Contents Spring 2017The Latest 'Storm' to Hit Florida Covering the Information Divide
Improving Technology Helps Fight Fraud The Drivers
Trend in Rising Auto Insurance Costs Mutual Transition
CEOs' Thoughts on Joining the Mutual Industry Putting Volunteers to Work
How to Make the Most of Employee Volunteer Programs
A Rising Tide
Insights from Chuck Chamness
Keyboards & Discussion
More Than a Spectator Sport
The Dirty Dozen
Where the Battles are Won
To Be Continued
NAMIC's Award in Innovation
Assignment of benefits schemes in Florida are causing big problems for consumers and insurers. There is hope that awareness and legislation will help curb the problem.
Covering the Information Divide
The information divide between insurers and policyholders has, at times, led to fraud situations. Improvements in technology are helping to build trust and bridge gaps.
Rising auto insurance costs have people wondering what is driving the increases and what might bring them down. The answer includes several trending factors.
The Affordability Complex
Defining affordability is a difficult task in general. Providing a definition when it comes to auto insurance is proving even more complex. It is creating dilemmas for the industry.
A Rising Tide
Participation in NAMIC's Educational Events Make Member Companies and the Industry Stronger.
Spring is an exciting time. It is the madness that comes each March, along with the hope that my favorite college basketball team – the Indiana Hoosiers – will make it deep into the NCAA tournament and raise a sixth championship banner at Assembly Hall.
It is prime time in the state and federal legislative sessions, when every improvement in public policy our industry seeks is still possible and when every threat we face is still playing out. And it is the height of NAMIC’s in-person educational event season.
At NAMIC, it is our mission to represent you on the state, federal, and international legislative and regulatory fronts. But we’re also committed to helping you stay up to date with the latest industry issues and in touch with your fellow NAMIC members. NAMIC’s educational events are some of the best ways we know to fulfill that goal.
By the time you have this issue of IN magazine in your hands, we’ll have wrapped up the always well-attended and informative Claims Conference and Commercial Lines Seminar, and several more events are on the horizon.
Each year, thousands of NAMIC members attend the nine in-person events, in addition to the Annual Convention, offered around the country. And each year, I continue to be amazed and encouraged by that attendance and level of sharing – within the parameters of the anti-trust statement, of course – that happens during these events.
The learning and networking that go on show me that there really is something to the aphorism “A rising tide lifts all boats.”
This quote, often used by my old boss Jack Kemp – who was the secretary of Department of Housing and Urban Development when I worked for him – is credited to another JFK, President John F. Kennedy. It refers to the idea that when the general economy performs well, individuals at all levels will reap the benefits.
The adage fits well within the mutual insurance industry, the NAMIC membership in particular. Perhaps the best example is the annual CEO Roundtables.
CEO Roundtables, which NAMIC has hosted for nearly 30 years is one of the most-valued and consistently attended events on the calendar. Whether the executive-level attendees hail from large companies or small, everyone has a place and a voice … and an opportunity to talk about the issues that are top of mind for them.
Based on my conversations with so many of you throughout 2016 and into this still relatively new year, I anticipate the 2017 event to include several discussions about governance in the mutual structure and technology – whether autonomous vehicles, cyber, drones, systems, or telematics.
While topics and particular discussions change with each passing year, the event’s format stays the same – and lifts all boats – because it works. Being able to openly discuss opportunities and challenges and the personal experiences within them can help make each attendee better at his or her job.
We’ve seen increases in roundtable discussion sessions at other NAMIC events because of the CEO Roundtables’ success. Sharing across all departments and all levels of mutual insurance companies makes companies and, in turn, the entire industry better.
For those of you who are active participants in NAMIC’s educational events, I am glad you are part of the excitement. For those of you who haven’t attended, I encourage you to give them a try. The stronger the tide, the higher our mutual ship will rise.
Mutual insurance industry CEOs don’t get to corner offices overnight. They work their way up the ranks, many of them crossing private-sector/public-sector and big-company/small-company lines. IN magazine asked two relatively new mutual sector CEOs who have crossed those lines about their experiences.
What was your path into the insurance industry?
I went to Allegheny College, which is a really small school in Pennsylvania. At the time, there weren’t many promising jobs. I was familiar with only two companies among those recruiting. One was Kmart and the other was the property/casualty division of Aetna. I didn’t really envision myself going into retail. I did well in the interview with Aetna, but didn’t have any idea what I was walking into. It was 1982 and that was my baptism into the industry.
How did you learn about the mutual world? What enticed you to it?
I heard about the mutual business model from a number of friends. When I heard about the opportunity at CopperPoint, I thought it would be exhilarating to lead a private-sector company with a great balance sheet and a strong leadership team that also was seen as a good corporate citizen.
I knew a number of people in the business who had told me how they had taken similar routes. They said I would love it, especially the commitment to community, employee satisfaction, and customer service. I love to be involved in the community, to give back, and that is really what CopperPoint and mutual companies stand for. Here, the emphasis is the long-term financial outlook instead of having to post results that will satisfy shareholders every quarter. I find the mutual experience really fascinating and rewarding from a number of different perspectives.
It doesn’t sound like moving into the mutual sector was a tough sell, was it?
No, not at all. It’s completely different from my previous career experiences. From a size and company board standpoint, it was a unique opportunity for me, a chance to join a highly regarded company and successful board of directors. It has been a big learning experience for me and a very rewarding one.
Is there a difference between the stock and mutual worlds?
I think there is a different atmosphere, but it is part of my nature to try to get quality results and improve results, even if you’re not doing it from a shareholder perspective. I think that is just part of running a company in a good light. You want to make sure a company is producing a profit and running efficiently. It gives the company stability, which is a big deal for a mutual policyholder. I think those attributes are very much parallel with my experiences with Travelers.
I can apply what I learned at Travelers to what we are doing here, which is fantastic. At the same time, I get the benefit of being in a smaller company that is very much community oriented. I feel like I’ve had the best of both worlds.
What was it like transitioning to CEO of a mutual insurance company?
It was absolutely the best thing to get the opportunity to take all of the things you have learned over the years – good and bad – and apply them in a new business environment. The fact that it’s a smaller company makes it really more my and the senior team’s business to mold. While you could say it’s a little daunting, I think it has given me a tremendous opportunity to use the skills I have learned from great people over the years. We’re putting together plans that we think will keep the company poised and growing for years to come. I’m thrilled to be at CopperPoint.
Any other words of wisdom?
I have been blessed in my career to have many different jobs and opportunities -- albeit with only three companies – to increase my skill set in many different directions. Life, to me, is about exploration. I don’t think I would appreciate this mutual experience nearly as much if I hadn’t come from a public company. They are two very different experiences, but each vastly rewarding, and I have only scratched the surface of the mutual one. I think it is important for people to experience both – the stock and mutual sides of the business.
A final thought I would leave you with: If you are in the business community, find a mentor or mentors. Also, be a mentor. It is one thing people don’t talk much about, but it is vital for careers. The only way I am sitting here is because people took an interest in me and I took an interest in learning from them.
I was fortunate in that one of the most prolific property/casualty leaders, former Travelers' CEO Jay Fishman, was a guiding light for me. He was my number one cheerleader and mentor for the past 15 years. His influence on my career, and so many others, is a driving force in making me who I am today. His passing in late 2016 is a loss for so many in the industry, but for all the people he touched, we are blessed and compelled to keep his legacy alive.
What was your path into the insurance industry?
I was 19, in college, and working at a restaurant. I was serving an insurance agent and his wife; they liked my style and asked me to come work for them in their agency. That was the first taste of insurance I got and I fell in love with the business. I changed my degree to include insurance, I have a Bachelor of Science in business administration.
You’ve worked in the mutual side of the business and the stock side; you’ve worked in an agency and for large companies. What was that like coming to the smaller-mutual-company side of the industry?
It brought back all the different experiences I’ve encountered – marketing, underwriting, actuarial, product development, agency management. In a large company, you have certain resources right there at your fingertips. If you want to go the predictive modeling route, you have actuaries to assist you in house. In a smaller mutual, you have to get out there and figure out for yourself where to get those resources. You have to pay attention to every single aspect of the business. I personally find it invigorating.
Do you notice a difference between the stock and mutual sides of the insurance industry?
Fostering strong business relationships is so important as a mutual. Agents do business with people they have relationships with. Key associates recognize the assets of your company and will work with you in terms of your strategies. We need to be better insurance experts in our markets of choice. My hope, for the mutual side, is to find even more efficient ways to do business that will keep us competitive.
You’ve been in some high-ranking positions before, managing large regional offices, but what was it like to transition to CEO, a position you had not held before?
It was my aspiration and I was ready to step into a new role. From 2012 until I joined Frederick Mutual, I had gotten a few inquiries in the super regional and national spaces. They were good opportunities, but I wanted to do something different. This was something different, but it aligned with my industry experiences.
I preferred the approach the board of directors took during the hiring process. We met multiple times over the course of several months in different group settings. Those were some very detailed and candid meetings. I got to know the board and they got to know me. You don’t always get the luxury of understanding the new company dynamics prior to joining.
Are there any particular aspects that enticed you to lead a smaller mutual company?
I am a huge fan of questioning everything and finding the root cause of problems in order to find sustainable solutions. Follow up and follow through are part of my daily routine. In a small company, there is no one sitting behind you to do it for you. You own it. You influence results daily.
What is next for your company?
I want to be on the forefront of helping mutual companies flourish. My belief is our customers desire a relationship with their insurance companies. During the economic downturn, significant disruption occurred for policyholders, agents, and companies. Mutual companies filled some of the gaps. In order to compete, we need to be the most efficient and effective in what we offer. A lot is on tap for Frederick Mutual; we are a 174-year-old startup company.
In light of the current and impending insurance industry talent gap, it's become imperative that companies show millennials just how much their career desires and the mutual INDUSTRY’S story match one another.
You’ve no doubt heard the expression “possession is nine-tenths of the law.” It means that ownership is easier to maintain if one has possession of something and difficult to enforce if one does not.
For the insurance industry, a slight modification to that old adage may be in order. When it comes to the looming professional talent gap, a more appropriate saying may be “perception is nine-tenths of the problem.”
The unfortunate reality is that despite the many diverse career opportunities that exist within the insurance industry, the nagging perception of insurance as boring and conservative is making it difficult for insurance companies to attract the next generation of professional talent.
Is There Really a Talent Gap?
The answer is yes, with some sobering facts as evidence.
The U.S. Bureau of Labor Statistics reports current insurance industry employment stands at 2.5 million workers. The number of insurance professionals age 55 and older has increased 74 percent in the past 10 years. And with 25 percent of industry employees nearing retirement by 2018, it is expected that nearly 400,000 insurance jobs will need to be filled by 2020.
Right now, only 27 percent of insurance professionals are under the age of 35. The industry’s future lies with the millennial generation – those born from around 1980 to the early 2000s – but current statistics show the industry lagging in attracting that group. According to the Insurance Information Institute, eight out of 10 millennials are unfamiliar with insurance industry career opportunities. Among those students who show interest, a recent study out of the University of Hawaii reports that graduates of existing risk management and insurance programs will meet only 10 percent to 15 percent of the current industry needs.
Clearly, there is much work to be done to overcome some significant challenges. But there is some promise.
The Education Challenge
First, the bad news. As already pointed out, insurance is not perceived as among the most exciting careers option. Much of that perception, however, is because of a lack of awareness about the diversity of opportunities available within the industry. The fact is the insurance industry has a great story to tell. The trick is telling that story effectively. That means first getting the attention of the younger generation and then telling them insurance’s story in a way that appeals to them.
Now for the good news. There are some important positives for insurance companies.
Insurance is a stable industry. The insurance industry unemployment rate of 2.4 percent is well below the most recently reported national average of 4.7 percent.
Even in the worst economic times, individuals and businesses will always need insurance.
According to the I.I.I., more than 60 percent of millennials are interested in a job that involves analyzing risk and recommending solutions, which are key aspects of insurance.
Add to these the fact that 50 percent of millennials want a stable job and more than two-thirds want to make a difference. A career in insurance makes for a perfect match.
Professor Mark Browne, Ph.D., Robert Clemens distinguished chair in the School of Risk Management at the Peter J. Tobin College of Business at St. John’s University, echoes that sentiment.
“A lot of young people do want to be involved in work that makes a difference,” Browne says. “And as you and I know, when bad things happen the insurance industry steps up.”
Advice from Educators
“An awful lot of companies, regardless of size, have people who are interested in giving back. And, for some, that involves getting involved with the university program. I would encourage companies to create a culture where people want to give back. The natural drive then for people is to want to give back to the profession that worked for them.”
Professor Mark Browne, Ph.D.
St. John’s University School of Risk Management
The key is convincing young people of the match. Professor Robert Hoyt, Ph.D., head of the risk management and insurance program in the Terry College of Business at the University of Georgia says at schools like his, which has a robust and well-known insurance program, overcoming negative perceptions and getting students’ attention is not a problem. It’s the schools without insurance programs that present bigger concerns.
“On a lot of campuses there’s not even a basic entry-level course,” Hoyt says, “so you’re trying to communicate about an industry where people don’t even really have a basic understanding about it. Then the problem is that the stereotypes kick in, like for insurance, where kids think that it’s not very exciting and that it’s just a lot of sales.
“What people don’t always appreciate is that by and large most of those are very technically significant positions, too,” Hoyt continues. “You’ve got to understand a lot about operating businesses, managing risks, and technical insurance things to be successful even in those sales-oriented positions. Once students learn that, they’re likely to say, ‘Oh, wow, that’s pretty cool.’”
Hoyt believes the insurance industry needs to consider ways it can help grow the educational opportunities for students. “You need an audience that’s going to listen to you for more than a couple of minutes to really have an impact,” he says. “Expanding the base of education at colleges around risk management and insurance would be the absolute best thing to support.”
Growing that education base is critical, but so is communicating with millennials from a perspective to which they can relate. That means focusing on the future and not on the past. Joan Schmit, distinguished chair in risk management and insurance at the University of Wisconsin School of Business, offers this advice to insurers.
“I asked for input on this topic from one of our new lecturers. He recently completed his MBA, holds a law degree, and has significant work experience, giving him useful perspective,” Schmit says. “He commented that the common approach by insurers to use their length in business as a selling point may actually have the opposite effect. Students often perceive duration in business as lacking innovation.
“He recommended that insurers demonstrate to students what their entire careers will be, that the first job is not the only position,” she continues. “He thinks that the industry is fascinating and has numerous fields. As individuals develop, they can move from place to place.”
Advice from Educators
“The key is to reach out to local colleges and universities and offer to come speak to a class or participate in a program on campus to provide support to the students. Often, what they’re able to gain from that is enriching for the professionals that participate, but they also, by virtue of representing their company, will help expand the attention that students on that campus are going to have.”
Professor Robert Hoyt, Ph.D.
University of Georgia
Risk Management and Insurance Program
Recruiting the Next Generation
Having a good story to tell is critical to attracting new talent. But equally important is having a plan for how to make a meaningful connection with prospective talent. Insurers across the United States increasingly identify recruiting as a significant part of their long-term strategic planning. One such company is Indiana Farmers Mutual Insurance Company. Kim Smith, the company’s president and CEO, says her company has seen a decrease in the available talent the last several years. That fact – that incoming talent is not keeping pace with retiring talent – is particularly alarming to Smith.
“The statistics that I see, which forecast the number of boomer retirements from our industry over the next two plus years are staggering,” Smith says. “Plus, many of those who will transition out of our organization are our top leaders, those who are seasoned and possess a great deal of institutional knowledge and industry expertise.”
Smith says Indiana Farmers is responding to the need to fill those positions in part by trying to better understand what the next generation of associates wants and values in the workplace. “We know first-hand that they want opportunity, flexibility, community and social engagement, and a ‘purpose.’ We are trying to be responsive,” she says. “It isn’t that difficult. In fact, most of what these folks want are the same things we all want.”
Several new initiatives are under way at Indiana Farmers that Smith says are specifically designed to identify and bring in new talent. They include an internship program with a multi-faceted approach that includes a strategy that provides internships in partnership with independent agents; stronger relationships with universities through greater on-campus participation; a new corporate social responsibility program; and an internal training and development program focused on developing new leaders from within the company.
PEMCO Insurance Companies is taking a similarly aggressive and innovative approach for its recruiting strategy. Mari Anderson, PEMCO’s vice president of people and customer service, says her company is working diligently to attract new talent. One thing she’s discovered is that new hires of any age or experience level want to make an impact right away.
“In previous years, you may have had to ‘earn your keep’ by being there five years, ten years, or whatever that magical number was to get the really impactful projects,” Anderson says. “Today, they want to be able to come in and work day one on key projects toward impact.”
Anderson acknowledges that this desire for immediate impact has created some cultural challenges for the company.
“But how do you pull that impact early when employers really don’t know how long people will be with us? I often refer to it as moving a boat,” she says. “We’re moving a boat toward that agileness, that flexibility to be able to anticipate and adapt to the needs of our talented people and our competitive strategies.
“It’s not standard in a lot of traditional industries, or a lot of corporations, to be that agile in talent management,” she continues. “But that’s the way of the world now, and that’s the way of the employment world, especially in our market.”
Connecting with students can take many forms, from social media outreach to industry events to guest lectures and scholarship programs, but professional educators agree that it’s the high-touch activities that remain the most effective.
“It’s the interpersonal contact and the ability to talk to people that influence students more than social media, although social media certainly has its role in raising awareness,” Browne states.
For that reason, career fairs and internships remain at the top of the list for effective recruiting strategies. Anderson says PEMCO has a robust engagement program with local colleges and universities, but it has changed its philosophy on internships in recent years to meet students’ changing expectations. PEMCO’s emphasis is no longer just exposing students to the organization, it’s more on demonstrating to them how they can make an impact.
A program dedicated to educating students and young professionals about the insurance industry as well as the limitless career opportunities it has to offer. MyPath was created as a marketplace of information, providing educational information about the insurance industry and connecting students to insurance internships.
Gamma Iota Sigma
The international risk management, insurance, and actuarial science collegiate fraternity promoting, encouraging, and sustaining student interest in insurance, risk management, and actuarial science as professions.
Insurance Careers Trifecta
A cross-industry, multi-phased initiative designed to raise awareness for career opportunities in the risk management and insurance professions as well as recruiting the next generation of industry leaders.
A school-to-work insurance program that teams with high school and college educators to provide a useful insurance curriculum for students.
“Today, exposure is a baseline,” Anderson says. “We want you to be able to impact us during your time here and you to be impacted as well, so you can see what you could be able to achieve. We keep in contact in hopes of bringing students back for multi-year internships.
“We try to recruit them for longer-term positions after graduation,” she continues. “We also are connecting with them to influence incoming interns as referrals. Our past interns help cultivate and encourage new interns to choose us as an opportunity.”
Regardless of company size, the internship remains one of the most effective tools. For companies with internship programs, Schmit encourages them to take full advantage of the opportunities with local educators. For companies that don’t already have a program, she strongly recommends they put one in place.
“If there’s one thing I would really suggest, it is that companies go to their local universities or colleges and try to get together an internship program,” she says. “Even if the college doesn’t have risk management or insurance programs, they probably have finance. They can get some of those students to have internships with them.”
Hope for the Future
With 2020 looming and the growing demand for young insurance professionals not abating anytime soon, there is no time for companies to waste in defining or refining the approach to talent recruitment. That said, the growing awareness of the issue and the increasing strategic focus on the problems by companies of all sizes give educators and employers hope for the future.
Indiana Farmers’ Smith sums it up this way: “This talent gap is real and is certainly a challenge, but it is also an opportunity, which I am confident we can seize upon. As an industry, we must work together to help job seekers know and understand us better. We have a great story to tell. Collectively, we just need to tell it and tell it more often with more effectiveness and with greater passion.”
Putting Volunteerism to Work
Company-Wide Volunteerism Programs Are Becoming Popular Ways to Give Back to Communities. Mutual Insurers Are Finding Strategies to Help Boost Program Success Rates
When a massive fire took down a huge steel mill in the Buffalo, New York, area, nearby mutual Merchants Insurance Group began wondering how it could help the affected community. Employees wanted to get involved — many happened to be volunteer firefighters. After consulting NAMIC forums and doing other research, Kelly Julius, Merchants’ vice president of human resources, started thinking about implementing a workplace volunteerism program.
She’s not alone. Workplace volunteerism programs are increasing in popularity.
When done correctly, they can be huge morale boosters that help companies attract and retain talent. When done incorrectly, they can be confusing and create scheduling nightmares.
So how do you stay on the morale-boosting, talent-retaining side of things? Here are a few important pieces of advice every mutual should consider when starting, thinking of starting, or revamping a volunteerism program.
1. Start at the Top.
For a volunteerism program to be viable, the management team has to be on board and should be willing participants, Julius says. Her recommendation: before doing anything else, pitch the volunteer program idea at a regular staff meeting with senior officers.
“I like to put it out there and gauge the room. That’s really where your roadblocks are going to be … if there are to be any,” she explains.
The management team is also likely to be where enthusiasm originates. CEOs and top executives are more likely to act as role models for charitable activity, according to a report on the property/casualty insurance industry’s charitable giving by consulting firm McKinsey and Company. Nearly two-thirds of the insurance company foundations surveyed in the study reported that CEOs were acting as charitable role models, which was up from just 16 percent in 2011. More than half of insurance company CEOs now make specific giving decisions themselves and communicate news about it to employees.
2. Document the Plan … With Explicit Detail and Flexibility.
Putting a volunteerism program in writing helps avoid conflict-inducing questions such as, Why does that person get the day off and I don’t?, explains Maureen Mulcahy, Erie and Niagara Insurance Association’s vice president of corporate relations and corporate secretary. Off-the-record programs might work for a while, especially in small companies, but there will eventually be a need for more detail and consistency.
Erie and Niagara’s 64-person staff has been active with charitable foundations for a long time, but it recently opted to create a more-structured volunteer program.
“We decided it would be better to have a formalized written policy so that people know what to expect,” Mulcahy says. “They didn’t realize we would let anybody volunteer as long as they weren’t on disciplinary review.”
Now, employees can take up to two paid days a year for volunteer work. People know what is expected of them and supervisors can administer it all consistently, Mulcahy says. The move has boosted morale and increased interest in volunteering.
“People are extremely appreciative,” she adds. “We’ve gone out and worked at the Ronald McDonald House, the West New York Food Bank, and a number of other local charities.”
But good volunteerism policies don’t just say, “It’s ok to volunteer on company time.” They should provide significant detail about who can participate, how much time is allowed, what counts as volunteer work, and any other information necessary to ensure employees are equitably engaged.
“In the policy, we give examples of appropriate volunteer programs – the Insurance Industry Charitable Foundation, Habitat for Humanity, food banks, and so forth,” Mulcahy explains. “We also give examples of ones that we would not allow, which would be coaching a child’s sports team, judging a beauty contest, or attending a religious or personal-interest conference.
“It’s not to be used for organizations that obviously discriminate based on race, color, etc.,” she adds. Organizations also have to be recognized as tax-exempt by the Internal Revenue Service and designated as a public charity.
Scheduling is another important issue to address in volunteerism policies, Merchant’s Julius cautions. Allowing days off for volunteer work can leave departments pressed for time, particularly if they have several tenured employees who already get three or more weeks off a year. Ensuring that employees understand important deadlines, projects, meetings, and milestones cannot fall by the wayside is a crucial part of a successful program, she notes.
At Farmers Mutual Insurance Association of Hull, the volunteering program runs somewhat informally, but expectations about scheduling are clear, according to Will Maas, the company’s president. One-day volunteering gigs don’t come out of paid time off, he says, but if the volunteering project is longer term, such as a week-long trip to another country to build housing, the volunteer time is deducted from vacation time and sick days.
3. Don’t Make It Just About Attracting Millennials.
Mutual insurers — and virtually every other industry — are looking for ways to attract and retain millennials, and many have high hopes that volunteerism programs will do the trick. About 22 percent of millennials volunteer, according to the Corporation for National and Community Service. The Case Foundation’s “2015 Millennial Impact Report” found that millennial employees are most likely to volunteer using paid time off or by taking part in an optional all-company volunteer day. In a 2015 survey by America’s Charities, a nonprofit that encourages workplace giving programs, 77 percent of respondents said they believe employee engagement opportunities are important to the recruiting strategy to attract millennials.
But older employees are also interested in volunteering. Data suggests they may even participate at a higher rate than millennials. According to the Bureau of Labor Statistics, 29 percent of 35- to 44-year-olds and 28 percent of 45- to 54-year-olds volunteered, highlighting the importance of ensuring an inclusive volunteering program.
“I don’t think that it is just the millennials,” Erie and Niagara’s Mulcahy says. “I would say we get equal interest from other generations, too. We’ve always heard that millennials want to be out there in the community with social responsibility. And they may, but not any more than anybody else in our company.”
Maas agrees. His employees range in age from their sixties down to their early twenties, and he doesn’t see any correlation between age and interest in volunteering.
“I really think that [age] doesn’t make very much difference here,” he says.
But expecting volunteering programs to do the heavy lifting in recruiting can be dangerous, Julius warns.
“I don’t know if it would rank at the top of the recruitment benefits that someone would look at when considering to join Merchants,” she says. “I think if we did not offer volunteer time off, it wouldn’t reduce our ability to bring on talent.”
The bigger rewards from volunteering programs could actually be the potential exposure to opportunities for innovation or to build new market knowledge, according to the McKinsey report. Maximizing social impact and strengthening the brand are also priorities for property/casualty insurance companies, the report says. Most respondents do expect corporate giving to improve recruitment, engagement, and retention, but they also say it differentiates a company from competitors, builds leadership skills among employees, and generates positive publicity, which can help increase customer satisfaction and loyalty.
That seems to be the case for Erie and Niagara. “I think our biggest payoff has actually been our branding in the community,” Mulcahy says. “They’re floored that we’re doing this.”
Emphasis on Inclusion
While organizations understand the importance of diversity within their businesses, experts say there is still room for inclusion.
By 2044, the United States will be a majority-minority nation. But even today, women outnumber men, African Americans make up more than 13 percent of the population, and Hispanics and Asians are the country’s fastest-growing racial minorities.
With our nation growing more diverse by the moment, many organizations within the mutual insurance industry have responded with a recognition of the importance of diversity in the industry’s workforce, and they have initiated a host of awareness programs to go along with it.
But in some corners of the industry, something akin to “diversity fatigue” has set in, according to Margaret Milkint, managing partner of insurance industry talent recruiting firm The Jacobson Group. The constant message has been to be concerned about and focus on diversity, and Milkint says most people believe they are doing that. Meanwhile, too little emphasis has been put on actionable things companies can implement to make sure there is inclusion.
“The industry is now at the stage where we need to go beyond the rhetoric. We need to go beyond what we have been doing in terms of awareness and educating. That is passé,” Milkint says. “Where we need to go, what we really need to do is get actionable, practical, real-time initiatives for organizations to take heed of and actually do.” She says 2017 is the year to do it.
The Business Case
American Family Insurance is one of the mutual insurance companies that has made a serious commitment to diversity and inclusion. As Tracy Williams, the company’s diversity and inclusion adviser, says, “without a workforce that reflects the customers they serve, companies can’t truly understand their communities.
“Customers are number one,” Williams continues, “and our customers are diverse. We have to have leaders who can relate to our customers and who look like them.”
She says a representative workforce means American Family is able to create products that resonate with the entire customer base.
Plus, diversity and inclusion can ensure that the most talented people are ready to lead companies into the future.
So even if people don’t buy into the moral imperative of a diversified workforce, the business case is hard to ignore.
Answering Questions to the Remaining Challenges
According to industry leaders, moving from the idea of a need for diversity to actually having a workforce that reflects its customer base is an essential goal. It will only strengthen companies and the talent pool from which they can draw.
With the business case in mind, the question becomes: What’s keeping a flood of diverse candidates from more companies’ C-suites and boardrooms across the nation?
Two schools of thought tend to dominate the answers to that question, according to Derek Avery, senior associate dean for diversity and global initiatives at Wake Forest University. One, he says, is that everyone is well intentioned and would love to hire a more diverse workforce, but they just can’t find the right talent within those groups. The other is that those making hiring decisions are biased.
Sure, there are challenges to finding the right talent, especially because there are many organizations competing over a relatively fixed pool of diverse individuals interested in working in the industry. But bias also exists.
“We have to recognize that people on both sides have some validity to what they are saying,” Avery says. “And we have to operate somewhere in the middle.”
Therefore, the next question is: How can the industry operate in the middle to grow the pool of diverse, talented, and prepared employees?
One of the answers is to recognize that a lack of diversity and inclusion could be a self-propelling problem. Avery suggests that, perhaps, leaders are naturally attracted to protégés who look or act like them.
When there is no diversity in leadership positions, young diverse talent already in the industry is more likely to grow discontent and restless and move on to another company or industry in which they feel better represented. It may also be that children within minority groups will overlook certain industries as career options all together if they feel they lack representation.
“If you start to recognize that people who are being promoted – and who have always been promoted – all look a certain way, you need to ask why,” Avery says. “It’s easy to let yourself off the hook and say that these are just the best people. But you need to take a deeper dive and ask why they are the best.”
He says appraisal criteria is one of the first things to examine. “Try to identify the criteria used for promotion,” Avery recommends. “Are we using criteria predictive of success at the next level? Or are we using what we have historically looked at?”
The conversation about diversity has been going on for a long time within the mutual industry, and many seeds have sprouted, according the Margaret Milkint from The Jacobson Group. She points to the increasing number of female leaders throughout the industry as an example. But she says it still needs to accelerate.
Another answer is to cast a wide net around the topic. Gender diversity and ethnic diversity are normally front and center, but if the idea is to represent the community as a whole, diversity in terms of generations, geographies, intellects, and sexual preferences should also be included.
That often requires people to step out of their comfort zones. “It is a little scary. If a company is a risk-averse one, it won’t be comfortable going through the process of making sure your company is more inclusive,” American Family’s Williams says. “But if everyone is on board with the idea, you will make it through.”
Recruiting and mentoring cannot be overlooked here. “Some industries have gone so far as to have career fairs in minority communities or to go into institutions of secondary and higher education,” Avery says. “Send people in to ask ‘Have you ever considered this as a career?’
“Have a CEO take an interest in developing someone who doesn’t look like [him or her],” Avery continues. “That sends a very powerful message. People see that as what is valued and expected. That cascades down and others take cues from it.”
Jacobson’s Milkint says it all comes down to action. Diversity is about embracing and celebrating people’s differences. Inclusion is about weaving those differences into the actual fabric of a company.
“When we do that weaving, that’s when the magic happens,” she says. “We get business impact. We get value. We deepen our relationships. We had to start where we did. We had to understand people’s differences. Now we’ve elevated our thinking and we need to tie it all together.”
The Life and Death (?) of the Performance Review
Some HR-related headlines tell us the traditional review is a dying trend. Is it really? Or is it just taking on a new kind of life?
One of the hot topics in business stories the past few years has been reporting on the fate of the annual performance review. Several top corporations have recently done away with them … to the glee of their thousands of employees. From powerhouses such as Adobe and General Electric to startups such as Retrofit, it appears the annual meeting with the boss is becoming obsolete.
Samuel Colbert, Ph.D., professor of management at the UCLA Anderson School of Management, wrote in his Wall Street Journal column “Get Rid of the Performance Review!,” “you can call me ‘dense,’ you can call me ‘iconoclastic,’ but I see nothing constructive about an annual pay and performance review … To my way of thinking, a one-side-accountable, boss-administered review is little more than a dysfunctional pretense. It’s a negative to corporate performance, an obstacle to straight-talk relationships, and a prime cause of low morale at work.”
Other complaints have been lobbed at traditional performance reviews, particularly about their ineffectiveness resulting from managers who are ill-equipped to conduct them.
“[Managers] miss the whole point of the conversation, which is to discuss past and current performance, what is working and not working, future goals and expectations, and doing all of this in a collaborative two-way dialogue,” says Susan Steinbrecher, president and CEO of Steinbrecher and Associates, a corporate leadership training firm. “Most leaders don’t get this type of training, and they desperately need it.”
But has this decades-old business tradition really gone the way of paper invoicing?
The Business Standard of Reviews
Despite the hoopla about replacing formal performance reviews, the majority of organizations continue to use the standard annual tool for sharing job-performance-related information, according to Human Resource Executive. WorldatWork discovered that “in spite of all the chatter, these newfangled techniques are actually being used by only a fraction of large organizations.”
“What percentage of all the Fortune 500 companies have abolished the conventional annual performance reviews? Answer: three percent,” says Richard Grote, president of Grote Consulting Corp., a performance management consulting firm. “The fact is, this is a man-bites-dog story. This is the rare thing. That’s why when a company says, ‘We are going to give up the conventional performance appraisal,’ it makes the news.”
Annual performance reviews, Grote opines, help company management when making informed decisions about compensation, promotion, downsizing, who should stay, and who should go. But, for Grote, the primary reason for annual performance reviews is that it is a key responsibility of leadership.
“Every person who works for an organization, whether it is GE or Grote Consulting, wants the answers to two questions: ‘What do you expect of me?’ and ‘How am I doing at meeting your expectations?’” Grote says. “I believe that organizational leaders have an ethical obligation to answer those two questions for every single person who picks up a paycheck.”
Grote recalls his own annual performance review for his initial job out of college as a “disaster” but also a good example. “My boss called me in one day and gave me what he called a performance appraisal. It was a disaster because I was not doing a good job,” he says. “My boss had the courage to tell me that. He laid it out cold, straight between the eyes. And he was right. I was a young kid right out of college. What happened is that I immediately changed. I got to work. I got the message.”
Grote readily admits that the once-a-year closed-door meeting with the boss is arbitrary. But he says it does have a benefit – it provides sufficient time for the supervisor and employees to think about their progress over the course of a significant period. “Another [benefit] that I think is not often considered when people denigrate the annual performance review is that, at a minimum, it assures that every single person in the organization has the opportunity to talk with his or her boss about how that person is doing at least once a year.”
A New Performance Review Lifecycle
But corporate America is changing. Leaders expect results from employees faster than ever before. Waiting an entire year to talk to employees about performance seems to be disconnected from current expectations.
“The quarterly review forces the conversation between leaders and employees to happen more frequently,” Steinbrecher says. “This allows the leader and employee to correct the course if they are not on the same page as well as adapt and flex to new priorities or goals for the organization.”
It may sound good on paper, but there are challenges to more frequent reviews. The main ones being whether managers will have the time to give more reviews and whether they will go through with them at all. Grote believes many managers will opt for the latter of those concerns if they are supposed to conduct them more often.
Steinbrecher agrees, saying that not all leaders will do more frequent reviews, so “the annual one still serves as the backup feedback process.” While she doesn’t have a problem with the singular annual review per se – it is important for employees to go into a new year with a renewed focus and goals – she believes company leaders who conduct more frequent reviews should consider the fourth-quarter appraisal as that end-of-year all-encompassing review.
While she is all for the more-frequent conversational reviews, Steinbrecher is adamant that there be a finely tuned strategy for conducting them. “I think the process needs to be crystal clear as to what happens and what the purpose of each quarterly review is,” she says. “If it has a structure and a goal for each quarter, then both the employee and leader feels more equipped for the dialogue, which means that it will be a better experience for both.”
Modified Reviews in Practice
For Patrick Gagen, human resources director for Harford Mutual Insurance Company, the annual performance evaluation has become dated and has lost its relevancy in the current constant-feedback environment. He believes manager/employee conversations on performance work well for jobs that are project based and require managers to course correct in a timelier manner. He says this helps employees adjust and succeed.
“I do feel the annual review has lost some of the impact it originally held,” he says. “Given that employees are looking for feedback throughout the year, it makes sense to look at different ways for employees and supervisors to interact.”
Later this year, Gagen will have the opportunity to test his theory that quarterly reviews promote open and useful communication when Harford Mutual rolls out its new quarterly review format. He anticipates good results.
“This ensures employees and supervisors are engaged on performance throughout the year versus waiting for the traditional year-end evaluation,” he says. “This will encourage more two-way communication throughout the year.
While only a few U.S. companies have redesigned their employee review process, Pioneer State Mutual Insurance Company prides itself as an innovator in performance feedback.
Since the company’s beginning more than a century ago, the manager/employee relationship has been built on an open-door policy and frequent documented conversations.
“We feel that the informal meetings are better received and keep it more of a conversation. We feel it has a positive effect for all our staff. It’s a very friendly, respectful, and professional environment,” says Pam Emmendorfer, the company’s vice president and director of human resources. “If you find the right people, provide them with opportunities to grow and flourish, compensate them fairly, provide good benefits, and establish a good work environment, all the other things fall into place.”
Despite the media hype about the death of the annual review, it appears this yearly appraisal process will be around for quite some time ... much to the chagrin of the American workforce. “The reason there is so much distress and rancor and angst over performance appraisal ratings I can explain in six words,” Grote says. “‘The infinite human capacity for self-delusion.’ We all believe we are better than we really are.”
The Latest ‘Storm’ to Hit Florida
Assignment of benefits schemes are having costly impacts on THE SUNSHINE STATE’S consumers. Industry groups are hopeful 2017 legislative efforts will continue to raise awareness and begin a calming of the storm.
Insurance fraud is a challenge the industry has faced since its beginning. In fact, historians can point to a time in 300 B.C., when a Greek sea merchant named Hegestratos was caught deliberately sinking his vessel to collect on the policy that covered his ship and its cargo. Centuries later, insurance companies still struggle to protect themselves from fraudsters. Insurers and consumers in Florida are currently facing perhaps one of the costliest schemes the industry has encountered in recent history.
This scheme is a legal tactic conducted by a handful of dodgy attorneys and contractors who take advantage of the state’s assignment of benefits arrangement, and it has dramatically increased the number of AOB lawsuits in Florida.
Florida’s AOB arrangement was designed with good intentions. The law allows third parties to directly bill a homeowners insurance company for remediation services provided. The benefit is supposed to allow homeowners to hire contractors for emergency repairs despite not having enough money to pay the contractors up front. When an AOB is agreed to, the homeowner relinquishes the rights to his or her policy, which leaves him or her susceptible to an ill-intentioned contractor submitting inflated home-repair costs directly to the insurer. If the insurer disputes the claim, the contractor will partner with a trial lawyer who is enticed by a lucrative one-way attorneys’ fees statute that awards litigation fees to the prevailing party in a dispute with an insurer.
Since 2000, Florida has experienced an astronomical increase in AOB lawsuits, according to the Consumer Protection Coalition, which is comprised of insurance companies, trade organizations – including NAMIC and Associated Builders and Contractors, and consumer groups. The coalition spent 2016 combating the issue by raising public awareness about just how much AOB fraud and abuse are costing Florida insurance companies and how it is leading to higher premiums. The CPC is also making its case to state legislators. Two AOB reform bills were introduced during the 2016 legislative session, but they did not pass.
Carolyn Johnson, director of business, economic development, and innovation at the Florida Chamber of Commerce, the spearhead of the CPC, admits that the 2017 legislative session could be challenging for AOB reform because of the number of trial attorneys who have been elected to the Legislature. But she says there is now broad awareness that a problem exists.
“The number of lawsuits is going up,” she says. “There are rate increases that have to occur because of this bad behavior, and it is not going to stop. People are going to be shocked at how significant this problem is. It’s a real issue no matter where you sit,” she continues. “Constituents are getting hurt by this battle.”
Liz Reynolds, NAMIC’s state affairs director for the Southeast region, says the coalition has observed some success in making the public, and therefore, policymakers, more aware of the
issue. She says the 2017 legislative efforts will be led by Florida’s Office of Insurance Regulation and its new commissioner, David Altmaier.
“In fact, the OIR is already circulating draft language on not only the creation of an AOB waiver but also on the one-way attorneys’ fees,” Reynolds says.
Like the AOB contract, the one-way attorney fees statute has well-intended origins. It was designed to level the playing field between policyholders and insurance companies. But a recent study conducted by the Florida Justice Reform Institute found that the statute is no longer serving that purpose. Instead, it is benefiting third parties to the underlying insurance contract.
“The attorneys’ fees are undoubtedly fueling the fire of AOB fraud and abuse,” Reynolds says. “A repair firm may submit a claim for a particular amount, when in reality the scope of the work was worth much less. Then insurers have to decide if fighting and perhaps losing the suit is worth it when they are the only ones on the hook for attorney fees.”
Without action, AOB litigation abuse could explode into a full-scale consumer crisis, according to the Personal Insurance Federation of Florida. The group found that in areas of south Florida, where the abuse is running rampant, claims without AOB average about $12,000 compared to $32,000 for claims with AOB.
“We are going to keep putting the pressure on,” Johnson says.
The Best AOB Advocacy Tool
Perhaps the Consumer Protection Coalition’s strongest advocacy tools when it comes to the assignment of benefits problem are the stories of consumer victimization. The coalition shares testimonials from policyholders who have signed over their insurance rights to shady repair firms and found themselves in worse situations.
In one instance, a woman from Port St. Lucie, Florida, hired a plumbing company to repair a simple leak in her kitchen. The damage was minimal, but the plumber convinced her to hire a water mitigation company to dry the excess water. The water mitigation company asked the woman to sign an AOB agreement, promising the work would be covered. The servicemen indeed got paid by the insurance company, but they left her kitchen torn apart and unrepaired.
Carolyn Johnson, director of business, economic development, and innovation at the Florida Chamber of Commerce, says the CPC has even heard from consumers who had lawsuits filed against their insurance companies by their contractors without them knowing.
An elderly couple from Clermont, Florida, experienced this when a roofing company told them their roof suffered hail damage and advised the couple to sign an AOB form for the roofers to make the repairs. The roof was fixed and the couple assumed the transaction between their insurance company and the roofers had gone smoothly. The couple later learned that the roofing company was suing their insurer over the claim.
Source: Consumer Protection Coalition
Covering the Information Divide
Technological Advances and Access to Information are Allowing Insurers to Combat Fraud While Building Transparency and Trust with Policyholders and Agents.
For decades, insurers and insureds have stood at opposite sides of an information divide.
On one side, applicants and insureds have the vital information needed to underwrite and rate policies accurately. Insurers had to rely on the knowledge and forthrightness of applicants to identify a vehicle’s drivers, vouch for the presence of home-safety systems, and provide other critical information.
On the other side, insurers alone know how such information was used.
This divide has, at times, fostered a climate of contention and distrust that spills into claims situations. Insurers can feel cheated by exaggerated reports of loss, and consumers feel victimized by rationales they see as depriving them of payments they’re entitled to.
Insurers essentially acknowledge this divide when they speak of fraud.
Fortunately, insurers can and are using technology to make objective risk information available immediately and efficiently, reducing the possibilities of misrepresentations – intended or unintended – and establishing a more transparent relationship among insurers, agents, and policyholders.
When asked about the use of technology to detect fraud, Sean Campbell, director of personal lines underwriting at Preferred Mutual Insurance Company, did not hesitate to put at least part of the responsibility for mismatches between rates and claims costs on insurers themselves.
According to Campbell, misrepresentations concerning the risks that are discovered during the claims process often result from “failure on the carrier’s part to identify risk-based issues” during the application and underwriting phases.
Since becoming director of personal lines underwriting in 2016, Campbell has helped coordinate efforts to enhance the use of technology and networked information in the company’s underwriting process.
For a year now, Preferred has been working with third-party services to develop risk scores for existing and potential auto and homeowners accounts. The scores are derived in part from public and permitted proprietary information, using multiple household characteristics including occupancy status and credit-based information. This knowledge is then paired with data from another service regarding physical hazards to property, such as wind, wildfire, and theft.
Occupancy Issues and Detection
Occupancy status issues have been some of the more vexing matters facing insurers in recent years, specifically, homes being unoccupied or occupied by people other than the named insureds.
There can be many legitimate reasons for such situations, as when individuals are hospitalized or go on prolonged business trips. But there are other situations where insureds either abandon a property or allow others to occupy it without notifying the insurer.
Home-monitoring technology is now available to detect changes is household behavior, such as water use and heat levels, that may signal a change in occupancy.
“We are seeing new monitoring opportunities for structures via the connected home/connected business technology,” says Karen Furtado, a partner with Strategy Meets Action, a firm that advises insurers on technology strategies.
“Policyholders can install many technologies on their own,” she adds, “including sensors for water, fire, smoke, motion, and temperature that are connected to their insurers. For commercial structures, there is a focus on proactive maintenance services along with self-reporting capabilities.”
Also, by now, it should be routine for insurers to periodically check to see if their homeowners accounts are connected with home-sharing services and if auto accounts are listed with transportation networking companies.
Detecting such connections and reminding insureds that they may not be covered – but could purchase additional coverage – could boost premium revenue and avoid unpleasant claim surprises.
The most familiar monitoring technology comes in the form of the sensors plugged into portals found under vehicles’ steering columns.
Many auto insurers offer reduced premiums to policyholders who agree to have telematics devices installed and the data transmitted to their carriers. That data can be used to develop rates based on the actual use of the vehicles. Plus, sensors can detect abrupt but common changes in the use of a vehicle, an indicator that it may be being driven regularly by an unrated driver.
Preferred does not currently utilize user-based information collected by such sensors. The company is, however, evaluating an on-board service that would go beyond monitoring an auto risk to actually implementing loss control.
According to Campbell, the service under consideration can be programmed to disable the cell phone of the person driving the vehicle. “This can be a great service to our policyholders to help them avoid distracted driving,” he says.
The Social Media Aspect
The 2016 edition of the Coalition Against Insurance Fraud’s “The State of Insurance Fraud Technology” notes that insurers are also making more sophisticated use of information gleaned from social media. Information posted on Facebook may be useful in detecting false or exaggerated claims of injury.
“For some reason, people who commit insurance fraud like to broadcast their stupidity,” says Frank Scafidi, spokesperson for the National Insurance Crime Bureau. “Maybe it’s a form of cyber narcissism. Whatever it is, committing insurance fraud and then posting a video of yourself on YouTube or Facebook, bragging about it has simplified life for many an insurance fraud investigator.”
When it comes to the claims process, Preferred Mutual finds that social media can provide valuable information regarding the nature and extent of damage or injury.
About five years ago, Preferred started using a service that produces reports about a person’s activities as revealed through publicly available content found on Facebook, LinkedIn, and other social media portals.
“Where deemed appropriate, we can follow up what we learn from social media with an investigation,” Campbell says. “It’s effective and more powerful to have information from both social media and a traditional investigation.”
By using these technological resources through the policy lifecycle, an insurer can greatly reduce the scope of misunderstandings that lead to accusations of bad faith, distrust, and fraud.
At times, information about insureds gathered through technology can lead to difficult conversations with agents and insureds, Campbell adds. But the end result is a more objective knowledge among all parties and better risk management in conjunction with independent agent partners.
“We’re not only doing these things to fight fraud,” Campbell says. “We’re doing them to improve our overall risk profile.”
Auto insurance costs are rising. What everyone is trying to figure out is what is driving those increases and how to bring them down.
The cost of auto insurance premiums is undoubtedly rising. The average increase ranges anywhere from 5 percent to as much as 25 percent, depending on the source. These increased premiums have consumer groups up in arms and insurers defending their rationales. Organizations such as the National Association of Insurance Commissioners and the Federal Insurance Office are looking into auto insurance affordability. But perhaps just as important as figuring out what is affordable when it comes to auto insurance is knowing what factors are driving the higher costs. Industry-related groups and insurance companies around the country are paying close attention to the issue and noticing several trends.
Those trends include increased accident severity offsetting declining accident frequency; the economic recovery bringing more people back to work and out on the roads; the increased cost to fix new high-tech vehicles; a larger population of young, inexperienced drivers; impaired driving; and the high cost of medical treatment for those injured in accidents.Web Exclusive Section
The Frequency-Severity Factor
The overarching trend to explain why auto insurance costs have increased is the frequency-severity factor. Auto accident frequency numbers declined in the years directly after the Great Recession, but the severity of the accidents that did occur worsened. The declining frequency and increasing severity offset themselves for quite some time, according to David Corum, vice president of the Insurance Research Council. But as he told IN magazine last summer, “when the decreasing frequency stops, that is really going to magnify the effect of severity. And that is especially troubling.”
Unfortunately, frequency numbers the last few years have been on an uphill climb. While James Lynch, chief actuary and vice president of research and information services for the Insurance Information Institute, says it’s too early to call it a trend, the current increased frequency, is having an impact.
The Economic Recovery
Unemployment rates are below 5 percent, which is a number Americans have not seen consistently since before 2008. More people working means more people are also driving to and from work. More people working also means more disposable income, which leads to an increased amount of driving to and from recreational activities.
“Starting around 2014, we began hitting a critical mass of people going back to work,” Lynch says. “When the number of roads don’t grow as fast as the number of cars on them, you’re going to have more traffic density, which is a major driver of accidents and costs.”
The Safety-Feature Influence
Current crash-avoidance technologies have no doubt prevented countless accidents, but the technology isn’t error proof. When those vehicles do crash, there is a much more expensive and extensive process to repair them. “The old fender benders, you might pay five hundred dollars to put new sheet metal on, now there are all kinds of sensors and wires built in that also have to be replaced,” John Donohue, president and CEO of the Arbella Insurance Group and chairman of the Arbella Insurance Foundation, says. “Instead of a five-hundred-dollar claim, it’s now a twenty-five-hundred-dollar claim. We’re seeing a lot of trends with this, all of which put a lot of pressure on the cost of repairing and insuring vehicles.”
Elise Quadrozzi, director of business development for the nonprofit education organization Inter-Industry Conference of Auto-Collision Repair, says because crash-avoidance features are still relatively new, technicians in repair shops across the country are still perfecting the repair processes. Plus, the age of the average vehicle is still 11 years, which means the majority of damaged vehicles aren’t equipped with the new technology.
“The information we have right now is anecdotal from repair shops,” she says. “But they are telling us that [technology] is increasing the time it takes for repairs. I’ve seen information that says by 2020, we’re going to see a twenty-four-percent increase in vehicles zero to five years old being in the repair shops.
“I really think in the next three to five years,” she continues, “is when we are going to have more statistically significant data that can be used by insurers in the pricing process.”
The Young and Licensed
In 2012, the University of Michigan’s Transportation Research Institute reported that the number of teenage drivers had decreased – to only six in 10 of 17- to 19-year-olds holding legal driving privileges. Researchers at the institute showed correlation between the increased use of social media with the decrease in young people obtaining drivers licenses.
But the I.I.I.’s Lynch says those numbers are rising. “There could have been some element of young people preferring to stay home to Facetime their friends than get in their cars to go see them,” he says, “but the main reason was that people were slow to get jobs back.”
When unemployment rates are bad, teen unemployment rates are worse. But if the economy continues to recover, it could mean more teenagers will be back on the roads. While they drive less than all but the oldest people, their crash numbers are disproportionately high, according to the Insurance Institute for Highway Safety. With the millennial population being as large as it is, the loss costs for young drivers can quickly add up.
For reasons David Zuby, executive vice president and chief research officer at IIHS, says he doesn’t understand, drunk-driving statistics aren’t going down. If the 2014 National Highway Traffic Safety Administration statistics remain consistent, a person is injured in a drunk-driving accident every two minutes and two in three people will be involved in a drunk-driving accident in their lifetimes.
Another kind of impairment is also making headlines and is on the IIHS’s and some insurers’ radars. Zuby says while there isn’t enough information yet to reach concrete conclusions about marijuana’s impact on auto insurance, it is an issue to continue monitoring as more states legalize the drug at the medicinal and recreational levels.
The Medically Treated
With more crash-avoidance technology-enabled vehicles hitting the roads every day, it would seem logical for there to be a decline in medical costs. Studies show, however, that this is not the case. In a June 2016 study titled “Affordability in Auto Injury Insurance Cost Drivers in Twelve Jurisdictions,” the IRC found that “high rates of utilization of expensive diagnostic procedures and medical treatment by auto injury claimants was the most common cost driver found among the jurisdictions examined.”
The use of MRIs and CT scans, according to the IRC’s Corum, is increasing, and those tests aren’t cheap. Whether they are being overused remains to be determined, but costs are going up and auto insurance providers are feeling the effects.
The IRC’s study also showed that nearly half of states examined experienced higher-than-average claims severity, and in all of those states, higher-than-average medical utilization was also recorded.
But perhaps the most-publicized and most-significant factor contributing to increased auto insurance costs is distracted driving. At any given time, more than 600,000 drivers are using their cell phones or another electronic device while driving, according to the National Highway Traffic Safety Administration’s National Center for Statistics and Analysis’ National Occupant Protection Use Survey.
Joseph DeChatelets, president and CEO of Rockford Mutual Insurance Company, says distraction is one of his company’s main concerns. “Every day I get a list of the claims that have occurred,” he says. “One-third to one-half of all auto-related claims across all lines, we suspect are distracted driving cases. It is remarkable how many people admit to it.”
Arbella Insurance Group recognized its policyholders’ distracted-driving problem more than a decade ago. Since then, the company has also noticed an increase in distracted walking. “We have seen a spike in claims for it,” says John Donohue, president and CEO of the insuer and chairman of the Arbella Insurance Foundation. “We think it’s a deadly combination – distracted driver and distracted walker.”
State Auto Insurance Companies notices the impacts of distraction as well. The company isn’t shying away from telling agents and policyholders why rates are increasing, according to Kim Garland, the company’s senior vice president of standard lines, who is responsible for all personal lines business.
“When there is general inflation, as a carrier, you feel bad about the rising rates,” he says, “but this is a preventable cycle we’re going through. We’re telling everyone ‘Look, cars are still safer; roads are still safer; this is all based on behavior of the U.S. driving population.
“’So this is completely under your control where this goes,’” he continues. “People choose to do these things while driving, so they shouldn’t be all that surprised that rates are going up.”
Driving Costs Down
With knowledge of what is driving auto insurance costs up, those in and around the industry have been making efforts to figure out what can bring them down.
There may not be one simple formula, but technology seems to be a significant ingredient in the solution … which might be ironic because it is also part of the problem.
Premium and pricing analytics provider Quadrant Information Services is working with insurers to learn more about the types of risks companies are insuring. Quadrant’s founder and CEO Michael Macauley says the company is using technology not only to gather historical data to properly price coverages, it is also using technology to factor in the social portion of people’s lives into the costs.
“People show their hands, who they really are through social media, and everyone can look at it,” Macauley says. “By blending social media and historical rates, insurers can make sure they are insuring the right people. Then they can reduce costs and rates based on insuring a better class of risk.”
Macauley believes insurers need to look more at what they are insuring rather than who they are insuring. “Is a car with crash-avoidance technology a better one to insure?” he asks. “Yes, it is. You have the reduction in potential crash liability just because of technology, not the driver.” But when crashes do occur, is the technology or the driver to blame?
State Auto’s Garland expects more insurers to turn to telematics, explaining that his company launched its first telematics offering this past October. The company hopes to have it rolled out in its entire writing area later this year. Garland says there has been about a 30 percent take-up rate of the telematics-based policy in the initial roll-out states.
“What we believe is that if costs continue to go up, we’ll see a higher adoption [of the telematics offering],” he says. “If you’re not part of the problem, you don’t want to pay for those who are.” Those who choose the telematics option also receive discounts for doing so.
Arbella is looking to telematics as a solution as well, offering discounts to people who drive fewer miles because, statistically, they are less likely to crash. The company also worked with Cambridge Mobile Telematics to launch a mobile app that the city of Boston used for its Boston’s Safest Driver competition. The app tracks whether users engage their phones while driving. It can also tell drivers if they are braking too hard or going too fast.
“It gives drivers a score that ranks them against other drivers,” Donohue says. “The city of Boston gave out cash prizes every few months to whomever had the best score, which is how they defined the safest driver.
“People like competition,” he continues. “They get bragging rights, the potential to get rewarded. They are not getting punished. You have to turn a negative into something positive, and this phone app is starting that approach.”
Arbella’s biggest effort to curb distracted driving, though, is its Distractology campaign, which launched in 2010 and is sponsored by the insurer’s charitable foundation. It brings a mobile classroom equipped with distracted-driving simulators to high schools throughout New England.
“As a local company and foundation, we take a lot of pride in giving back to our communities,” Donohue says, “so we decided we needed to get out into the communities and educate people more about this.”
The company heard about a University of Massachusetts professor who built a distracted-driving simulator in his lab. “It was like a video game. Instead of lecturing to inexperienced drivers and showing them scary photos of cars crashing,” Donohue says, “he could show them just how quickly small distractions can turn into horrible accidents.
“[The simulator] was great, but you couldn’t take it out of the lab,” he continues. “Through our charitable foundation, we decided to create the mobile classroom.”
In the seven years since Arbella began taking the Distractology vehicle on the road, the organization and its foundation have reached more than 12,000 young drivers in more than 100 high schools across southern New England.
A study of Arbella’s policyholders shows that the efforts are paying off. Donohue says in a comparison of the company’s inexperienced-driver policyholders, the ones who have been through the program have been involved in 20 percent fewer accidents and have received 25 percent fewer traffic citations and violations than those who have not participated. Those who complete Distractology receive a 5 percent premium discount.
“We’re getting some real proof that training, education, and conversation do actually change how people operate vehicles,” Donohue says. “It does prevent accidents and, hopefully, saves lives.” And keeps costs lower, too.
The Affordability Complex
The subjective nature of defining auto insurance affordability is causing several dilemmas for those in and around the insurance industry.
The fact that auto insurance is more expensive than it used to be has been established. The reasons behind the price increases have been established, too.
What is affordable when it comes to auto insurance expenses, well, that’s a little more up in the air. Several dilemmas present themselves for numerous players within the industry.
Dilemma: Defining Affordability
Perhaps the dilemma of all dilemmas is what “affordable” means. Sure, there is the dictionary definition, but even that is vague.
“It is inherently subjective,” Jon Bergner, NAMIC’s assistant
vice president of federal policy, says. “What one person considers affordable may not seem affordable to another. “Trying to objectively define what is or is not affordable is a quixotic crusade.”
Dilemma: Policyholder Prioritization
Affordability depends on how consumers prioritize the purchase of insurance. We’ve heard time and again that policyholders don’t like to pay for something that is just a piece of paper … until they have claims.
As a 2016 Insurify.com article says, “add [the average yearly amount spent on auto insurance] to the average annual cost of living expenses, including housing, food, utilities, etc., and suddenly your bills for these resources pile up and take priority over intangible things like car insurance.” Plus, there are more fun items people would like to buy, even though auto insurance is legally required in nearly every state.
“Everyone’s standards are different,” says David Corum, vice president for the Insurance Research Council. “And that is based in part on how people value insurance. If someone doesn’t value the security and protection insurance provides or if they just don’t want to buy it, it isn’t affordable, even if it only costs a dime”
Ironically, within its study of auto insurance rates, the IRC has found evidence that auto insurance is actually more “affordable.” The research organization developed its own index, using the National Association of Insurance Commissioners’ reported average auto insurance expenditures and the average household incomes in America.
“Looking at the average, it is obviously going to be less expensive relative to income for some and more expensive for others,” Corum says. “We’re not saying that’s not important.
“But we also looked at the cost of insurance relative to lower income scales,” he continues. “Even doing that, we found that there is a downward trend in the average expense of insurance because average household income at all levels has been increasing.”
Dilemma: The Nature of Auto Insurance
As insurers are well aware, auto insurance is a highly regulated entity. Rates cannot go up – or down – without reason and approval. Therefore, price increases reflect what is going on in the industry – more accidents and higher loss costs are going to mean higher prices.
Those who aren’t involved in accidents, unfortunately, bear the added costs right along with the responsible parties. Although that is the nature of insurance, some consumer groups continue to be upset.
“I think there is always a steady drumbeat, a strong view from organizations aligning themselves with consumers saying, ‘Sure, insurers have to file rates, but they try really hard to break the rules,’” James Lynch, chief actuary and vice president of research and information services for the Insurance Information Institute, says.
“We take a lot of calls from people looking for perspective. We try to tell them that insurance companies are charging rates based on the risks presented to them,” he continues. “Insurers don’t have incentives to game these things the way a lot of people assume they do.”
Dilemma: The Federal Insurance Office’s 2 Percent
Studying affordability and availability of auto insurance for “traditionally underserved communities and consumers” and minority and low- and moderate-income consumers has been a project for the Federal Insurance Office since its inception in 2010.
Much like the word “affordable,” Bergner says “traditionally underserved communities” is another ill-defined concept.
According to Robert Detlefsen, NAMIC’s vice president of public policy, the FIO is basing affordability on whether the average annual premium in majority-minority ZIP codes and majority-LMI ZIP codes exceeds 2 percent of the median annual household income in those areas. Detlefsen notes that residents in majority-minority ZIP codes and majority-LMI ZIP codes account for roughly one-third of the American population. Many of them are not minorities and others do not fit the FIO’s definition of LMI consumers.
“Using ZIP codes to identify minority and LMI consumers will tend to be both over inclusive and under inclusive,” Detlefsen explains. “It will include non-minority consumers and relatively affluent consumers who happen to live in majority-minority and majority-LMI ZIP codes while completely missing minority and LMI consumers who happen to live in areas that are not majority-minority or majority-LMI.”
Some within the industry expected the FIO to release a report by the end of 2016, especially because of the change in administration. The office did quietly release a “Report on the Protection of Consumers and Access to Insurance” right before Thanksgiving, but it made no mention of auto affordability and availability.
The FIO then released its “Study on the Affordability of Personal Automobile Insurance” in January. The report found that auto insurance is unaffordable for more than 18 million people.
Detlefsen called the report “disappointing but hardly surprising” because even the office itself admitted that “its findings should not be used for interstate analysis and are ‘not appropriate for measuring the affordablility of an auto insurance premium paid’ by individual consumers.”
The NAIC Proposal
The issue has also been on the National Association of Insurance Commissioners agenda for some time, and it was a topic of conversation for the Automobile Insurance Working Group during NAIC Fall National Meeting this past December.
During that meeting, commissioners from California, Missouri, Oklahoma, and Pennsylvania proposed a data call for insurers’ information regarding premiums, claims, and loss costs. Detlefsen says that while the term “affordability” wasn’t explicitly mentioned in the proposal, “what they seem to have in mind is a study where they compare premiums charged in given ZIP codes with loss costs to see if premiums charged in those areas are actuarially justified by the losses.
“I am pretty confident the answer to that question will be ‘Yes, they are justified,’” Detlefsen says. “But that doesn’t tell whether the premiums are affordable for any particular consumer or group of consumers. This shouldn’t be a concern, however, because as we’ve said, there is no objective way to determine whether auto insurance premiums are ‘affordable.’ What matters is whether the premiums are based on risk as reflected in insurers’ loss costs.”
As with all other NAIC proposals, this one became subject for comment after its introduction at the fall meeting. At press time, the comment period was still open and NAMIC was working on its comments. Detlefsen expects the working group to
continue its discussions via conference calls and make concrete
decisions about how to move forward during the NAIC Spring National Meeting in April.
What To Do With It All
Out of all of the previous dilemmas comes another one. What can be done?
The FIO isn’t a regulator, so even with the release of its findings, it can’t do anything more than make suggestions. And, in theory, there are any number of ways to address alleged affordability problems.
“One could argue, for example, that raising the minimum wage would make car insurance more affordable for LMI consumers by putting more money in their pockets,” Detlefsen says. “Increasing the federal earned income tax credit should also, in theory, have the same effect. But it’s doubtful the FIO would recommend such measures.”
When it comes to the NAIC’s Automobile Insurance Working Group’s proposal, even if the organization adopts it, individual states will have to administer the data call, which could yield inconsistent results given that states have varying minimum liability limits and accident compensation systems.
And it’s not as if insurers can drop their rates just because people are paying more than a certain percentage of their incomes – solvency questions would undoubtedly arise.
The answer, it seems, might be just as subjective as the dilemmas.
More Than a Spectator Sport
For two decades, Shelter Insurance's Matt Moore worked two jobs. One that required suits and another that required referee stripes and a whistle.
The atmosphere at Texas A&M’s Kyle Field in College Station, Texas, was electric when the Aggies played the Florida Gators on September 8, 2012.
How could it not have been? Football is religion in College Station, and in Texas in general. It’s also religion in the Southeastern Conference. Therefore, when Johnny Manziel, who, at the time, was pegged to be a lock for NCAA and NFL glory, led the Aggies on the field against the Gators for the team’s first game as a member of the SEC, it was a big deal.
Matt Moore, executive vice president for Shelter Insurance Company, remembers every current of the electricity coming from inside the stadium that late summer day. In fact, Moore says it is one of the most memorable college football games he’s been to.
“I had never been to College Station,” he says. “Getting to go there, to see all that tradition, it was unbelievable.”
Moore’s perspective wasn’t from the stadium’s seats among the more than 100,000 people cheering on their favorite team, though. His view came from the field, wearing stripes and a white hat, making calls as the game’s referee.
Texas A&M’s first game in the conference came in Moore’s 14th year on an SEC officiating crew.
Yes, Moore spent his normal workweek overseeing several aspects of Shelter. And for 16 years, he added a second, nearly full-time gig making revered and jeered calls each Saturday for some of college football’s most prestigious programs.
A Family Tradition
Becoming a football referee in the tradition-filled SEC actually started as somewhat of a family tradition. Moore’s father refereed high school and some small-college football games in Arkansas, letting the younger Moore tag along and learn the ropes.
As Moore entered his teenage years, attending games with his dad stopped. But the love of refereeing never strayed. When Moore earned a scholarship to play baseball for the University of Arkansas-Little Rock and learned that his coach moonlighted as a high school football official, he quickly resumed the tagalong status.
“I started working Pee Wee football games and then began working some high school football games with Coach Fulmer, my baseball coach,” Moore recalls. “There were still some guys around who had officiated with my dad. I got to work a couple of games with them, which was a dream come true.”
Moore officiated football games throughout his undergraduate career. When he moved to Louisiana to pursue a master’s degree, he replaced officiating with coaching. But the officiating bug never went anything more than dormant.
After graduating from Northeast Louisiana University with a master’s in education and then coaching at a high school in Louisiana for a couple of years, Moore moved back to Little Rock. The community remembered his affinity for calling plays. So one day while working his sporting goods salesman job, Moore received a call, asking if he would be interested in working high school football games again. The man who called him said he knew someone named Carl Owen who was looking to add to his crew. Moore quickly obliged.
The Insurance Tie-Ins
This commitment ultimately led Moore to the insurance industry. During one of the first games as part of the crew, Owen inquired about Moore’s day job. “I told him I was selling sporting goods and he told me he worked for an insurance company as a claims supervisor,” Moore recalls. “He asked if I would be interested in insurance. He was the one who brought me into the business, into Shelter thirty-three years ago.”
Moore kept officiating high school football games as he began working his way up the ranks at Shelter. But he says he always had the desire to do more with his officiating career. He wanted to work major college football games. Like his dad before him, Moore started working small-college football games in the NAIA’s Arkansas Intercollegiate Conference.
“Just like with anything else in life, you have to have someone helping you along the way,” Moore says. “When I applied to the AIC, I met a guy who knew of my dad and helped me get in.”
Moore moved along and up to the Gulf South and the Big West conferences. But with his sights set on bigger games, he applied for a position in the SEC. Although he did some networking with SEC officials, his application was rejected. “I was devastated,” Moore recalls, “but I was persistent. I sent another letter.”
That persistent letter writing was answered by Bobby Gaston, who was the SEC’s supervisor of officials. Gaston helped Moore get onto the supplemental official list, which allowed him be an alternate official and run game clocks at three to five contests each fall. Five seasons on the supplemental list led to Moore being pulled onto Gaston’s crew.
After about a decade as a side judge, Moore was extended the opportunity to move up to a referee. He led his own crew for about five years before he retired in 2014.
Even after spending 21 years officiating in the SEC, Moore says butterflies fluttered in his stomach every time he stepped onto a field. The first game he worked, he remembers the crowd being a bit overwhelming. “But you do get used to it,” he says, “the stadiums, the crowds, all that. You have a job to do, and that is what you concentrate on.
“You know you cannot mess up,” he continues. “Well, you are going to mess up, but you’re not supposed to. The adage we say is: ‘For football officials, we’re supposed to be perfect, and then get better.’
“We know we’ll never be that,” he continues, “because there is a human element in everything that goes into a game. Receivers drop passes; quarterbacks misread coverages; and officials miss calls.”
Interestingly, there is another element to the game that people don’t really think about being is part of the officiating crew’s responsibility. That element is risk management. There are strict rules regarding weather and safety as well as safe playing areas.
“One thing we do as referees and back judges in a pre-game ritual is walk the field to look for any issues,” Moore explains. “There are limitations on where game management’s responsibilities and ours begin and end. Game management is responsible for most of it, but risk management is an aspect of what we do.” And officials and the conference have liability protection in case issues do arise.
Two Full-Time Jobs
As anyone in the business knows, insurance can be a round-the-clock job. And with so many of his 33 years with Shelter including SEC officiating, it’s hard to believe Moore ever got any sleep. “Being college football, a lot of people think all of what you do is in the fall,” he says. “But it is so much more than that.”
Responsibilities include studying for and taking rules tests throughout the year. Working spring practices, scrimmages, and games. Attending a spring officials clinic and a referees replay clinic as well as a summer officials clinic. “Plus, the SEC is one of the conferences that requires officials to run a mile and a half for time,” Moore adds. “That is something else, making sure you’re staying in shape.”
Then there is the season. Depending on a game’s location, Moore would leave on Friday to prepare for Saturday’s game. Friday nights would consist of meals, meetings, and tape watching; talking over all the rules, responsibilities, and possible in-game scenarios. Saturday mornings repeated those steps until it was time to leave for a stadium two hours prior to a game.
“We’d have what is called the one-hundred-ten-minute meeting with TV people, we’d go visit the coaches, and then we’d be on the field forty minutes before the game to check the field, the replay equipment, the communication devices, everything,” Moore recounts. “And then you’re into the game.”
Sundays included flights home and post-game conference calls to recap the previous day and begin preparations for the next week. Mondays through Wednesdays would be dedicated to pulling training tapes together, studying, and working on rules tests. Thursdays were when training tapes would be sent around to the entire crew. “Then you're back to Friday,” Moore says, “and off you go.
“There is a lot that goes into it,” he continues. “More than just showing up on a Saturday and working a football game.”
Life After the SEC
Moore refereed his last game – the Russell Athletic Bowl – on December 29, 2014, at age 59. He admits the decision to retire was a difficult one, but he likes that he did so on his own terms. “I could have worked a couple more years,” he says. “But I would rather have gone out with people saying, ‘Man, he could work a couple more years,’ than ‘Man, he should have retired two years ago.’”
While Moore says he couldn’t have asked for anything better than the way Shelter accommodated his dual roles, he acknowledges that moving into the executive vice president position and the demands that came along with it were requiring more of his time. That played a big role in his decision to retire. The ultimate deciding factor, though, was his family.
“They sacrificed. For sixteen years each fall. They let husband, dad, now grandpa, run all over the place,” he says. “I have an eight-year-old grandson and a three-month-old grandson. Having that time to spend with them, you can’t take that away. We’re going places and doing things we never were able to do in other falls.”
Moore says some Saturdays are still filled with the gridiron, just from a different perspective. “I watch a lot of football,” he admits. “My wife questions me about that sometimes. But I do love to watch it, and I watch it from an official’s standpoint. I’m really not a fan of a particular team. I am a fan of the guys out there in black and white.”
Movers & Shakers
If you have company or employee achievements and recognitions you’d like to share, email details and photos/logos to firstname.lastname@example.org.
Arbella Insurance, Quincy, Massachusetts, its employees, and its Arbella Insurance Foundation gifted more than $46,000 to the Dana-Farber Cancer Institute. The money was raised during the organization’s annual Pink Day. This is the seventh year for the event during which employees are encouraged to wear pink to work, purchase Dana-Farber bracelets and opportunities to dress casually, and participate in departmental gift basket raffles. Since its founding in 2009, Pink Day has raised nearly $230,0000 for cancer awareness and screenings.
CFM Insurance, Concordia, Missouri, hosted its first Veterans Day Ceremony in November 2016. Local veterans and other community members enjoyed performances by local musicians and a keynote address from Concordia’s mayor, Michael Brown. CFM presented a $1,200 donation to the Honor Flight Network.
Acuity, Sheboygan, Wisconsin, and its employees distributed $500,000 in a special year-end contribution in 2016 to Conquer Cancer Foundation, Feeding America, Safe Harbor of Sheboygan County, the Salvation Army, Sharon S. Richardson Community Hospice, and Mental Health America. Acuity and its charitable foundation contributed nearly $1.8 million last year.
Mergers & Acquisitions
Hartford Steam Boiler Inspection and Insurance Company, Hartford, Connecticut, acquired technology startup Meshify. The move is meant to support HSB’s Internet of Things strategy. Meshify will become part of HSB’s IoT services and will provide IoT-based services to small and midsize businesses and business chains.
Concordia, Missouri-based CFM Insurance and Trenton, Missouri-based Farmers Mutual Insurance Company of Grundy County announced the merger of FMIC of Grundy County during a special joint meeting in late 2016. It went into effect January 1, 2017.
Boston, Massachusetts-based Liberty Mutual Insurance’s Liberty International Underwriters and AMS Management Group entered into a formal agreement last October. Under the agreement, AMS will market, underwrite, provide risk management tools, and administer medical professional liability products for LIU. Liberty Mutual also agreed to acquire Ironshore, Inc. from China-based Fosun International Limited. Ironshore will continue to operate under the same management team and brand name. The transaction was expected to be complete within the first half to 2017.
Farmers Mutual Insurance Company of Ste. Genevieve, Ste. Genevieve, Missouri, and Perry County Mutual Insurance Company, Perryville, Missouri, merged on January 1, 2017. The company’s new name is Missouri Alliance Mutual Insurance Company and will be located in Perryville.
Hires & Promotions
Leavenworth, Kansas-based Armed Forces Insurance promoted Lori Simmons to chief marketing officer and vice president of marketing and corporate communications. She has worked for AFI for 21 years, most recently as assistant vice president of marketing and communications. Simmons will oversee all corporate branding, integrated marketing, and public relations programs. She will remain president of the Armed Forces Insurance Foundation. She is a member of several insurance industry associations. She earned a bachelor’s degree in business marketing from LaSalle University as well as several professional certifications from the University of Oklahoma. She is currently pursuing an executive certification in marketing from St. Louis University.
CNA, Chicago, Illinois, appointed John Kaas to senior vice president and mid-Atlantic zone officer. He will be responsible for the strategic direction of that territory while also directly managing the company’s Philadelphia, Pennsylvania, branch office. Kaas joined CNA in 2011 and was the Florida branch vice president prior to his new role. The company appointed Laurie Munson to vice president of global services. She will help improve efficiencies, processes, and technology to help grow CNA’s international business. Munson has more than 30 years of industry experience. She worked at Chubb prior to joining CNA.
Preferred Mutual Insurance Company, New, Berlin, New York, hired Jennifer Dinardo as an auto claims specialist. She will be responsible for the investigation, evaluation, and settlement of first- and third-party auto claims. She graduated from Siena College. Jon Longshore joined the company as a no-fault claims representative. He held a similar position for a national carrier prior to joining Preferred. He is a graduate of the Rochester Institute of Technology. Preferred Mutual hired Angel Waggoner as an auto claims representative trainee. She will be responsible for the investigation, evaluation, and settlement of auto physical damage claims. She earned a degree from the State University of New York-Buffalo. Ryan O’Malley joined the company as an associate application developer. He will write software for many of the company’s online systems, particularly for its new business center. He earned a degree from Hartwick College.
Western National Insurance Group, Edina, Minnesota, hired Eric Furtado as vice president of agency sales. As such, he is responsible for day-to-day sales activities as well as oversight of the regional agency manager team. Furtado has more than 15 years of experience, most recently serving as vice president of personal lines underwriting at QBE.
Mutual Benefit Group, Huntingdon, Pennsylvania, hired Bryan Mosser as senior marketing representative. He will manage the agency force in Maryland to promote growth and profitability, maintain regular agency visitation, monitor agency performance, and manage agency relationships. He has more than 13 years of experience in the insurance industry. He was assistant vice president of marketing for Frederick Mutual Insurance Company prior to joining MBG.
Liberty Mutual Insurance, Boston, Massachusetts, appointed David Dwortz president of Helmsman Management Services, its third-party claims administrator. He took over the position when Debbie Michel became executive vice president of national insurance casualty for Liberty Mutual. Dwortz has worked for Liberty Mutual for 16 years in various leadership roles.
NJM Insurance Company, West Trenton, New Jersey, announced the appointment of Alastair Shore as senior vice president and chief financial officer. He has more than 25 years of property/casualty insurance experience. He served CUNA Mutual Insurance Group, Madison, Wisconsin, prior to joining NJM. Shore earned a master’s degree in mathematics from the University of Cambridge and is a fellow of the Casualty Actuarial Society and the Institute of Actuaries.
The MEMIC Group, Portland, Maine, appointed Adam Levesque to safety management consultant for the customer base in New Hampshire. He has more than 10 years of environmental health and safety experience, working for Velcro Companies in New Hampshire and Parlex Corporation in Massachusetts prior to joining MEMIC. The company promoted Deb Sabatino to director of human resources. She will be responsible for planning and managing human resources operations and programs for the company. Sabatino has more the 25 years of human resources experience, eight of which have been with MEMIC. The company promoted Chris Abboud to senior underwriter. He began his insurance career in 2010 as an intern at MEMIC. He then became an account analyst in 2011, an associate underwriter in 2013, an underwriter I in 2014, and an underwriter II in 2015. Abboud earned a degree from the University of Southern Maine. He holds the Chartered Property Casualty Underwriter and Certified Risk Manager designations and is working toward the Certified Insurance Counselor designation. MEMIC promoted Eileen Moran Fongemie to vice president of finance and assistant treasurer. She joined MEMIC in 2007 as a senior accountant, in 2010 became financial reporting manager, and in 2014 was promoted to director of finance. Fongemie holds the Certified Public Accountant, Chartered Property Casualty Underwriter, and Workers’ Compensation Professional designations.
Cameron Mutual Insurance Company, Cameron, Missouri, named Pat Conboy chief financial officer and treasurer. He joined Cameron after a 16-year career with MAG Mutual, where he most recently served as vice president of financial planning and analysis. He spent 19 years at Shelter Insurance Company before moving the MAG. Conboy earned an accounting degree from the University of Missouri. He holds the Certified Management Accountant, Associate in Insurance Accounting and Finance, Chartered Life Underwriter, Chartered Financial Consultant, and Associate in Reinsurance designations.
Pinnacle Actuarial Resources, Bloomington, Illinois, hired Terrence Wright as a consulting actuary in its Atlanta, Georgia, office. Wright has 14 years of consulting experience and 18 years of experience in the insurance industry. His core responsibilities with Pinnacle will be ratemaking, deterministic and stochastic reserving, risk transfer testing, and funding allocations. Wright earned a bachelor’s degree in mathematics with a minor in economics. He also holds the Associate of the Casualty Actuarial Society and Member of the American Academy of Actuaries designations. The company hired Linda Brobeck as a senior consulting actuary in the San Francisco, California, office. She has 30 years of experience in the property/casualty insurance industry and has been providing actuarial consulting services since 2011. Brobeck will be providing ratemaking, predictive modeling, and regulatory support services for personal and commercial lines clients in California. She earned a bachelor’s degree in mathematics from Millikin University. She holds the Fellow of the Casualty Actuarial Society and Member of the American Academy of Actuaries designations.
State Auto Insurance Company, Columbus, Ohio, named Suzanne Sinclair senior vice president and chief people officer. She has a 30-year career in the financial services industry and was most recently president and CEO of Sinclair Board Advisors, working with corporate boards to recruit and assess directors. Sinclair earned a bachelor’s degree from Marquette University. She is a member of the Economic Club of Chicago, chair of DePaul University’s College of Communications’ dean’s advisory board, and a featured speaker at DePaul University’s master’s programs.
NJM Insurance Company, West Trenton, New Jersey, announced the appointment of Alastair Shore as senior vice president and chief financial officer. He has more than 25 years of property/casualty insurance experience. He served CUNA Mutual Insurance Group, Madison, Wisconsin, prior to joining NJM. Shore earned a master’s degree in mathematics from the University of Cambridge and is a fellow of the Casualty Actuarial Society and the Institute of Actuaries.
Farmers Mutual Insurance ompany of Marion County, Palmyra, Missouri
Wolverine Mutual Insurance Company, Dowagiac, Michigan
Merchants Mutual Insurance Company, Buffalo, New York
Munich Reinsurance America, Prince, New Jersey
Center Mutual Insurance Company, Rugby, North Dakota
The Merchants Property Insurance Company of Indiana, Indianapolis, Indiana
Brotherhood Mutual Insurance Company, Fort Wayne, Indiana
NJM Insurance Company, West Trenton, New Jersey, announced the retirement of Charles Prall in December 2016. He served as senior vice president and chief financial officer as well as a member of NJM’s board of directors. His tenure with the company spanned 30 years.
John Leonard, president and CEO of Portland, Maine-based The MEMIC Group, announced in December 2016 that he will retire in September 2017. Leonard was hired in 1993 to help start the company, making him MEMIC’s only president and CEO thus far.
Awards & Recognitions
SECURA Insurance, Appleton, Wisconsin, earned spots on three of Fortune and Great Place to Work’s lists. The company is included on the 100 Best Medium Workplaces, 100 Best Workplaces for Women, and 30 Best Workplaces for Financial Services and Insurance. SECURA made the lists based on ratings provided by employees through anonymous surveys.
Acuity, Sheboygan, Wisconsin, earned two ACORD awards for the technology solutions it provides its independent agents. The Leadership Award highlighted Acuity’s use of ACORD standards to enable the company, its independent agents, and its trading partners improved electronic communications and operating efficiency. The Case Study Award highlights Acuity’s omni-channel approach of connecting the company and its agents and customers. The development of lead generation and quoting as well as integration with online insurance aggregators were cited as parts of that omni-channel approach.
NJM Insurance Company, West Trenton, New Jersey, received the National Safety Council’s Teen Driver Safety Leadership Award in October 2016. NJM’s safety program has included several initiatives, including providing driving simulators to more than 125 high school across New Jersey and delivering no-cost interactive education presentations to New Jersey high school students.
Quincy, Massachusetts-based Arbella Insurance’s Arbella Insurance Foundation was recognized as the 2016 Corporate Partner Honoree by the New England Center and Home for Veterans. Arbella’s foundation has supported the center since 2006. The partnership has included sponsorship of the center’s annual Leave No One Behind fundraiser and recognition of the center as one of the recipients of Arbella’s 50 to 25 program. Arbella employees also donate their time to volunteering at the center.
The Missouri Association of Mutual Insurance Companies, Sikeston, Missouri, named the Concordia Fire Department its 2016 Fire Department of the Year. MAMIC chose this department based on its active community involvement, which included conducting fire prevention programs and hosting a Halloween trick or treating event at the fire house.
Harford Mutual Insurance Company, Bel Air, Maryland
Has San Lake Mutual Insurance Company, Buffalo, Minnesota
Chisago Lakes Mutual Insurance Company, Scandia, Minnesota
Bohemian Mutual Insurance Association, Toledo, Iowa
Brown Township Mutual Insurance Association, Springville, Iowa
Jefferson County Mutual Insurance Association, Fairfield, Iowa
DMC Mutual Insurance Association, Mediapolis, Iowa
Buckeye Mutual Insurance Company, Orangeville, Illinois
Wabisa Mutual Fire Insurance Company, Jarvis, Ontario, Canada
Hartford Steam Boiler Inspection & Insurance Company, Hartford, Connecticut
German Farmers Mutual Fire Insurance Company, Stillwater, Minnesota
Polk and Butler Mutual Insurance Company, Osceola, Nebraska
Northern Nebraska United Mutual Insurance Company, Plainview, Nebraska
Alamance Farmers’ Mutual Insurance Company, Graham, North Carolina
Bird Island-Hawk Creek Mutual Insurance Company, Bird Island, Minnesota
Peoples Mutual Insurance Association, Donnellson, Iowa
Farmers Mutual Insurance Company of Noble County, Avilla, Indiana
Hurst Home Insurance Company, Lexington, Kentucky
Hochheim Prairie Farm Mutual Insurance Association, Yoakum, Texas
Howard Mutual Insurance Company, Ridgetown, Ontario, Canada
Washington County Mutual Insurance Company, Blair, Nebraska
Cameron Mutual Insurance Company, Cameron, Missouri
German Farmers Mutual Assessment Insurance Association of Hall County, Cairo, Nebraska
Central Illinois Mutual Insurance Company, Villa Grove, Illinois
Cokato Mutual Fire Insurance Company, Maple Lake, Minnesota
Monroe County Farmers Mutual Insurance Company, Paris, Missouri
Monona County Mutual Insurance Association, Onawa, Iowa
Grenville Mutual Insurance Company, Kemptville, Ontario, Canada
Hickory County Farmers Mutual Insurance Company, Hermitage, Missouri
Clarks Fork Mutual Insurance Company, Boonville, Missouri
Western Mutual Insurance Company, Irvine, California
Louisiana Workers Compensation Corporation, Baton Rouge, Louisiana
Pacific Indemnity Insurance Company, Hagatna, Guam
Maine Employers’ Mutual Insurance Company, Portland, Maine
Maiden Re, Mount Laurel, New Jersey
Endurance Reinsurance Corporation of America, New York, New York
Sawgrass Mutual Insurance Company, Davie, Florida
Build America Mutual Assurance Company, New York, New York
The Dirty Dozen
The benefits of the Small Mutual Inflation Update have been on small mutual insurers' wish lists for years. Unfortunately, because of some bad seeds, it's also on the IRS's watch list.
December 18, 2015, might have been just another day for most Americans. But for small mutual insurance companies across the United States, it was a day they had been anticipating for 30 years. That late fall day, Section 831(b) of the Internal Revenue Code, also referred to as the Small Mutual Inflation Update, passed as part of a legislative package to keep the government up and running. With that passage came an increase in the premium threshold for which small mutual insurers can elect to be taxed on their investment income rather than their underwriting income.
The three-decade delay was not for lack of effort on the part of mutual insurance companies or NAMIC.
As Rep. Erik Paulsen, R-Minnesota, who worked to push the update forward, told the 121st Annual Convention audience during his Federal Legislator of the Year Award acceptance speech, “It’s not that anyone opposes bills like these. Unfortunately, partisan politics can prevent commonsense legislation from moving forward. And that means sometimes we have to work to get important bills such as the Small Mutual Inflation Update added to other must-pass legislative packages.”
So when the legislation finally did pass, Aaron Cocking, CEO of the Minnesota Association of Farm Mutual Insurance Companies, who is all too familiar with the SMIU’s struggles, could not believe it.
“[The delay] was disheartening for many members,” Cocking says. “They would visit Washington, D.C., for the Congressional Contact Program every year to talk about why it was important, but each year it would get overlooked. When I was told the update had gotten in, I was thinking, ‘Yeah, I’ll believe it when I see it.’”
But now as shock has worn off, small mutual NAMIC members can and should be looking forward to filing their 2017 taxes, which will be the ones in which they will begin seeing the benefits of the election. But companies should also be prepared for questions from the Internal Revenue Service regarding their mutual status.
The Watch List
Believe it or not, Section 831(b) is associated with the IRS’s Dirty Dozen List
of Tax Scams under the abusive tax shelters category. While the SMIU is meant for small mutual insurance companies, it also applies to small- or micro-captive insurance companies, which is where the trouble can begin.
According to the IRS website, “Tax law allows businesses to create ‘captive’ insurance companies to enable those businesses to protect against certain risks…. The captive insurance company … can elect under a separate section of the tax code to exclude $1.2 million [$2.2 million starting with 2017 taxes] of its net premium income per year, so that the captive is taxed only on its investment income.
“In the abusive structure, unscrupulous promoters, accountants, or wealth planners persuade the owners of closely held entities to participate in these schemes. The promoters assist the owners to create captive insurance companies on shore or off shore and cause the creation and sale of the captive ‘insurance’ policies to closely held entities….
“Underwriting and actuarial substantiation for the insurance premiums paid are either absent or illusory. The promoters manage the entities’ captive insurance companies for substantial fees, assisting taxpayers unsophisticated in insurance to continue the charade from year to year.”
This became a challenge three or four years ago, according to Julie Gackenbach, principal at Confrere Strategies, who has worked for years with NAMIC to help raise awareness and ensure passage of the update to Section 831(b).
It was then that NAMIC went to work explaining the business of small mutual insurance companies and working with the IRS and lawmakers to develop a way to keep 831(b) and expand the threshold amount while also ensuring that it applied only to legitimate insurers.
Fighting for the Legitimate Insurers
“We went into defensive mode,” Jimi Grande, NAMIC’s senior vice president of federal and political affairs, says, “explaining NAMIC members’ businesses, telling decision makers that we understand what was being done and that we, like them, strongly opposed the use of 831(b) for estate-planning and tax-avoidance purposes.
“We told them, ‘We want to get rid of the bad guys, too,’” he continues.
“‘But we don’t want you throwing the baby out with the bathwater. We want you to understand that our guys are not the problem.’”
The effects of those discussions are seen in the final bill language of the SMIU, which, among another nuances, requires that no one entity can “own” 20 percent or more of a company.
Even with the tightening in the bill, the inappropriate use of 831(b) continues to be a concern for the tax policy and revenue service worlds. And the Dirty Dozen status remains. Grande says the IRS has put out a notice to make those taking the 831(b) election aware of the kinds of transactions it considers to be transactions of interest. These transactions include ones without standard accepted underwriting practices or claims procedures or those that established premium amounts based on tax.
“Those are situations that NAMIC members clearly aren’t or wouldn’t be involved in,” Grande says.
While NAMIC members that qualify for and decide to take the election might need to answer a few more questions from the IRS, mutual insurers don’t need to do much more than act like the legitimate insurance companies they are when it comes to tax preparation.
As for NAMIC, the heavy lifting of getting the SMIU to pass might be over, but the work on behalf of its small mutual members will continue. The association will continue to monitor the issue and work with the IRS.
“Should there start to be any additional reporting requirements,” Grande says, “we will work with the IRS to make sure they are the least burdensome as possible.”
The Difference Maker
The Small Mutual Inflation Update could impact the bottom lines of many small mutual NAMIC members. Because it is an election rather than a mandate, the decision to take it is something that will need to be discussed and approved by management and boards of directors.
But Tim Iverson, manager of Prairie Pine Mutual Insurance Company, which has been above the $1.2 million threshold for quite some time but safely under the indexed $2.2 million, doesn’t think it will take much convincing.
“The upside potential for having additional money put to surplus is much better than the downside of having a bad year,” he says, going on to explain how, based on company calculations, it would be paying less than $25,000 in taxes if it could use the election right now.
“Historically, we have paid a lot more than that when we had a low-loss year,” Iverson continues. “Pretty consistently, we have paid more than a hundred thousand dollars in taxes each year. For a small company, that is a lot of money.”
The update is also a welcome change for Kelso & Selby Farmers Mutual Fire Insurance Company. The mutual has been close to the $1.2 million threshold for a little while. But this past year, it was so close the company had to wait until the end of the year to see if it made it under the limit.
“We’d been expecting to exceed the old threshold in the next couple of years,” Nick Hager, the company’s manager, says. “We wanted to take advantage of it while we could. Ultimately, we want to remain a stable company for our policyholders. Hopefully, we will see even better results because of this favorable tax liability.”
Tax experts say several favorable opportunities will exist for small companies because of the increase. Perhaps the most important one is growth.
Daniel Kusaila, a partner in the tax services group at accounting and consulting firm Crowe Horwath, says the potential is still sinking in for his small mutual clients. “Are there now opportunities to write new lines of business? Take on new policyholders?” he says about the questions his clients are asking. “We see reality setting in and creativity starting to come out.”
Cilla Hughes, manager for Hope Mutual Insurance Company, says the company is unsure of what 2017 will bring, but she is certain the new threshold will make a difference.
“It not only changes the predictability of taxes but also how we can anticipate change,” she says. “We’re not a big company, but we can do more if we have more money internally.”
Kusaila does advise well-thought-out, slow growth. “Be mindful not to take on coverage just to increase premium levels for those who have had bad underwriting experience,” he says. “Don’t compromise underwriting fundamentals just for a tax deduction.”
Published by the National Association of Mutual Insurance Companies
The National Association of Mutual Insurance Companies strengthens and supports its members and the mutual insurance industry by its leadership in advocacy, public policy, public affairs, and member services.
Steve D. Linkous
President & CEO
Harford Mutual Insurance Companies
Bel Air, Maryland
Paul A. Ehlert, J.D.
Germania Insurance Company
Henry R. Gibbel President & COO
Lititz Mutual Insurance Company
Secretary | Treasurer
Steven C. Silver, CPA
President & CEO
Mutual Benefit Group
Immediate Past Chairman
Paul G. Stueven, PFMM
Mutual Insurance Company
Charles M. Chamness
President & CEO
IN magazine Volume 104, Number 1
NAMIC Public Affairs Digital Team
Joseph S. Harrington
IN (ISSN: 1931-7727) is published four times per year by the National Association of Mutual Insurance Companies (NAMIC), 3601 Vincennes Road, P.O. Box 68700, Indianapolis, IN 46268-0700, (317) 875-5250.
IN magazine strives to inform, entertain, and inspire its audience: mutual property/casualty insurers and those who work with them. IN's articles reveal and explore issues, challenges, trends, and personalities central to the purpose of mutual insurance and related business.
Published articles are intended for informational and educational purposes only and do not replace independent professional judgment. Statements of fact and opinions expressed are those of the author or individuals quoted by the author and may not reflect the opinion or position of NAMIC.
IN magazine is not responsible for or otherwise liable for the content or representations made in any advertisement. We reserve the right to reject advertising that is deemed to not be truthful or in good taste, or which is inconsistent with the mission of NAMIC. All advertising is subject to the terms and conditions set forth in the advertising contract.
Correction of factual error(s) of previously printed editorial information will be published at the earliest available opportunity.
IN magazine welcomes submissions and often assigns articles to freelance writers. Basic criteria for such submissions and assignments include relevance to the mutual insurance industry, timeliness, and quality. NAMIC will not publish advertorials or articles that promote a single company or its products and services. NAMIC reserves the right to edit any article for space, clarity, and style. For more information on writer's guidelines, please email email@example.com.
Comments from readers are also welcomed and should be submitted to firstname.lastname@example.org. Reader name, phone number, and email address should be provided to be considered for publication.
For permission to reproduce any articles from IN magazine or its predecessor, Property/Casualty Insurance magazine, or to order any back issues of IN magazine, email email@example.com.
Periodicals postage paid at Indianapolis, Ind., and additional mailing offices. Annual subscription rate is $30. Copyright 2017. All rights reserved. Printed in the United States. POSTMASTER: Send address changes to IN magazine, P.O. Box 68700, Indianapolis, IN 46268-0700.
Learn how to become politically active. Contact Laura Grace Ashton, director of NAMIC PAC, at firstname.lastname@example.org.
Where the Battles re Won
Building relationships with legislators in the 115th Congress gives NAMIC PAC access to the political frontlines.
The 2016 election cycle was, for lack of a stronger term, unprecedented. With television ads, talking heads, and the guy who lives next door, by November 9, most were feeling emotionally fatigued and politically hungover after the hard-fought battle for the White House.
However, as NAMIC members well know, the White House is not where legislation is passed. As the world watched Donald Trump and Hillary Clinton, NAMIC PAC had its eyes on the nation’s legislators and the strongest support ever from NAMIC members.
Having a war chest and friends in Washington are important as we head into the 115th Congress. With financial regulatory reform, international regulation, tax reform, flood insurance, disaster mitigation, and a host of other issues on the agenda, we need resources to bring our industry to the table. As the largest insurance company trade association political action committee in the country, we have an opportunity to be on the frontlines and win the battles in Congress.
Giving to candidates is a form of “disaster mitigation.” It’s easier to prevent bad policies from coming to the table than fighting to shut them down.
With many legislators running for office at both the state and federal levels, NAMIC PAC participated in 339 races in the 2016 election cycle, contributing more than $1.1 million. Helping elect legislators who will not only prevent bad policies but who are also willing to promote good policies for the property/casualty insurance industry was a key facet of determining how NAMIC PAC dollars were spent.
While winnability was a large consideration when allocating NAMIC PAC funds, the primary focus was on electing good legislators. To this end, NAMIC PAC had a 94 percent win rate. Taking chances in politics is how you make friends, and NAMIC PAC was willing to take smart chances on both sides of the aisle. In politics, there is much credence to the adage, “Make new friends, but keep the old.”
In closing out the first $1 million cycle in NAMIC PAC’s history, it was evident the difference a $1 million PAC can make. The ability of the NAMIC membership to influence policy is paramount to the success of the property/casualty insurance industry. As the largest association of insurance companies, NAMIC continues to lead the way and ensure those in government hear from those in the business
To Be Continued
As NAMIC’s Award in Innovation Enters Its Fourth Year, IN magazine reflects on past winners’ innovative successes.
The application deadline for the 2017 Award in Innovation is April 1, 2017. Visit NAMIC.org for more information or to submit your idea.
Innovation done correctly should foster continuous growth. The increasing number of applicants to NAMIC’s annual Award in Innovation competition proves just that. As does the continued – and expanded – success of the award’s previous three overall winners.
2014 Overall Winner – Mutual of Enumclaw Insurance Company
The winning innovative idea for the inaugural Award in Innovation was a wild one, in name especially. Mutual of Enumclaw’s idea focused on “wildly important goals” – informally known as WIGs– to improve its service to agents and policyholders. The customer satisfaction scores – as measured by Net Promoter and Deep Customer Connection scores, respectively – were good, just not quite where the company wanted them to be.
“As we went forward pursuing higher NPS and DCC scores, every department decides what its wildly important goal will be to improve either member or agent experience,” Eric Nelson, Mutual of Enumclaw’s president and CEO, says. “Then they work them out, meeting each week in WIG sessions to go over what they accomplished and what they are going to commit to that week.”
When Mutual of Enumclaw received NAMIC’s overall Award in Innovation honor in 2014, the company had already begun to see benefits from the departmental WIGs, and those benefits continue to show today. NPS scores have risen from 48 to 58; DCC scores have done the same, increasing from 86 to 96; processing hours have been reduced by 63,000 hours; and claims times have been cut by nearly 40 percent.
Plus, the WIGs have fostered additional innovation. Nelson says that employees know they’ve found the right WIGs when it requires them to innovate more. “The ideal WIG is one which is expected to have a significant impact and one in which you have no idea quite how to achieve it when selected. This forces a thinking process that moves beyond history and into idea generation and innovation.” Nelson says.
Those added innovations include something called Sunday Sky, which sends real-time personalized videos to new and renewal members, providing them with relevant policy information. A newly created member services department adds an extra touchpoint between the company and its policyholders to help add to customer satisfaction. A mobile app and website dedicated to independent agents and better ease of doing business have also been developed. And a partnership with the Disney Institute helped define the corporate culture and values. More initiatives are currently in the works.
“It’s working really well,” Nelson says. “It’s created a really nice culture where people know how to focus on member and agent experiences even when they aren’t sure of the outcomes. It’s a nice service culture, and I think we’re going to keep it going for a while.”
2015 Overall Winner –Celina Insurance Group
Celina Insurance Group had been communicating and working electronically with its agents for years, so when employees in the information technology department suggested the company build an app for the agency base, it didn’t seem all that necessary.
“We’re a small insurance company in the middle of Ohio,” Rob Shoenfelt, senior vice president of marketing and chief information officer, says. “We didn’t need an app, and we put off developing one until we realized how much smartphones were replacing agents’ digital cameras.
“When using digital cameras, we had a whole paradigm set up to get things where they needed to go. With smartphones, no one did that,” Shoenfelt continues. “Pictures were coming to us from phone numbers we didn’t necessarily know and electronic files were going to the wrong places.”
The company wanted to improve upon the time-consuming, inefficient process. So AgentConnect Mobile was born. A year later, it was honored as the 2015 Award in Innovation overall winner.
The app’s initial capabilities were very well received. Because of this, Celina has added to its functionality. Just about everything the insurer needs from its agents is being pushed to the app’s worklist. That way everything can be found in one place and easily checked off the list as agents gather information and complete forms.
In an effort to enhance ease of doing business even more, Shoenfelt says the app has expanded to sync with agency management systems as well. That endeavor has paid off. “Every agent who uses it says it is great,” he says. “No one has had a negative opinion. It makes their job so much easier.”
And AgentConnect Mobile drew Celina’s IT department into additional app development. The company’s largest agency wanted an app, too, and came to Celina’s IT professionals for recommendations. Instead of making any suggestions, Shoenfelt says the department offered to build the agency’s app and then extended the offer to all of the its master agents.
“All we ask in return is that the agents’ carriers are listed alphabetically in the app, and that the alphabet starts with C-E-L-I-N-A.,” he says. “But it has been very much a success.”
2016 Overall Winner – CAMICO Mutual Insurance Company
Innovation doesn’t have to involve brand new ideas, but it does require tweaking ideas to make them your own. Last year’s Award in Innovation winner, CAMICO Mutual Insurance Company, and its Idea Central are continued testaments to that requirement.
Jag Randhawa, CAMICO’s vice president of information technology, wanted to find a way to keep his department highly engaged in the aftermath of the Great Recession. So, he took a page out of a Brazilian manufacturing company’s book, which had taken a page out of Toyota’s book, which was also followed by Google, Apple, Pixar, and so many others.
Randhawa asked the IT department employees for ideas to make the department even better through new initiatives and processes. He’d then work with them to implement the ideas that made the most sense for the department.
The increased initiatives and engagement did not go unnoticed by others around office. The idea quickly went company wide and became Idea Central, a way for employees to submit suggestions about how to make the company work even better. When CAMICO submitted its Award in Innovation application in early 2016, 90 ideas had been submitted, 21 had been implemented, and 20 more were in the works. At press time, that number had grown to 116 submitted, 29 implemented, and 18 in the works.
While the implemented ideas have helped the company in its mission to serve agents and policyholders, Randhawa says the cultural shift around the company is also something to celebrate.
He says people can get stuck seeing their company from only their departmental perspectives, but Idea Central enables an opportunity to learn about the entire organization. “They see their piece of it, yes,” he says, “but they also see how everything fits into the larger picture.
“It has sparked interest,” Randhawa continues, “and created a culture that lets people know management is keen to hear their input.”