send refrigerator magnets with agency contact information to clients. If they are going on vacation and have a friend caring for their house, remind the friend to call the agency if they find any signs of damage.

Electric Bicycles

Standard homeowners’ policies often fail to cover bicycles that have an electric motor to give riders a boost up hills. Be sure to ask your clients and prospects whether they are properly insured if they have e-bikes. Electric skateboards present similar challenges. One RiskProNet member suggested Markel as a source for insuring electric bicycles.

 

Construction Practice Group Hears From Brian Siska, CNA

The aging workforce, combined with the shortage of skilled labor, is causing more severe construction accident claims and the trend is likely to continue. That was the prediction from Brian Siska, CNA construction industry leader – Mid-Atlantic and North East zones, in a talk to the RiskProNet Construction Practice Group in May.

The construction industry has rebounded from the economic crisis with construction starts up 6 percent in 2016. Residential building increased more than 16 percent and non-residential, more than 9 percent, in 2016.

Key concerns include the following:

  • Shortage of labor.
  • Advances in project delivery.
  • “Green” construction.
  • Marijuana legalization, presenting particular challenges when an injured employee has been prescribed medical marijuana. (Watch for an upcoming RiskProNet article on this.)
  • Prescription opioid abuse, which is considered responsible for a 25 percent increase in prescription drug costs.
  • Cyber liability, with small to mid-size contractors increasingly becoming targets.

The frequency of injuries has been decreasing, even as claims are becoming more severe. More are
involving legal representation. Claimants also tend to be older, and more often have preexisting conditions that can impact the ability to close a claim. Medicare liens are being billed more consistently, increasing claim costs. In additional, overall medical costs continue to rise.

Brian also shared these facts about construction claims:

  • Most residential claims are in California, Nevada and Florida.
  • Most residential claims are against contractors who specialize in other fields and are doing only incidental residential work.
  • 77 percent of construction defect claim losses are from roofers, general contractors and mechanical contractors. Mechanical contractors have fewer claims but they are typically more severe.

CNA offers two products that are difficult to find, Brian told the group.

These include faulty workmanship protection that includes the cost of tearing out defective materials and replacing them, as well as some types of pollution at the insured’s location.

Brian is based in Pittsburgh and can be reached at (412) 562-4119 (office), ( 412) 538-9037 (cell) or brian.siska@cna.com.

Graphics courtesy of CNA.

 

 

Troy Moody, New RPNI Board Member, Is in the News

Watch the insurance headlines today for RiskProNet’s announcement that Troy Moody, chief operations officer of Moody Insurance Agency, Inc. in Denver, is joining our board of directors. Troy’s specialties include construction and business life insurance, including “key man” and “buy-sell” policies. Here’s the complete press release.

Troy Moody, Chief Operations Officer of Moody Insurance Agency, Joins Board of RiskProNet International

DENVER – Troy Moody, chief operations officer of Moody Insurance Agency, Inc., has been elected to the board of directors of RiskProNet International, an association of leading independent insurance brokers in North America.

RiskProNet member firms have combined annual revenues of $548 million and more than $5.5 billion in annual written premium.

Founded in 1972, Moody Insurance Agency offers specialized risk management solutions, insurance, bonding, employee benefits and personal lines. It represents more than 30 major insurance carriers and has more than $100 million in written premiums. The agency has offices in Denver, Grand Junction, Colorado Springs and Fort Collins.

Troy Moody, chief operations officer, has been with the agency since 1994. He joined as a producer, specializing in construction-related clients. He also focuses on business life insurance, including “key man” and “buy-sell” policies.

An active member of Associated Builders and Contractors, Moody has served as an ABC Ambassador. He also is a member of the Associated General Contractors of America and an associate board member of the Boys and Girls Clubs of Metro Denver. He leads Moody’s community involvement with a focus on fund-raising for Judi’s House, a charity founded by former NFL quarterback Brian Griese to support children who have had a death in the immediate family. In 2016, Moody Insurance raised $107,000 for Judi’s House.

Moody holds the professional designation of Certified Insurance Counselor. He received a bachelor’s degree in business communications from the University of Kansas. He also has completed the CNA Sales and Technical Training School and the National Association of Surety Bond Producers William J. Angell Surety School Level II.

At RiskProNet, each member is an equal owner in the association, which gives the network the geographic diversity and shared knowledge base to serve clients with national, international or highly specialized exposures to risk.

In addition to Moody Insurance Agency, RiskProNet members are AHT Insurance, Virginia; BFL Canada Insurance Services, Inc. in Canada; BHS, Michigan; Brady, Chapman, Holland and Associates, Inc., Texas; Buckner Company, Inc., Utah; Connor & Gallagher Insurance Services, Inc., Illinois; Crane Agency, Missouri; Dawson Companies, Ohio; Eustis Insurance & Benefits, Louisiana; Herbert L. Jamison Co., LLC, New Jersey; InterWest Insurance Services, Inc., California; Johnson, Kendall & Johnson, Inc., Pennsylvania; M3 Insurance, Wisconsin; ONI Risk Partners, Indiana; Regions Insurance, Inc., Arkansas; Reynolds & Reynolds, Inc., Iowa; SterlingRisk, New York; SullivanCurtisMonroe Insurance Services, LLC, California; and Watson Insurance, North Carolina.

RiskProNet International is headquartered in Menlo Park, Calif. Additional information is at www.riskpronet.com or at (650) 323-1929.

For additional information about Moody, visit https://www.moodyins.com or call (303) 824-6600.

 

 

Meet Some Top Producers at RiskProNet Member Firms

We got a rare opportunity to learn more about top producers at two RiskProNet member firms when their bios and photo’s appeared in a recent edition of Insurance Business America magazine. Five were from Buckner Company and eight from AHT, including RiskProNet board member George Forrester.

The list includes 100 of the industry’s top-performing insurance professionals. To qualify as a Top Producer in 2017, applicants needed to have a personal book of business worth $750,000 or more (net commissions).

AHT is a full-service insurance brokerage and consulting firm with nationally recognized practices in areas including technology, manufacturing, government contracting and nonprofits. The Buckner Company is a third-generation, family-owned business led by President and CEO Terry H. Buckner.

AHT Insurance

Peter Dean, national practice leader of AHT’s real estate division, has been involved in more than $10 billion worth of real estate transactions, ranging from single-asset purchases to the acquisition of overseas hospitality and habitational assets. He also regularly works with investment advisors, and hedge and debt funds.

George Forrester, a member of the RiskProNet board of directors, leads the manufacturing practice at AHT. He also serves the legal, technology, and property and hospitality management industries. He is a leading expert on product liability risk management and was the primary architect of a product liability risk assessment methodology template that is commonly used among manufacturers.

Mark Ganley is a director of AHT and leads the sales team in Seattle. He has helped develop AHT’s expertise and practice growth in life sciences and technology while assisting clients in various industries with their management liability exposures. He is a former board member and past chairman of TechAssure, a nonprofit organization for risk management professionals engaged in technology products and services.

Jamie Madonna is the property and casualty principal in AHT’s Seattle office. He belongs to the Center for Advanced Manufacturing Puget Sound, Washington Technology Industry Association, Pacific Northwest Business Aviation Association, National Business Aviation Association and Association for Packaging and Processing Technologies.

Ned Sanders heads the global services practice at AHT, where he is responsible for strategic relationships with leaders in key foreign insurance markets, including London, Bermuda, Hong Kong and Singapore. He focuses his business on growth-oriented global operations with less than $750 million in revenue in the technology, life sciences, manufacturing, nonprofit, financial institution, real estate and legal sectors.

David Schaefer, AHT president and CEO, leads the agency’s technology and government contractor insurance practices. He also led the development of a proprietary D&O loss prevention program and helped design an insurance certificate management and compliance system for real estate and multinational risks. Under his leadership, AHT has achieved national recognition for its technology and management liability programs.

Michael Tomasulo leads AHT’s management liability practice group. Prior to joining AHT, he was a founding member of the NASDAQ Insurance Agency, NASDAQ’s own full-service insurance brokerage. Tomasulo is a regular speaker at conferences such as the ROTH Capital Conference and Marcum Microcap Conference on topics such as IPO readiness, uplisting, Reg A+ and governance.

Derek Symer is a principal and director, nonprofit practice. He also is an experienced property and liability insurance broker, specializing in D&O, employment practices, media and publishers and cyber liability, as well as international coverage. He co-founded the Business Managers Roundtable, a networking and educational forum for business officers of private and independent schools, and is part of the National Business Officers Association and the American Society of Association Executives.

The Buckner Company

Mike Gale, a specialist in construction and surety bonds, is a member of the National Association of Surety Bond Producers and the Utah Surety Association, and was the convention chairman of the Associated General Contractors of Utah. He has served as a board member for the alumni association at his alma mater, Weber State University, and on the advisory council of WSU’s business school.

Béat Koszinkowski, the top producer at The Buckner Company, specializes in construction and real estate insurance. A Certified Insurance Counselor and Community Insurance Risk Management Specialist, Koszinowski is also an active board member at the Salt Lake Home Builders Association and a member of the education committee of the Utah Chapter of the Community Associations Institute. Born in Switzerland, Koszinowski is fluent in four languages and is a classically trained French chef.

Brad Nielson, who was born and raised on a potato farm and cattle ranch in Idaho, specializes in agriculture. President of the Buckner Company’ Idaho operations, he has been on the board of directors of the Idaho Independent Agents Association for 12 years. He has worked on association projects that include Make-A-Wish, Young Agents and Community Insurance Education.

Brett Nelson specializes in homeowners, small business, manufacturing and construction. He has served as the national chairman of the board of directors of the Independent Insurance Agents and Brokers of America, and on the board of directors of the World Federation of Insurance Intermediaries. He has been a member of various committees of state and national organizations as well.

Dustin Thorne is active in the Apartment Association of Metro Denver and the Community Associations Institute, an international organization of homeowners and condominium associations. He contributes to the Colorado Real Estate Journal, the state’s only commercial real estate publication.  He also is a regular writer for numerous other publications and and frequent speaker on podcasts.

 

Wraps: “Everything Is Negotiable”

There is no such thing as a standard wrap policy: “Everything is negotiable and has the potential to be manuscripted. It’s whether the insured is willing to pay the price.”

That was the advice from Bob Pedersen, AVP, of Chicago’s Brown & Riding Insurance Services, Inc., a wholesale broker specializing in construction. His talk to this month’s Construction Practice Group teleconference was arranged by Don Aberbook, risk manager/in-house counsel at Moody Insurance Agency.

Brown & Riding can provide an estimate of insurance costs as far as a year in advance with no more than geotechnical reports based on soil samples, Pedersen told the group.

“Traditionally most owners see their liability as contingent to the contractors and mostly for premises liability, but is there more?” he asked. Consider these questions:

  • What about completed operations through the statute?
  • What happens if the contractor goes out of business?
  • What if the GC’s limits have been exhausted from other claims?
  • What happens if you sell the property as the owner?

Extended completed operations tail coverage is important, he added. Carriers traditionally will endorse the policy to extend it through the completed operations statute in a specific state or 10 years, whichever time period is shorter.

He advises purchasing tail coverage for several reasons:

  • Dedicated limits for the owner and general contractor on the one specific project.
  • Reduced litigation between the general contractor and owner, since they are on the same policy.
  • Broader coverage.
  • Some potential cost savings, as credits can be removed from the general contractor’s bid.

He also listed the advantages of wrap-ups:

  • Cost savings: Lower costs to the property owner as bulk purchase of insurance lowers total cost. Contractors will be bidding on projects without the possible inflation of their insurance premiums.
  • Bid credits from contractors: Subcontractors will not include the cost of insurance in their bids because the coverage is already being provided for them by the wrap-up policy. All of the contractors have to enroll into the wrap for a specific fee that typically is based on the rate of their current policies as well as the percentage of work they are doing. The insured usually hires a third party wrap-up administration firm for a designated fee to handle all of the enrolling process as well as multiple other services to the insureds.
  • Improved control: Wraps provide improved control of the insurance on the project and remove possible uncertainty when it comes to relying on the insurance coverage of various subcontractors. It is a significant worry whether subcontractors carry the appropriate coverages under their insurance, whether subcontractors insurance will continually be renewed through the state statute, and whether the subcontractor will even be in business by the time a claim arises.
  • Extended products/completed operations coverage: There are varying thoughts on whether the standard ISO policy provides an extended period of time for the completed operations. Most wrap-up policies remove the possible discrepancy by placing an extended completed operations endorsement on the policy. It states that the completed operations period is extended up to the applicable statute in the specific state where the policy is written.
  • Repair work coverage: When placed correctly, the wrap-up policy will extend this to give premises coverage for any repair work the insured needs to do after the policy has expired. This would be something that one would think would typically be covered under an insured’s practice policy but it is standard these days for a carrier to put a wrap-up or project-specific exclusion on policies. This could prevent the insured from having coverage while back on the job site.
  • Dedicated limits: On wraps a dedicated set of limits applies to one project.
  • Reinstating aggregate limit: Wrap-up policies often reinstate the general aggregate limit on an annual basis during the ongoing operations phase of the project. This is more common for commercial than residential placements.
  • Better safety and loss control procedures. Owner control of the insurance broker and insurance underwriter makes it possible to require more stringent safety and loss control procedures of the GC and subcontractors
  • Reduction in time required for contractors to obtain insurance certificates.
  • Improved risk control and claim handling.
  • Peace of mind to the owner. This is the owner’s investment. It should be up to the owner to ensure that it is appropriately protected in every aspect of construction, including the insurance.

A future blog will talk about ways to make administration of wraps easier.

 

 

How IT Departments Cope with 24/7 Requests

Handling requests 24/7 and managing personal use of Wi-Fi by employees were among the topics at this month’s IT practice group teleconference. Here is some of the advice members shared:

  • Some IT managers are on call 24/7 for major problems, even if it means driving to backup servers in remote locations. Others have a partner or outside consultant who can step in to help.
  • One agency uses Veeam, a paid service that keeps a snapshot of servers in the cloud and offers high-speed data recovery.
  • When it comes to contacting all employees when there is a problem with a server or a potential emergency such as a hurricane, agencies use Twitter or text messaging. “We had to explain to people that they can access Twitter messages even if they don’t have their own Twitter accounts,” one member said. Setting up text-messaging groups can be effective for issues that affect only certain departments.
  • One agency has a help desk composed of a trainer, an account manager and an accounting systems staff member. Emails sent to the help desk go to all of them, and the first person available will answer the question.
  • Procedures vary for responding to after-hours texts requesting help. “If it’s reasonable, I’ll respond,” one person said. “Otherwise, I’ll say I’m not at my desk.”
  • Most are using the same devices for printing and copying..
  • Personal use of Wi-Fi by employees can be a challenge. One has a 5 MG Wi-Fi network dedicated to mobile phones and guests. “If there’s too much use, I can change the password and shut some of them out.”

 

Three Ways to Make Wrap Administration Easier

Three types of third-party firms can make the administration of wrap-up construction insurance policies easier. These are the suggestions from Bob Pedersen, AVP, of Chicago’s Brown & Riding Insurance Services, Inc., a wholesale broker specializing in construction.

  • Wrap Administrator –Third-party firms will administer the wrap-up policy and handle the enrollment of all parties.
  • Quality Assurance/Quality Control firm – These companies, usually owned by engineers or former contractors, provide peer review. They will take photos of good construction procedures as work progresses, so that the contractor can have a file showing the quality control if a construction defect claim arises.
  • Coverage Counsel – Having the insured’s legal counsel review the policy in advance is important, particularly in major projects.

Be cautious of general contractors that offer to provide wrap-up coverage and may view it as a profit center. It is usually more economical for the project owner to provide the wrap-up coverage.

Pedersen’s talk was arranged by Don Aberbook, risk manager/in-house counsel at Moody Insurance Agency. See previous post on the advantages of wrap-up policies.

 

How RPNI Members Approach Personal Lines Renewals

RiskProNet members begin reviewing personal lines policies as much as 100 days in advance of renewal dates. Initial steps include talking to the client and carriers about changes that may affect client needs.

These were among the comments at this month’s Personal Lines Practice Group teleconference:

  • “Check with clients on lifestyle changes. Have they started acquiring collectibles? Inherited valuables?”
  • Face-to-face renewal meetings get clients to pay attention to the process rather than the cost. It’s a good time to offer extra products, such as travel insurance..
  • “One of the biggest challenges is getting clients to compare apples to apples. The industry has shot itself in the foot to a degree with television ads commoditizing policies.”
  • No one has had claims experience with private flood insurance claims, but prices “are out of the park” and as much as double the prices in federal programs.
  • “The question is not if the ‘big one’ will hit, but ‘when.’ We want clients to understand the value of a good policy and a reputable company that will be there if they have a claim.”
  • “We always look for upselling opportunities. Perhaps a client wants to increase the deductible and reinvest the premium in higher liability and umbrella limits.”

Also see the previous blog on factors influencing the personal lines market.

Thanks to Practice Group Chair George Pester of JKJ for chairing the discussion.

 

How Online Tools Stack Up for Total Compensation Statements, Performance Reviews

Total compensation statements, benchmarking salaries and performance reviews —including the use of online tools to simply these processes, were the major topics at this month’s Human Resource Practice Group teleconference.

Recommendations and concerns expressed at the roundtable discussion include these:

Total Compensation Statements

  • ADP payroll service provides total compensation statements for employees.
  • Insight E-Tools has been used successfully by one RPNI member.
  • Two agencies have developed proprietary software based on Excel spreadsheets. Contact RPNI Executive Director Gary Normington for permission to use these models.

Benchmarking Salaries

  • Some major cities have employee councils that conduct surveys. A challenge is that many large employers see no benefit in taking the time required to participate, while smaller companies may be reluctant to share proprietary information.
  • Data from national surveys needs to be adjusted to reflect the local market.
  • If a position is unusual, it can be worthwhile to ask a trusted contact at a similar company to share salary ranges.
  • The Property Casualty Insurance Association of America offers some salary data.

Performance Reviews

  • “We’re moving away from a one-time annual meeting to check-ins several times a year. Are you ahead or behind of our goals?”
  • “We base merit increases on whether the person’s responsibilities have increased and whether they’re going above and beyond what is expected. Are they growing or are they on cruise control?”
  • “We have ratings of 1 to 5, but haven’t given 5s. We’re revisiting why we have a rating of 5, if we don’t use it.”
  • “We haven’t had performance reviews for years. Our turnover is low, it was time-consuming and managers didn’t feel it was working for them.”
  • “I’ve never heard of a manager who loves performance reviews. However, it we give one person a 5 percent raise and another person a 3 percent raise, we need reasons that are objective and in writing. If we ever ended up in court, we’d have a hard time convincing a jury it isn’t discrimination.”
  • “We switched this year to Reviewsnap. It’s powerful and easy to use.”
  • “If you use technology for performance reviews, keep an open mind. It’s unlikely that it will match exactly what you are doing on paper.”

This’ month’s discussion was led by Amanda Ross, SHRM-SCM, SPHR, of Moody Insurance Agency. The next Human Resources Practice Group meeting will be July 13 and will focus on succession and workforce planning.

 

What’s Driving Cost Increases in Personal Lines

Personal lines policies are increasing in price – occasionally by double-digit percentages, Personal Lines Practice Group members agreed at this month’s teleconference.

The Consumer Price Index data shows that auto insurance costs grew by 7.6 percent in February 2017. This was among the statistics that JKJ’s George Pester, practice group chair, presented. Some of the others follow:

  • Accidents and injuries are increasing, as more people are driving now that the economy has rebounded and the price of gas has dropped.
  • The National Safety Council estimates that 40,200 people died in auto accidents in 2016, up 14 percent since 2014. This is the largest year-to-year increase in more than five decades.
  • The Federal Highway Administration shows a 9.4 increase in miles driven from 2013 to 2015. Increased congestion on the roads means a greater chance of an accident. The last two years also have brought more accidents caused by distracted driving, more complex and sophisticated auto parts and increased accident frequency and severity.
  • The cost of hospital services increased by 3.4 percent from 2016 to 2017, meaning higher bodily injury costs.
  • Vehicles are more complex than ever. Repairing a taillight broken in an accident may involve replacing an entire portion of a vehicle rather than just the taillight today. This trend affects not only comprehensive and collision claims, but also property damage liability.
  • Prices for motor vehicle bodywork are up by 3.0 percent since last year.
  • Awards in lawsuits are increasing, with a median award of $75,000 in 2014, compared to $70,000 in 2014, the latest year for which figures are available. Awards of $1 million or more accounted for 18 percent of all personal injury awards in 2013 and 2014, up 17 percent from the prior two-year period.
  • Incurred losses and loss-adjustment expenses grew by 7.6 percent in the first three quarters of 2016 versus a rise of 2.7 in the comparable period the previous year.
  • Underwriting expense grew by 2.6 percent.
  • Against this background, insurers’ investment income has dropped because of prolonged low interest rates.

A future post will discuss how RiskProNet members are handling renewals in light of these factors.