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6 | INSURANCE JOURNAL-WEST February 22, 2016 www.insurancejournal.com

Inside This Issue

WEST

February 22, 2016 • Vol. 94 No. 4 • West

10 Greenberg Confident Most Top Talent, Agents to Stay with New Chubb

14 P/C Direct Premium Written Up 4.2 Percent

16 Spotlight: 10 Things to Know About Deer Breeding Operations

18 M&A Review: Merger, Acquisition Activity Sets New High-Water Mark

22 Closer Look: Travelers’ Shasha Talks Boats for the Summer

26 Special Report: 2016 Agency Salary Survey – Unequal Pay for Women?

NATIONAL COVERAGE

34 The Whole Package: Negotiating Beyond Salary

36 Minding Your Business: Catherine Oak & Bill Schoeffler

38 Closing Quote: Technology’s Full Potential

IDEA EXCHANGE

DEPARTMENTSW4 People11 Declarations11 Figures12 Business Moves

W2 W6

W2 California Hospital Workers’ Comp Report Shows Claim Severity on Rise

W2 Mercury Begins Offering Ridesharing Insurance in Arizona

W2 Fatal Fire in Washington Bikini Coffee Stand Caused by Propane

W6 Expert: Targeting High-Risk Shoppers with Mobile Makes Sense

WEST COVERAGE

3422

On The CoverSpecial Report:

Agency Compensation:Unequal Pay for Women?

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NATIONAL COVERAGE

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

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

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

Opening Note

Andrea WellsEditor-in-Chief

Publisher Mark Wells | [email protected]

EDITORIALChief Content OfficerAndrew Simpson | [email protected] Wells | [email protected] EditorYoung Ha | [email protected] EditorAmy O’Connor | [email protected] Central Editor/Midwest EditorStephanie K. Jones | [email protected] EditorDon Jergler | [email protected] EditorLisa Howard | [email protected] EditorSusanne Sclafane | [email protected] EditorDenise Johnson | [email protected] Catherine Oak, Bill Schoeffler Contributing Writers David Coons, Paul Lienert, Adrienne Lindsey, Douglas Powell, Laird Rixford, Meredith Reeves, David Shepardson, Bernie Woodall

SALESChief Marketing Officer Julie Tinney (800) 897-9965 x148 | [email protected] Manager Lauren Knapp (800) 897-9965 x161 | [email protected] Dena Kaplan (800) 897-9965 x115 | [email protected] Valdez (800) 897-9965 x172 | [email protected] Whalen (800) 897-9965 x180 | [email protected] Central Mindy Trammell (800) 897-9965 x149 | [email protected] (NY, PA and CT only) Dave Molchan (800) 897-9965 x145 | [email protected] & East (except for NY, PA and CT) Howard Simkin (800) 897-9965 x162 | [email protected] Markets Sales Manager Kristine Honey | [email protected], Jobs, Agencies Wanted/For SaleKelly De La Mora (800) 897-9965 x125 | [email protected]

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

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

IJ ACADEMY OF INSURANCEV.P. of EducationChris Boggs | [email protected] Training CoordinatorBarbara Whiffen | [email protected]

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

The majority of the lawsuits filed alleged violations of Title VII of the Civil Rights Act of 1964.

Top 10 Discrimination Claims

Retaliation charges increased by nearly 5 percent in 2015 and continue to be the leading concern raised by workers across the country.

Disability charges increased by 6 percent from last year and are the third largest category of charges filed. The U.S. Equal Employment Opportunity Commission (EEOC) released breakdowns of the 89,385 charges of workplace discrimination that the agency received in fiscal year 2015. EEOC said it resolved 92,641 charges in fiscal year 2015, and secured more than $525 million for victims of discrimination in private sector and state and local government workplaces through voluntary resolutions and litigation. The year-end data shows that retaliation again was the most frequently filed charge of discrimination, with 39,757 charges, making up 45 percent of all private sector charges filed with EEOC. The fiscal year ran from Oct. 1, 2014, to Sept. 30, 2015. The agency is currently seeking public input on its proposed update of enforcement guidance addressing retaliation and related issues as part of its commitment to inform the public about the EEOC’s interpretation of the law and promote voluntary compliance.

Top 10 Charges The charge numbers show the following break-downs by bases alleged. The percentages add up to more than 100 because some charges allege multiple bases.• Retaliation: 39,757 (44.5 percent of all charges filed)• Race: 31,027 (34.7 percent)• Disability: 26,968 (30.2 percent)• Sex: 26,396 (29.5 percent)

• Age: 20,144 (22.5 percent)• National Origin: 9,438 (10.6 percent)• Religion: 3,502 (3.9 percent)• Color: 2,833 (3.2 percent)• Equal Pay Act: 973 (1.1 percent)• Genetic Information Non-Discrimination: 257 (0.3 percent) Charges raising harassment allegations made up nearly 28,000 charges, or 31 percent. Employees claimed harassment in charges based on race, age, disability, religion, national ori-gin and sex, including sexual orientation and gender identity. The agency filed 142 merits lawsuits last year, up from 133 the previous year. The majority of the lawsuits filed alleged

violations of Title VII of the Civil Rights Act of 1964, followed by suits under the Americans with Disabilities Act (ADA). This included 100 individual law-suits and 42 lawsuits involving multiple victims of discriminatory policies. EEOC lawyers resolved 155 lawsuits alleging discrimination.

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NATIONAL COVERAGE

News & Marketsis to deliver the message from the combined company that “we are bringing more to you.” “The senior executives, every-one is out, we are doing it around the world,” Greenberg noted. “I am out there seeing agents. I was out last night seeing agents. Our business comes from producers and they need to feel comfortable. Value creation is not in the inside,” Greenberg said. “Value creation is out there, and that’s where we live.”

Agency Culture In July, soon after announcing the plan for ACE to acquire Chubb, Greenberg made a point of stressing that the new Chubb would, in his words, “preserve” the agency culture of Chubb. He said then that the new company would adopt the best of both companies and that Chubb’s agency system is better than ACE’s, whereas ACE is better at brokerage. He called Chubb a “great” agency com-pany. “We’re going to preserve the agency culture. We’re going to preserve the agency distribution. We’re going to preserve the branch system,” said Greenberg in July. The ACE CEO also said he would not be changing the contingent commission system — to do so he’d have “to be stupid or have rocks” in his head, he said. Some insurers pay contingent commissions to agents for achieving certain goals with the insurer, such as placing a particular amount of business, retaining a number of policies or achieving a particular loss ratio. The plan for the new company calls for not only keeping the agency distribution and branch structure of Chubb but also growing this distribution channel with new products and customers, he said. In urban centers where both ACE and Chubb have branches, the plan calls for combining the two. Hollmer is editor of CarrierManagement.com’s daily newsletter, where the original version of this article was published.

Chubb’s Greenberg Confident Most Top Talent, Agents to StayBy Mark Hollmer

Chubb Chairman and CEO Evan Greenberg believes opportunity

and incentives will encourage most executives to stay with the insurer in the wake of its recently completed mega-merger. “I don’t kid myself. We’re not going to keep everybody,” Greenberg said during his first earnings call on Jan. 27, after his ACE Ltd.completed its $29.7 billion acquisition of Chubb on Jan. 14 and kept the Chubb name. “I firmly believe this, that the loss of talent that we have will be very much on the mar-gin. It won’t be in large numbers and we have great depth within the organization.” “This organization is on the ascendancy,” Greenberg added. “Why wouldn’t you want to be here?” As Greenberg said, some executives will always leave. One notable one did so before the merger deal was even finished. Chubb Veteran Dino E. Robusto had been slated to become an executive vice presi-dent of the post-merger Chubb, and co-president of the North America Insurance division after

the merger. In mid-November, news broke that he’d become chairman and CEO of CNA Financial Corp. instead. Greenberg asserted during the company’s earnings call, however, that the post-merger Chubb has plenty of factors in play to keep executives engaged and motivated. “It’s a little bit of a self-selecting process,” Greenberg said. “Those who want to sign on to an environment that is ambitious, that

is hardworking, that is driven to win, that has an aggression to it — a certain aggres-sive stance, all those attributes that I can describe, they are juiced and energized by this. I don’t have any concerns about losing those people.” Greenberg explained that he believed those qualities reflect the “overwhelming vast majority of talent of the combined

organization.” “At the end of the day, it’s not just about organizations, but indi-vidual motivations and aspirations. But people also work to be paid,” Greenberg added. “They want to be incented. We have no problem incenting for performance. We believe that our value creation in the future is substantial and in front of us. Anybody holding equity

in the combined companies’ stock, that is a pretty good motivator of retention.” Greenberg, in answer to a related question during the call, said that “legacy Chubb”

and “legacy ACE” executives and employ-ees are working hard to meet with clients and partners and hit the ground running, post-merger. “Legacy Chubb and legacy ACE of all branches, and all regions, are getting them-selves together quickly. They’re out meeting agents and delivering the message that we are open for business,” Greenberg said. He explained that the mission right now

‘We’re going to preserve the agency culture. We’re going to preserve the agency distribution.’

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have turned on the ridesharing app, but haven’t accepted a fare. Period 2 is when drivers have accepted a fare and are on their

way to pick up a passenger. During period 3 drivers are transporting passengers to their destinations. Mercury’s ridesharing insurance will extend driv-ers’ personal auto policies

from period 1 through period 3 of the drive cycle, allowing them to obtain coverage not provided by their ridesharing companies. Mercury’s ridesharing insurance will also fix the insured’s vehicle in a covered loss if those coverages had been purchased from Mercury.

Mercury Begins Offering Ridesharing Insurance in Arizona

Mercury Insurance is offering rideshar-ing insurance to cover Uber, Lyft and

other transportation network company drivers in Arizona. The new coverage announced in February will provide drivers with insur-ance that will bridge the gap between their personal auto insurance and the coverage provided by their TNC. Mercury’s ride-sharing coverage will provide drivers with coverage throughout the entire drive cycle. Mercury will be offering the insurance for as little as 20 cents per day. The ridesharing drive cycle is divided into three periods. Period 1 is when drivers

Fatal Fire in Washington Bikini Coffee Stand Caused by Propane

Fire investigators say they’ve completed

their investigation into a blaze that killed a woman working in a coffee stand where baristas wear bikinis. Everett Fire Department investiga-tors said in a February news release the fire Jan. 7 was accidental and caused by a propane heater. Officials say 26-year-old Courtney Campbell had been in the stand refill-ing a small space heater with propane. Investigators said it was apparent that an accidental release of propane vapor occurred immediately before a flash that caused the fire. Campbell was burned while escaping the flames and died later at Harborview Medical Center in Seattle. Officials said Campbell had recently bought the stand. Copyright2016AssociatedPress.

California Hospital Workers’ Comp Report Shows Claim Severity on Rise

California workers’ compensation claim severity continues to increase, while

claims frequency declines, according a newly released report. The latest California hospital report benchmarking workers’ comp costs by Milliman and Keenan Healthcare uses data from 35 hospital systems and individual facilities within California to provide more than 3,500 claims for review. The report offers a glance at factors including claim frequency and severity, impact of workers’ comp reforms, medical and indemnity costs and allocated loss adjustment expense over the past 10 to 12 years. Also included is data on payroll and utilization, age, litigation status and future medical claims. Trends identified in the report include: Overall losses per $100 of payroll remained flat over the 10 years ending 2014, with severity of claims on the rise while claim frequency declined. Estimates of costs per indemnity claim for accidents occurring during 2014 have decreased approximately 10 percent from 2013.

Projected 2015 loss cost per $100 of pay-roll was at $2.20. The first notable trend in the report is that severity per paid indemnity claim — indemnity, medi-cal and allocated loss adjustment expense combined — showed an increase of nearly 5.5 percent annu-ally during the period between 2005 through 2014. The report also notes that the drop off in claim severity that occurred from 2003 to 2004 was due to reform laws enacted during that time. Indemnity claim frequency declined dramatically up until 2008. The net effect of these two trends com-bined has been that overall losses per $100 of payroll have been largely consistent across the past 10 years, the report shows. The decline in claim frequency has been seen both in claims that incur an indem-nity payment and in medical-only claims, according to the report. The smallest com-ponent, ALAE costs, have increased as a

percentage of overall claim costs in recent years. Workers between the ages of 36 to 55 account for more than half of the paid

indemnity claims. The report indi-cates that the share of overall losses for each age range is less than its share of overall claims for ages 30 and younger, which indicates lesser average severity of indemnity claims for younger workers. While litigated claims contribute

only 20 percent of the total claims with indemnity payment, they account for rough-ly 54 percent of total incurred losses, the report states. Copyright2016AssociatedPress.

Marty HacalaFitness Enthusiast General Star President & CEO

“Rolling out of bed at 5am every morning to work out requires discipline. It’s my way of getting the very most out of my busy day.

“At General Star, we strive to get the very most out of our wholesale broker relationships. As a member of the Berkshire Hathaway family of companies, our financial strength is unsurpassed. But it’s our disciplined approach to building and maintaining profitable partnerships with a select group of brokers that drives us.

“Discipline: Whether sticking with an early morning exercise regimen or standing firm with a limited number of valuable wholesale broker relationships, it remains the cornerstone of our success.”

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

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

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People Langille is currently a partner at the defense firm of Finnegan, Marks, Theofel & Desmond in San Francisco.She has served as amicus counsel for the CWCI and other organizations in a number of cases, including AngelottiChiropracticv.Baker; Dubonv.WorldRestoration; Brodiev.WCAB; LockheedMartinv.WCAB; Stuartv.WCAB; and AvalonBayFoodsv.WCAB(Moore).

Alliant Insurance Services Inc. named Michael Heffernan executive vice president in its construction services group. Heffernan will be responsible for Alliant’s construction operations in San Jose, Calif. Heffernan has more than 25 years of risk management experience. Prior to Alliant Heffernan was an executive vice president at a global retail broker. Newport Beach-based Alliant provides property/casual-ty, workers’ compensation, employee benefits, surety and financial products and services.

Walnut Creek, Calif.-based Heffernan Insurance Brokers named Christopher Dewey vice president. Dewey joined Heffernan in 2008 in the small business division, and was promoted to Heffernan’s large commer-cial division in 2009. Heffernan has California offices in San Francisco, Petaluma, Menlo Park, Los Angeles and Orange County, and in Portland, Ore., St. Louis, Mo., Long Island and New York.

Reno, Nev.-based LP Insurance Services Inc. has named Lindsay Minor chief marketing officer. Minor will support offices in marketing and community efforts. Minor was most recently the company’s strategic com-munications manager. LP Insurance is a risk management and commercial insurance brokerage firm.

EPIC Insurance Brokers and Consultants has named Joshua Allen Western region risk management loss control specialist. Allen will be based in EPIC’s Concord, Calif., office and report to Marianne Schleicher, chief operating officer of the Bay area region. He is responsible for providing safety management and loss control services to EPIC’s larger, more complex risk management clients. Allen has more than 10 years of safety and loss control experience. He comes from the Hartford. EPIC is retail property/casualty and employee benefits insurance brokerage and consulting firm.

Hub International Ltd. named Sara Owens senior vice president of engagement. Owens will be responsible for engaging key constituents of Hub’s Los Angeles, Calif., operation. She will report to Andrew Forchelli, regional presi-dent of Hub International Los Angeles. Owens was a vice president at Hub. Chicago, Ill.-based Hub is an insurance brokerage that provides property/casualty, life and health, employee benefits, investment and risk management products and services.

William Guthrie was named chief risk officer, and Melissa Kaufman was named vice president of prod-uct development of Menlo Park, Calif.-based Pacific Specialty Insurance Co. Pacific Specialty is part of the McGraw Group of Cos. Guthrie is responsible for risk management operations. He will also continue to have oversight of the research and development department as well as McGraw Powersports. Kaufman is responsible for the development, mainte-nance and profitability of Pacific Specialty’s personal lines insurance programs. Guthrie was previously senior vice president of product development. Kaufman was formerly director of product development. Prior to Pacific Specialty she was with the law firm of Roger, Scott & Helmer. Prior to that she was counsel for Safeco Insurance Co. Pacific Specialty sells a variety of products, including property, powersports and liability.

Gov. Doug Ducey appointed Leslie Hess as the interim director of the Arizona Department of Insurance. Hess has worked in the insurance and financial services industries for more than 25 years. Hess was with the Department of Insurance for 12 years as deputy receiver and legal advisor. She was with the Arizona Legislative Council and worked for the Arizona Corporation Commission, Securities Division in legal counsel positions. Hess worked for both Merrill Lynch and Bear Stearns in New York. Most recently, Hess was the director of compli-ance and corporate secretary for Oxford Life Insurance Co. and its subsidiaries.

Ellen Sims Langille was named general counsel of the California Workers’ Compensation Institute. Langille will manage the CWCI’s internal and external legal affairs. She will also serve as staff liaison to the legal committee, which directs CWCI’s amicus activities.

Sara Owens

William Guthrie

Melissa Kaufman

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News & Markets93 percent more likely to conduct research for insurance on their mobile devices as compared to lower risk shoppers. “The main thing to remember about online insurance shoppers is that they come in all shapes and sizes,” said Rory Joyce, CoverHound’s chief product officer and co-founder. When it comes to variety, Joyce isn’t just talking demographics. According to him, an assessment of the users who came to CoverHound.com shows they visited on 2,200 different devices. The disparity between how high-risk versus low-risk shoppers’ online insurance researching and buying profiles is worth noting: Compared to higher risk shoppers, lower risk shoppers are 49 percent less likely to complete an insurance purchase on a desktop. Compared to higher risk shoppers, lower risk shoppers are 43 per-cent less likely to complete an insurance purchase on mobile. The above differences in lower risk shoppers’ digital insurance shopping behaviors — both desktop and mobile — could be due to more complex insurance needs. Higher risk shoppers are 7 percent more likely to purchase their insurance within the first week compared to lower risk shoppers. High-risk shoppers tend to go online for a number of reasons, and they tend to be more comfortable not only self-servicing during the quote process, but also purchas-ing online, Joyce said. This is because high-risk shoppers are

Expert: Targeting High-Risk Shoppers with Mobile Makes SenseBy Don Jergler

High-risk shoppers may be one of the best segments for insurance agencies

and carriers to target with online and mobile quoting and services. New data from online agency CoverHound shows high-risk shoppers are

ABRAM16746.indd 1 2/9/16 9:37 AM

continued on page W8

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News & Markets

important. “You really need to have a dynamic experience that really takes the specific segment’s behaviors and preferences in account and build your experience accord-ingly,” Joyce said. Joyce also offers a reassuring message to agents who feel online insurance purchas-ing is leaving them out in the rain: The majority of the market may be comfortable getting an initial quote online, but they still want to pick up the phone and close the deal with an agent. “Obviously there are going to be seg-ments, who tend to be the younger gen-eration, where they’re just conditioned to absolutely not want to talk to anyone over the phone,” he said. “We find that when given the option to not talk to an agent versus purchase online, most of that seg-ment is going to do so.” However, the majority of the market still is only comfortable in getting that ini-tial quote online or through an app. They still want interaction with an agent, and they prefer close the deal with an agent, Joyce said. He added: “I think the best lesson here is: the need for agents isn’t going away overnight. And then make sure that we’re always giving the best service possible across the board, high-risk, low-risk, mid-dle market.”

typically younger, and younger segments are inherently more active on the web, according to Joyce. “There is less demand, from a carrier standpoint, to write high-risk policies,” he added. Going online allows the segment to maximize their options.” While the low-risk segment maybe be a little bit less comfortable actually purchas-ing insurance online, they are comfortable getting that initial comparison online without talking to an agent, according to Joyce. Another notable difference is the high-risk segment seems more willing to use mobile devices for a majority of their needs. “It could be more younger folks tend to be what we consider high-risk and the lower-income folks,” he said. “In many cases, a mobile device can be their only connection to the web.” CoverHound data also shows that high-risk shoppers are more likely to make an

immediate purchase decision. What accounts for that? “I don’t think it’s any one thing — it’s pretty interesting,” Joyce said. “A cou-ple of factors: high-risk shoppers, for example, they tend to be more likely to be without insur-ance, so that creates a greater sense of urgency.” It may also be impulse. Younger people are more likely to want to get a purchase made sooner than

later, and these high-risk shoppers typically have fewer overall options in the market, so when they see a deal they’re com-

pelled to jump on it, he said. The message in all of this may not be totally new, but the take-home is that offering a good online experience is

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The amount the city of Chicago has had to pay in misconduct settlements involving

124 of Chicago’s roughly 12,000 police offi-cers. The officers are identified in nearly a third of the misconduct lawsuits settled since 2009. The Chicago Tribune reported one officer had seven lawsuits against him that were settled. The lawsuits have largely escaped city council scrutiny because the

settlements have been at or under $100,000. If they’re larger, aldermen must approve

them.

$5 MillionThe amount that Time Warner Cable has

agreed to pay to settle lawsuits that claimed it owed Los Angeles millions in city fees.

The amount Arkansas highway officials plan to spend on the state freeway system

with a focus on reducing wrong-way crashes on the state freeway system. The changes

include replacing more than 4,000 “wrong way,” “do not enter” and “one way” signs at exit ramps with brighter sheeting, and

installing them at a lower height. The department also plans to put down more noticeable pavement directions and add reflectors on off-ramps that indicate the

driver is going in the wrong direction.

$2.8 Million

439,238The number of Pennsylvanians who

signed up for the 2016 health insurance plans that were sold through the federal

marketplace. The enrollment number fell compared to last year when about 471,000 Pennsylvanians signed up. Officials said some people have migrated to Medicaid after the program’s eligibility guidelines

expanded. Pennsylvania’s Medicaid program grew by 440,000 people in 2015 to a record

of nearly 2.7 million.

$34 Million E-Cigarette Marketing“The health of New York City kids is not for

sale.”— New York City Comptroller Scott Stringer on the need to investigate and regulate marketing of e-cigarettes. Stringer hosted a rally with dozens of advocates, parents and youth to call on e-cigarette companies to stop marketing to youth. He cited a Centers for Disease Control and Prevention

study that found 70 percent of young Americans have been exposed to e-cigarette advertisements.

800-Pound Gorilla“Right now, the 800-pound gorilla in the

room for most Oklahoma citizens is the fact that the largest and most important invest-ment that they make in their lifetime, their

homes, are shaking underneath them.” — Oklahoma Rep. Scott Inman, D-Del City,

believes the oil and gas industry should subsidize the costs of researching earthquakes in his state.

Democrats want to prohibit out-of-state wastewa-ter from being dumped in Oklahoma. They also want to roll back a law that prohibits cities or counties from regulating oil and gas activities.

Flint Water Lawsuits“How can they look at themselves in the

mirror? … It’s an embarrassment for gov-ernment officials to take the safety of their

citizens so lightly.”— New York attorney Hunter Shkolnik, who has filed one of the many lawsuits over lead contam-ination in Flint, Mich.’s water system. Gov. Rick Snyder, the former mayor, public employees, and almost anyone else who may have had a role in supplying the city with corrosive river water are being sued. The lawsuits accuse them of violating civil rights, wrecking property values and enrich-ing themselves by selling a contaminated product.

Don’t Worry, Be Gassy‘Telling people who are upset that it is not a problem or serious is a terrible crisis man-

agement strategy.’ — Susan Tellem, a partner at Tellem Grody

Public Relations in Los Angeles, knocked Sempra Energy’s consistent “Don’t worry” message to Los

Angeles residents ever since one of its wells in California started spewing natural gas.

Stormy Seas“The thing about this storm was that it was forecast for days. So why in the world would a cruise ship with thousands of passengers

go sailing right into it?”— Sen. Bill Nelson, D.-Fla., who has called for

the National Transportation Safety Board to investigate the Royal Caribbean cruise ship that

ran into stormy seas in the Atlantic Ocean.

DECLARATIONSFIGURES

NATIONAL COVERAGE

The amount a South Carolina jury awarded in punitive damages to a woman injured in a car crash involving James Boulware, a repeat drunken driver. The jury also awarded Jami Allison Owens $89,000 in actual damages

for unspecified injuries suffered in the Oct. 1, 2011, crash after a University of South

Carolina football game.

$1 Million


NATIONAL COVERAGE

Business MovesWorld Insurance, Alamo Insurance World Insurance Associates LLC, an inde-pendent agency based in Tinton Falls, N.J., has acquired Alamo Insurance Services Inc. of Toms River, N.J. Terms of the transaction were not disclosed. The Alamo Insurance Services acquisition is World Insurance Associates’ 13th business acquisition since its founding in 2012. Established in 1974, Alamo Insurance Services is an independent agency offering automobile, homeowners, flood, health, life, and commercial insurance services. World Insurance Associates will maintain Alamo’s Toms River location. Alamo’s three staff members will join World Insurance Associates as part of the transaction. World Insurance Associates LLC is an independent agency with 60 employees and 10 offices in the Northeast region and places more than $90 million in annual premiums.

Tompkins Financial, Shepard, Maxwell & Hale Tompkins Financial Corp., a financial services company headquartered in Ithaca, N.Y., announced that its insurance agency subsidiary, Tompkins Insurance Agencies Inc., has acquired Shepard, Maxwell & Hale Insurance in upstate New York. Terms of the transaction were not disclosed. Established in 1957, Shepard, Maxwell & Hale is an independent agency with two offices in Batavia and Hamlin, N.Y. Shepard, Maxell & Hale’s two principals, Daniel G. Hale and Stephen S. Maxwell, will remain with the agency. Five other employees will also join the Tompkins Insurance team.

Hub International, Columbian Agency Insurance brokerage Hub International Ltd. has acquired operations assets of the Columbian Agency, based in New Lenox, Ill. Terms of the acquisition were not dis-closed. Columbian operations specialize in providing commercial lines insurance and surety bond solutions for the construc-tion industry. Columbian’s owners Kevin Scanlon, Gary Eaton, Lee McWethy and Rob Kegley, will join Hub Midwest.

The Hilb Group, Dowling & O’Neil The Hilb Group, a middle market insur-ance agency based in Richmond, Va., has acquired Dowling & O’Neil, an independent agency in Hyannis, Mass. Terms of the transaction were not disclosed. Founded in 1841, Dowling & O’Neil pro-vides general property/casualty insurance services with niches in high net worth per-sonal lines and healthcare facilities. Dowling & O’Neil co-owners Rob Miller and Mark McCartin will continue to lead 31 employees and operate in the Hyannis loca-tion under their current name. The Dowling & O’Neil acquisition is The Hilb Group’s first transaction in 2016. Established in 2009, The Hilb Group is a portfolio company of Boston-based private equity firm, ABRY Partners.

Brown & Brown, SSAD Brown & Brown Inc.’s subsidiary, The Advocator Group LLC, has acquired sub-stantially all of the equity interests of Social Security Advocates for the Disabled LLC (SSAD) in Norwell, Mass. Terms of the transaction were not disclosed. Since its founding in 1994, SSAD has provided Social Security disability insur-ance (SSDI) advocacy services to individual clients on behalf of long-term disability insurance carriers. SSAD had annual net

revenues of approximately $10.0 million in 2015. SSAD will continue to operate from its Norwell location under the sales leadership of Ann Marie Beaudoin and operational lead-ership of Megan Reid. The SSAD operations will report to Julie Turpin, CEO of The Advocator Group. Brown & Brown Inc. is head-quartered in Daytona Beach, Fla.

Anderson, Bagley & Mayo, Judy A. Mendolusky Anderson, Bagley & Mayo Insurance Agency, an indepen-dent agency based in Leominster, Mass., has acquired Judy A. Mendolusky Insurance Agency,

also based in Leominster. Terms of the transaction were not disclosed. Founded in 1986, Judy A. Mendolusky Insurance Agency has been an independent agency offering property/casualty insurance services to local residents and businesses. Anderson, Bagley & Mayo is a family owned and operated firm offering property/casualty insurance services to more than 7,000 families and 800 businesses in the north central Massachusetts region.

AssuredPartners, Suydam Insurance AssuredPartners Inc. has acquired Suydam Insurance Agency in Somerset, N.J. Terms of the transaction were not dis-closed. Suydam Insurance Agency has provided business and personal insurance coverage to clients in the greater New Jersey area since its founding in 1879. The Suydam team of eight will continue operations in Somerset under the leadership of Robin Suydam and Ryck Suydam. Based in Lake Mary, Fla., AssuredPartners acquires and invests in insurance brokerage businesses across the United States and in London. From its founding in 2011, AssuredPartners has grown to $550 million in annualized reve-nue, with more than 125 offices in 30 states and a London office.

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

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NATIONAL COVERAGE

News & MarketsP/C Direct Premium Written Up 4.2 Percent

DPW 12.2 percent over the first nine months of 2014. This continued the Top 25 insurers’ impressive display of premium growth and financial stability. The Top 25 accounted for more than 55 percent of the growth in the P/C insurance industry’s DPW. In contrast, the remainder of the industry reported an increase in DPW of 2.3 percent, or $8 billion year-over-year. While increasing DPW, P/C companies have aggregately maintained a sufficient level of policyholders’ surplus (PHS). One measure that indicates P/C companies are conservatively leveraged is the DPW to PHS ratio. An insurer’s DPW to PHS ratio is indicative of its premium leverage on a direct basis, without considering of the effect of reinsurance. Since 2010, this ratio for P/C companies has remained stable at approximately 70 percent.

Although the market continues to exhib-it signs of firming and DPW continues to increase, P/C insurers should not expect a traditional hard market in the near future. More importantly, it is possible that the double-digit premium growth experienced in the historical hard market cycles may have created unrealistic premium growth expectations for this current recovery. It is more realistic that expectations should relate to gradual, stable growth. There is always a fair amount of uncertainty in making projections based on third-quar-ter data, but if the industry holds to its 10-year historical pattern, growth in 2015 would result in the highest level of year-end DPW reported by the P/C industry.

Powell is a senior financial analyst with Demotech Inc. Email: [email protected].

Top 25 Property/Casualty CompaniesBased upon dollar amount of direct premium written (DPW) growthYear-to-date results September 30, 2015 versus September 30, 2014

DPW DPW $ %Company Name 9/30/2015 9/30/2014 Growth GrowthAllstate Northbrook Indemnity Co. 1,349,938,048 87,476,781 1,262,461,267 1,443.20%Allstate Fire and Casualty Insurance Co. 5,188,773,339 4,507,281,437 681,491,902 15.12%American Home Assurance Co. 414,763,995 -262,985,301 677,749,296 --Wesco Insurance Co. 1,600,716,115 1,120,170,948 480,545,167 42.90%State Farm Mutual Automobile Insurance Co. 26,057,095,340 25,580,599,478 476,495,862 1.86%Continental Casualty Co. 4,727,399,780 4,302,249,643 425,150,137 9.88%Liberty Insurance Underwriters Inc. 1,053,115,048 638,355,292 414,759,756 64.97%Allstate Vehicle and Property Insurance Co. 1,083,573,364 670,650,620 412,922,744 61.57%American Bankers Insurance Co. of Florida 2,400,345,121 1,992,152,425 408,192,696 20.49%GEICO General Insurance Co. 5,950,811,319 5,560,823,143 389,988,176 7.01%Zurich American Insurance Co. 4,745,084,435 4,361,073,415 384,011,020 8.81%USAA General Indemnity Co. 2,091,245,302 1,709,888,245 381,357,057 22.30%LM General Insurance Co. 1,808,836,334 1,435,897,605 372,938,729 25.97%GEICO Casualty Co. 2,446,945,792 2,076,271,232 370,674,560 17.85%State Farm Fire and Casualty Co. 14,647,389,844 14,317,624,026 329,765,818 2.30%Auto-Owners Insurance Co. 2,040,451,111 1,724,693,183 315,757,928 18.31%GEICO County Mutual Insurance Co. 504,251,192 212,171,691 292,079,501 137.66%Ohio Security Insurance Co. 929,375,810 650,320,845 279,054,965 42.91%Nationwide Agribusiness Insurance Co. 975,374,654 707,545,677 267,828,977 37.85%Standard Fire Insurance Co. 1,205,099,454 950,440,765 254,658,689 26.79%Liberty Insurance Corporation 2,090,855,862 1,840,655,041 250,200,821 13.59%USAA Casualty Insurance Co. 3,958,601,029 3,729,155,995 229,445,034 6.15%Nationwide General Insurance Co. 657,234,391 454,601,306 202,633,085 44.57%Farmers Insurance Exchange 2,695,103,875 2,503,960,437 191,143,438 7.63%Everest National Insurance Co. 838,483,126 647,529,557 190,953,569 29.49%

Top 25 P/C Companies by DPW Growth 91,460,863,680 81,518,603,486 9,942,260,194 12.20%All Other P/C Companies 354,353,406,940 346,320,135,661 8,033,271,279 2.32%

Total 445,814,270,620 427,838,739,147 17,975,531,473 4.20%

Data Source: The National Association of Insurance Commissioners, Kansas City, Mo., by permission. Information derived from an SNL product. The NAIC and SNL do not endorse any analysis or conclusion based upon the use of its data.

By Douglas A. Powell

Direct premium written (DPW) for prop-erty/casualty insurance companies con-

tinues to increase, albeit gradually, accord-ing to a Demotech analysis. At year-end 2014, more than $570 billion of DPW was reported, a record-high for the industry. For 2014, total DPW for all P/C insurers aggregately increased

4.5 percent over 2013, an increase of $24.7 billion. Through the third quarter of 2015, the insurance industry’s growth trend has continued, as DPW for all P/C insurers aggregately increased 4.2 percent over 2014. For the nine months ended Sept. 30, 2015, P/C companies comprising the Top 25 insurers in terms of DPW increased their

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Farm & Ranch SPOTLIGHT

4. Operations may breed high-valued bucks to sell their offspring to other hunt-ing ranches, which advertise such stock to draw high-priced hunts. Others breed to increase the stock on their own prem-ises. Breeding options affect the rating for insurers because selling the deer increases products exposure and needs to be charged for appropriately. 5. Hunting is an incidental operation that will probably take place on the prem-ises. This exposure can be minimal if only employees and family members are allowed to hunt. If the insured sells hunts to outside parties to increase profit, this could be an additional liability exposure that needs to be addressed and charged for by the insur-er.6. When hiring outside of the opera-tion to extract and store semen, it is very important to verify that the outside party has its own coverage, and to obtain a certifi-cate of insurance. 7. Semen storage is also something to look at when writing these types of opera-

tions. The semen of prize bucks can be very highly valued. This semen needs to be stored in a temperature-controlled facility that will provide coverage for spoilage in the event that the facility’s systems fail and the semen becomes no longer via-ble. 8. When livestock is being sold to others, they are either picked up by the new owner or delivered to the new premises. Because transporting deer can be a difficult task, many times owners/buyers outsource the delivery. Care, custody and control needs to be in place by the hauling company to make sure that in the event the stock doesn’t make it through the delivery, the money for the live-stock isn’t lost.9. When dealing with

high-value livestock, coverage for the ani-mal itself definitely needs to be in place. But sometimes, in addition to a prize buck the doe herd should be insured, as well. Mortality/livestock policies can help with this exposure. Coverage forms vary from carrier to carrier, but usually coverage can be tailored depending on the circumstanc-es. Whether it is a policy for a $250,000 prize buck, or a limit on the entire herd, policies can be purchased for both types. 10. Because these operations can generate high receipts, and tend to have increased land/property values and expensive stock, an umbrella policy is a wise choice for these risks. And because this is a fairly new risk, the limits that could be paid are unde-termined. Being prepared for a high-liability loss will help keep the operation intact and moving forward during a claim.

Lindsey, an underwriter, commercial AG, at Texas- based Tejas American General Agency, holds Cer-tified Insurance Counselor and Agribusiness and Farm Insurance Specialist certifications.

10 Things to Know About Deer Breeding OperationsBy Adrienne Lindsey

Deer breeding operations can generate high receipts.

A relatively new type of risk, deer breeding has many pecu-liarities that agents should be aware of to better service their clients. Here are some of them:

1. Fencing is imperative when looking at deer breed-ing operations. Because of the ability of this type of livestock to jump an average fence, the entire perimeter must be game fenced. Some carriers will approve 8-foot game fencing, and others may not allow any-thing under 10 feet. Because most farm/ranch policies don’t include deer in the definition of livestock, the insureds need to make sure to keep them safe and enclosed. 2. Deer are bred in two ways. They may be penned in a game fenced area during breeding season where they will breed nat-urally. Alternatively, bucks will be darted in the field and the semen extracted. A vet may then come onsite and artificially insem-inate a darted doe. When using a veterinar-ian onsite, their coverage needs to be veri-fied and a certificate of insurance obtained. Also, make sure the vet has experience with this type of procedure. 3. When bucks are darted and semen extracted, the appropriate pens must be available in which to allow them to wake up after the medication has worn off. Pens need to be dark and enclosed, and the ani-mals should be kept away from each other. The bucks are then placed into an outside pen until they can be safely released to their natural habitat. To ensure that both employees and other livestock are not injured, the buck’s horn racks must be removed. This will limit the liability expo-sure of injury for everyone on premises.

‘

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Rick Dayner, trainer and

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Dina Sapienza, rider and

Great American underwriter

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Great American Insurance Group, 301 E. Fourth St., Cincinnati, OH 45202. Policies are underwritten by Great American Insurance Company, Great American Assurance Company and Great American Security Insurance Company, authorized insurers in all 50 states and the DC. The Great American Insurance Group eagle logo and the word marks Great American®, Great American Insurance Group®, and We Live It® are registered service marks of Great American Insurance Company. © 2013-2016 Great American Insurance Company. All rights reserved.

In hundreds of niche industries, Great American’s expertise is built on the knowledge and experience of people who know our insureds’ business as well as our own. People like Dina, an underwriter who has competed for years on the Hunter/Jumper circuit. Her passion has been forged in the stables and rings—and on the job.

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NATIONAL COVERAGE

Merger and Acquisition Activity Sets New High-Water Markthose firms accounting for 57 percent of all sellers during the year. Multi-line agencies, those with both property/casualty and employee benefits, comprised 28 percent of all deals. Employee benefits-only firms dropped to 15 percent of total activity. Retail agencies comprised 82 percent of all deals with the specialty distribution segment taking the remaining 18 percent. Within the specialty distribution segment, activity was split among program adminis-trators (72 deals) and wholesale brokers (11 deals). While retail agencies make up the majority of the transaction activity, the vol-ume of specialty distributors increased 32 percent (20 more deals) from the prior year. There were 44 buyers in 2015 with mul-tiple acquisitions, but it was the five most active that really drove activity to new heights, with 33 percent of all announced transactions. The top five, all private equi-ty-backed, each had their most active years to date. Topping the leader board was Acrisure LLC with 39 U.S. based deals, the highest transaction count seen on record for any buyer. AssuredPartners Inc. and Hub International Ltd. followed with 34 and 30 U.S. based deals, respectively. BroadStreet

Partners Inc. became an active player in 2015 with 26 announced transactions, a marked increase from two deals the prior year. Rounding out the top five most active with 20 deals was Confie Seguros Insurance Services, continuing to build its presence with regional personal lines brokerages. With a combined 149 deals, these five buyers announced 72 more deals in 2015 than the prior year. Expanding the leader board brings in two public brokers, Arthur J. Gallagher & Co. (18) and Brown & Brown Inc. (12). Also completing the year in the double digits was NFP Corp. with 16 announced transac-tions, more than twice its prior year count. While demand swelled for the histori-cally active buyers, there were many new entrants that stepped in from the sidelines. In 2015, there were 188 buyers in the market, 100 of them first-time acquirers. Compared to the total 136 buyers the prior year, there were 38 percent more buyers making acqui-sitions. In our opinion, activity in 2015 was pro-pelled to new heights by the low cost of capital, all-time high valuations and buyer demand that seemed difficult to satiate. While market dynamics can change at any time and acquisition activity could signifi-cantly relax, based on what we are seeing, the end of the buying spree is not currently visible on the horizon. Securities offered through MarshBerry Capital Inc., Member FINRA and SIPC, and an affiliate of Marsh, Berry & Co. Inc. 28601 Chagrin Blvd., Suite 400, Woodmere, Ohio 44122. Phone: 440-354-3230. Except where otherwise indicated, the information provided is based on matters as they exist as of the date of preparation. Past per-formance is not necessarily indicative of future results.

Reeves is a senior consultant with Marsh, Berry & Co. Inc. Website: www.marshberry.com.

See Corresponding M&A Activity chart on page 21

M&A Review

By Meredith Reeves

Sources: SNL Financial, Insurance Journal, other publicly available sources and MarshBerry proprietary databases. Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only.

Announced Deals(U.S. Transactions; Year-to-Date as of Dec. 31, 2015)

Merger and acquisition activity for 2015 set a new record with 456

deals, sailing past the previous high-water mark of 325 deals set in 2012, according

to recent data. The fourth quarter closed with 104 announced transactions, pushing the total deal volume up an impressive 42 percent over the prior year, as market condi-tions led to increased

buyer demand and opportunities for sellers. The availability of capital along with an expanding buyer pool helped to create a surge of activity among insurance broker-ages backed by private equity. Private equi-ty-backed brokers drove activity with 212 deals or 46 percent of the total deal count for 2015. Independent agencies accounted for 119 deals or 26 percent of the total activ-ity. Public brokers completed 39 deals (9 percent of the total) and banks, insurance companies, and other buyers completed the remaining 19 percent of acquisition activity. Activity in 2015 shifted more heavily toward the property/casualty firm, with

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10/01/15 Acrisure LLC Undisclosed Independent Agency10/31/15 Acrisure LLC Winant-Bomack Insurance Agency LLC11/01/15 Acrisure LLC Undisclosed Independent Agency11/01/15 Acrisure LLC Undisclosed Independent Agency11/01/15 Acrisure LLC Undisclosed Independent Agency11/01/15 Acrisure LLC Undisclosed Independent Agency11/01/15 Acrisure LLC Undisclosed Independent Agency11/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/01/15 Acrisure LLC Undisclosed Independent Agency12/05/15 Acrisure LLC Undisclosed Independent Agency12/17/15 Acrisure LLC Anthony & Co. Inc.12/21/15 Acrisure LLC H.D. Segur Inc.12/31/15 Acrisure LLC Undisclosed Independent Agency11/01/15 All Risks Ltd. Specialty Risk Underwriters Inc.10/13/15 Alliant Insurance Services Certain books of business10/23/15 Arthur J. Gallagher & Co. Sigma II Insurance Agency Inc.12/01/15 Arthur J. Gallagher & Co. McPherson Benefits Group LLC12/11/15 Arthur J. Gallagher & Co. Centennial Insurance Agency LLC12/18/15 Arthur J. Gallagher & Co. Brown Hobbs & McMurray Insurance12/18/15 Arthur J. Gallagher & Co. Managed Healthcare Solutions Inc.12/21/15 Arthur J. Gallagher & Co. Hawk Agency Inc.12/07/15 Associates of Glens Falls Inc. Loomis & LaPann Inc.10/05/15 AssuredPartners Inc. Wilson H. Flock Insurance Inc.10/16/15 AssuredPartners Inc. D.M. Lovitt Insurance Agency10/21/15 AssuredPartners Inc. Alliance Insurance Group12/01/15 AssuredPartners Inc. Insurance Marketing Center Inc.12/21/15 AssuredPartners Inc. Redmond General Insurance Agency12/30/15 AssuredPartners Inc. Glenn/Davis & Associates Inc.12/30/15 AssuredPartners Inc. Church Insurance and Financial Services Inc.10/02/15 BB&T Corp. Connecticut Underwriters Inc.10/01/15 BenefitMall Forest Financial Group Inc.10/01/15 Beneflex Insurance Services Inc. Insurance Dimensions Inc.10/22/15 Bremer Financial Corp. Nonprofit Insurance Advisors10/01/15 BroadStreet Partners Inc. Debra LaVelle Inc.10/01/15 BroadStreet Partners Inc. Commercial Insurance Group Inc.10/29/15 BroadStreet Partners Inc. Bayberry Insurance11/30/15 BroadStreet Partners Inc. Bramlett Agency Inc.12/01/15 BroadStreet Partners Inc. Linda R. Goble12/31/15 BroadStreet Partners Inc. Liberty Truck Insurance Inc.11/17/15 Brown & Brown Inc. Certain assets of BenTrust11/30/15 Brown & Brown Inc. MBA Insurance Agency12/09/15 Brown & Brown Inc. Smith Insurance Inc.12/17/15 Brown & Brown Inc. Ocean Marine Insurance Agency Inc.10/01/15 CBIZ Inc. Pension Resource Group Inc.10/08/15 Charles W. Merriam & Son Inc. Scherff Insurance Agency Inc.12/16/15 Chestnut Hill Insurance Group LLC Rotatori Insurance Inc.10/02/15 Confie Seguros Insurance Services All Florida Insurance Group Inc.10/02/15 Confie Seguros Insurance Services Dunlap & Bajak Inc.10/02/15 Confie Seguros Insurance Services Schmitt & Kraft Inc.10/02/15 Confie Seguros Insurance Services TS Insurance Group LLC10/31/15 Confie Seguros Insurance Services AFA Claims Services10/31/15 Confie Seguros Insurance Services Realty Support Services Inc.11/16/15 Confie Seguros Insurance Services California Insurance Specialists12/21/15 Cross Insurance Knapp, Schenck & Co. Insurance Agency Inc.11/15/15 CWI Underwriters LLC Weston Financial Group Inc.10/01/15 Driskell Peterson Insurance Agency LLC Eby Insurance Agency12/31/15 DSP Insurance Services Certain assets of Willis of Illinois’ Schaumburg office11/01/15 Eastern Bank Corp. Northwestern Benefit Associates Insurance Agency Inc.10/07/15 Fairfax Financial Holdings Limited Travel Insured International Inc.10/30/15 Fairfax Financial Holdings Limited Brownyard Programs Ltd.12/16/15 First Bancorp Bankingport Inc.12/01/15 First Mid-Illinois Bancshares Inc. Illiana Insurance Agency LTD10/27/15 GDP Advisors LLC Insurance Connection of Texas10/01/15 Hilb Group LLC Gentry Insurance Agency Inc.10/02/15 Hub International Limited IAS Associates LLC10/05/15 Hub International Limited Johnson & Wood Insurance Services Inc.10/12/15 Hub International Limited Oxford Coverage Inc.11/04/15 Hub International Limited RFO Enterprises Inc.11/05/15 Hub International Limited Employee Benefits Group Inc.12/02/15 Hub International Limited Forest Financial Group Inc.12/01/15 J. Smith Lanier & Co. Rogers, Parker & Associates Inc.10/20/15 Kelso & Co. Risk Strategies12/01/15 LIA Great Bend Inc. Albright Insurance Agency Inc.10/28/15 Maritime Insurance LLC Port City Holdings LLC11/04/15 Marsh & McLennan Cos. Inc. Dawson Insurance Agency Inc.12/01/15 NFP Corp. Pieper-Ramsdell Agency Inc.12/04/15 NFP Corp. Absolute Advantage Insurance Services LLC12/11/15 NFP Corp. Vanorsdale Insurance Services Inc.11/18/15 Orchid Underwriters Agency LLC Platinum Partners12/16/15 Oswego Valley Insurance Agencies LLC Banach Insurance Agency10/13/15 Parsons Insurance Services LLC Alpha Insurance Agency Inc.11/01/15 Paul Hanson Partners Specialty Insurance Solutions Universal Insurance Facilities Ltd.10/15/15 People’s United Financial Inc. Kesten-Brown Insurance LLC10/22/15 Pfenninger, Claxton, & Estelle Insurance Group Ameriana Insurance Agency Inc.12/14/15 Provident Insurance Group LLC Eaton & Associates11/10/15 Risk Strategies Co. LLC M. G. Welbel & Associates Inc.12/07/15 Risk Strategies Co. LLC Re-Solutions Intermediaries LLC11/15/15 SEK Holding Co. LLC All In One Insurance Services Inc.12/14/15 Senior Market Sales Inc. Futurity First Insurance Group Inc.12/31/15 Tarpey Insurance Group Inc. Wilson Insurance Agency Inc.10/09/15 TowneBank B.H. Baird Insurance Agency10/09/15 TowneBank Invincia Insurance Solutions10/09/15 TowneBank Total Insurance Planning LLC12/01/15 U.S. Risk Insurance Group Inc. Matias Underwriters LLC10/13/15 USI Holdings Corp. Gardner & Associates Enterprises Inc.12/09/15 Wallace, Welch & Willingham Inc. Sondregger Insurance Agency Inc.10/01/15 Westaim Corp. Capital Risk Underwriters Inc.12/01/15 World Insurance Associates LLC Redmond Insurance Associates Inc.

Announced Date Buyer SellerMerger and Acquisition Activity September to December 2015Announced Date Buyer Seller

Sources: SNL Financial, Insurance Journal, other publicly available sources and MarshBerry proprietary databases Disclosure: All deal count metrics are inclusive of completed deals with U.S. targets only. MarshBerry estimates that only 15 percent to 30 percent of all transactions are actually made public. Past performance is not necessarily indicative of future results.

continued from page 18


CLOSER LOOK

Boats

With more than 12 million registered vessels nationwide, the boat and

yacht market presents an interesting oppor-tunity for agents and brokers to add to their book. Boats are a growing opportunity for Travelers as well, says Todd Shasha, managing director, per-sonal insurance boat and yacht, Travelers. In this inter-view with Insurance Journal’s Andrea Wells, Shasha, a life-long boat owner, talks about why insuring boats and personal watercraft offers agents opportunities to round out accounts this summer.

Insurance Journal: Describe the boat and yacht market in a post-recession environment. Are you seeing an uptick

There are a number of competitors, includ-ing us, who are chasing market share. But there’s ample appetite for boat and yacht risks. For Travelers, we do have a multitude of products that are available for customers. We sell (products) for boats and yachts, but as a personal insurance company, we also sell auto, home, condo, tenants, umbrella and personal articles. We do offer a dis-count off our boat and yacht products if you do have an account rounded piece of busi-ness. For example, if you have two or more policies with Travelers, you can get up to 15 percent off your boat policy premium.

How have coverages changed for the market? Shasha: You’ll find a variety of coverage across carriers with maybe more special-ized coverage. It really will vary carrier per carrier on the coverages that are offered. I think each carrier might add unique endorsements that they would proffer their customers. It depends on the products as well. Your yacht product will be a little more sophisticated or potentially a lot more sophisticated than a boat policy, per se. Usually more coverages with that type of a vessel versus the boat potentially.

What’s the biggest challenge agents might see when insuring watercraft, whether it’s a small personal boat or a large yacht? Shasha: With your boat and your yacht policies, typically, there are warranties under that policy. We’ll speak to the yacht policy. In the Northeast, we have something called the layup provision, which is a war-ranty under the policy. You get a premium discount if your yacht is decommissioned based on a certain time period. You might say, “I’m not using the yacht after December or before March 1.” Generally, you get a premium discount for that, but the custom-er has to be very careful that they’re not navigating with that vessel between that time frame. Otherwise, coverage could be

On the Water: Travelers’ Shasha Talks Boats for the Summer

in business? Is the market growing now? Todd Shasha: Boat sales have trended up throughout 2015. We have seen an increase in boat new business coming in throughout 2015. We’re hoping the same maintains for 2016. We are very optimistic. … There’s been a downturn over the last couple of months. Obviously, that will be a watch item to see if that impacts boat sales in the near-term to long-term. But ultimately, over-all, a solid year for 2015 for boat sales.

How would you describe the insurance market for boats and yachts today? Is it competitive? Shasha: Generally, the marketplace for boat and yacht insurance is very healthy. continued on page 24

We have seen an increase in boat new business com-ing in throughout 2015. We’re hoping the same maintains for 2016.

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Boatspotentially not there for the customer if something should happen when they’re nav-igating the vessel. The other thing is the territories where your vessel is used. If you have a yacht and you pick a navigation territory of New England, if you navigate outside those waters, there could potentially be no cover-age as well. Those are two areas. On a boat policy, you could have inland or coastal navigation; you want to be very cognizant of the coverage that you have. The obligation is on the agent and the customer — ultimately the customer — to really understand the coverage that the pol-icy provides for navigation of the vessel.

The sharing economy is affecting a number of areas of property/casualty insurance. It seems that some boat owners maybe considering renting out their boats in a sharing capacity. How

do you handle that as an underwriter? Shasha: That’s such an interesting con-cept. We have actually seen manufacturers promoting that (rentals) as potentially a method to offset the high payment of a boat. Travelers is a personal insurance writer. Sharing of your vessel, receiving compensation, is dealt into a commercial risk aspect. If you are renting out your boat, coverage would not be provided by the policy. I think that’s probably pretty typical across the industry. The reason for that is you underwrite the owner of the vessel and potentially the operators. If you’re renting out to somebody, is the person familiar with the waters that are being navigated? What is their experience operating a vessel? Those are questions you’ll ask the owner when you’re under-writing the risks. We don’t have that opportunity to do that if they’re renting out the vessel. It really

is a very different categorization of risk. Compensation is considered a commercial exchange. We would not provide coverage under that circumstance.

Owning a boat is generally a luxury for most people. Is there opportunity in this market to grow, or does the mar-ket depend solely on the economy? Shasha: I think the economy certainly does impact, to an extent, boating. With boaters, you have a very passionate group. For instance, I started boating at a fairly young age. It’s in my blood. It’s an interest I have. I hopefully will always own a boat. I wanted to share that with my kids so they take up that hobby as well. But if you look at boat registrations from the U.S. Coast Guard statistics, you’re look-ing at probably more than 12 million boaters nationwide or registered vessels nation-wide. I think it was down the last couple of years but we’re starting to trend back up again. The strengthening economy probably plays a role in that and hopefully the econ-omy will continue to expand forward and present opportunities. It is a luxury item. It is a very expensive hobby, but it’s one that people are very pas-sionate about.

Lastly, what are the typical claims you see in the boating world? Shasha: Boats and yachts might be a lit-tle bit different. With boats you’re using a trailer. With yachts you’re navigating further. But the top five claims are: 1. Collisions, such as hitting a submerged object like a log; 2. Mechanical breakdowns; 3. Collisions, such as docks, piers, other vessels etc.; 4. Windstorm events; and 5. Collisions, such as running aground.


CLOSER LOOK

EZLYNS16785.indd 1 2/5/16 3:08 PM


SPECIAL REPORT

Agency Salary Survey


By Andrea Wells

Women who are top leaders or produc-ers in property/casualty insurance

agencies make materially less than men in the same positions. While females make up almost half of all agency employees (48.3 percent), across the board femals earned 109 percent less than male agency employees, according to Insurance Journal’s 2016 Agency Salary Survey. The Agency Salary Survey also found that:• Female support staff members average $1,100 less per year than male support staff.• Female producers earn $13,428 less on average than male producers.• Female managers earn $79,531 less on average than male managers.

Even when comparing the same job, such as commercial lines manager where respon-dents to the survey were equally men and

help account for the discrepancy like expe-rience or age?” he asked. Even so the data shows a difference in pay by gender, Osborne said. “I think it is pretty clear that there is a bias, as the num-bers are significantly different, but pinning it down is difficult unless you have two people doing the exact same job.” In management, the survey revealed that in five of the eight agency manage-ment positions, men outpaced women in average salaries. See “Average Management Salaries by Gender” chart below. The survey showed:• Female president/CEO positions average $39,125 less per year than male president/ CEOs.• Female agency owners/principals earn $61,673 less on average than male owners/ principals.• Female commercial lines managers earn $52,290 less on average than male managers.• Female personal lines managers earn $25,875 less on average than male managers.• Female office managers earn $82,722 less on average than male office managers.

Not Unique to Insurance The gender salary gap is not unique to the insurance agency business. According to the U.S. Census Bureau, women in the U.S. earned 78.6 percent of what men earned in 2014 compared with 77.6 percent in 2013. In 2014, the U.S. median annual earnings for women working full-time, year-round was $39,621, compared with $50,383 for men, the Census reported. At the current rate, if trends are project-ed forward, women will not receive equal pay until 2059, according to a 2015 analysis of the most recent U.S. Census data by the Institute for Women’s Policy Research (IWPR). This date is one year further out from the 2014 IWPR analysis, which signi-fies the gender wage gap isn’t closing. “For decades, women have been increas-

women, men out-earned their female coun-terparts by 70 percent on average ($126,529 to $74,239), according to the survey. Nearly 1,400 respondents — owners, producers and agency support staff — from every state participated in this year’s annual survey.

Why the Compensation Gap? According to some experts, it’s an oppor-tunity gap, more the result of fewer women being in the higher paying jobs than it is agencies paying men more than women for the same job. It may also reflect age and experience. The exact reasons are difficult to quan-tify, says Paul Osborne, senior consultant at Demotech Inc., Insurance Journal’s official research partner, who provided data analy-sis for the 2016 Agency Salary Survey. “For instance, for a commercial lines manager, does that pay difference tend to happen at smaller agencies or in certain regions? Are there other factors that would

continued on page 28

Commercial Lines Producer Personal Lines Producers East $75,474 $32,855 Midwest $60,735 $36,901South Central $66,877 $77,906 Southeast $86,293 $40,001West $67,338 $52,350

Average Producer Salaries by Region

Manager/Owners Producers StaffFemale $101,300 $55,996 $58,839 Male $180,831 $69,424 $59,937

Average Salaries By Gender

Average Management Salaries SalaryPresident/CEO $181,239Agency Owner/Principal $173,340Commercial Lines Manager $98,441Office Manager $83,750Marketing Manager $97,094Accounting Manager $65,505Technology Officer $91,000

Average Producer Salaries by Line SalaryCommercial Producers $72,544Personal Producers $45,514

Commercial Lines Personal Lines StaffFemale $64,491 $64,491 $58,839 Male $60,416 $52,375 $59,937

Average CSR Salaries By Gender

Female Male President/CEO $146,702 $185,827 Agency Owner/Principal $121,569 $183,242 Commercial Lines Manager $74,239 $126,529 Personal Lines Manager $66,500 $92,375 Office Manager $69,278 $152,000 Marketing Manager $81,143 $36,000 Accounting Manager $65,505 N/A Technology Officer N/A $91,000

Average Management Salaries by Gender

Accounting Manager $65,505 $65,505 N/A


ing their level of educational attainment and gaining job experience, which econo-mists would call increasing their human capital,” said IWPR president and economist Heidi Hartmann. “Yet, their earnings have not kept pace with these increases.” In another analysis, online publisher 24/7 Wall St. identified the largest gender wage gap to be that of the insurance agent. A 24/7 Wall St. article titled, “Jobs with the Widest Pay Gaps Between Men and Women,” where the publication reviewed U.S. Bureau of Labor Statistics earnings data from 2012, said women insurance agents earned just 62.5 percent of men’s earnings. According to the 24/7 Wall St. analysis, which reviewed data for 389,000 workers, women agents earned just $641 per week on average compared to men agents who

earned $1,026 per week on average. Gender disparity may be most noticeable in top leadership roles of commercial prop-erty/casualty insurance carriers and rein-surers, where a 2012 study by St. Joseph’s University showed that just 6 percent of top executive positions were held by women. One area where female workers in agen-cies appear to come close to their male

counterparts in pay, according to the Insurance Journal Agency Salary Survey, is that of support

staff. However, females are almost six times (5.87) more likely to hold a support staff position as a male, while males are about two-and-a-half times more likely (2.64) to be a manager, the survey revealed. In terms of producers, the genders are fairly even in number, the survey showed.

Agency Salary SurveySalary Gap Concerns Some industry experts have been talking about the gender pay gap in insurance for awhile. Sharon Emek, who runs Work At Home Vintage Experts LLC (WAHVE), a company that looks for ways to outsource retired baby boomers from the insurance industry back to insurance firms, brokers and carri-ers, says the insurance industry has a long way to go to close the gender salary gap. “The salary gap is closing, but it still has much to go,” Emek said. A more significant concern to Emek is the lack of gender diver-sity among insurance industry leaders. “There are still few women in the c-suite and few women in ownership positions at insurance brokerages,” Emek said. In her view, technology is helping to address this issue. “With technology enabling work from home, women in the future will no longer be penalized for hav-ing to manage a career and family.” Tracey Carragher, CEO of Breckenridge Insurance Group, agrees that the industry has a long way to go when it comes to clos-ing the gender salary gap. Carragher has been outspoken on gen-der and diversity issues. She was honored last year at the annual Association of Professional Insurance Women Awards as Insurance Woman of the Year. “The salary disparity is still there,” Carragher said. “It’s ridiculous if you take a look at studies; (female) MBAs getting out of school start at around the same salary (as men). What happens four years later — the disparity between men and women is sig-nificant.” Carragher believes that the salary gap exists in all levels of insurance industry. “So while we have made a lot of progress, I don’t think we’ve gotten close enough at all,” Carragher told Insurance Journal last year in a podcast interview. Carragher says she’s not surprised by the most recent Agency Salary Survey findings. “Clearly this is an issue that continues to prevail,” she said. “Constant conversation about this situation has not materially moved the needle.”


SPECIAL REPORT

Commercial Lines Producer Personal Lines Producers East $75,474 $32,855 Midwest $60,735 $36,901South Central $66,877 $77,906 Southeast $86,293 $40,001West $67,338 $52,350

Average Producer Salaries by Region

Manager/Owners Producers StaffFemale $101,300 $55,996 $58,839 Male $180,831 $69,424 $59,937

Average Salaries By Gender

Average Management Salaries SalaryPresident/CEO $181,239Agency Owner/Principal $173,340Commercial Lines Manager $98,441Office Manager $83,750Marketing Manager $97,094Accounting Manager $65,505Technology Officer $91,000

Average Producer Salaries by Line SalaryCommercial Producers $72,544Personal Producers $45,514

Commercial Lines Personal Lines StaffFemale $64,491 $64,491 $58,839 Male $60,416 $52,375 $59,937

Average CSR Salaries By Gender

Female Male President/CEO $146,702 $185,827 Agency Owner/Principal $121,569 $183,242 Commercial Lines Manager $74,239 $126,529 Personal Lines Manager $66,500 $92,375 Office Manager $69,278 $152,000 Marketing Manager $81,143 $36,000 Accounting Manager $65,505 N/A Technology Officer N/A $91,000

Average Management Salaries by Gender

Accounting Manager $65,505 $65,505 N/A

‘Every one of our businesses will suffer if we don’t take

diversity seriously.’


Average Salary Paid Average Hours WorkedCommercial lines CSR $62,959 39.73 Personal lines CSR $47,124 37.38 Support staff average $54,508 37.00

CSR Salaries and Hours

How Agencies Base Compensation Incentive Plans

Agency profits 34.1%Productivity 30.9%Revenue growth 28.5%Contingent commissions 15.4%Individual performance 43.0%No incentive plan 22.9%Other 6.7%

Health Insurance: % Paid by Agency for Employee

East 65%Midwest 55%South Central 53%Southeast 56%West 65%

Agencies’ Plans to Change Payroll Expense in 2016

Reduce payroll expenseIncrease payroll expenseKeep the sameNot sure

8.2%6.0%

33.0%52.7%

Agency Salary Increases in 2015

Higher than 2014 Lower than 2014Same in 2015 compared to 2014

45.4%

7.6%

47.0%

Agency Staff Size in 2015

IncreaseDecreaseStayed the same

42.2%

12.4%

45.4%

Anticipated Agency Staff Size in 2016

IncreaseDecreaseStay the same

46.4%

5.0%

48.6%

Producer Commissions in 2015

IncreaseDecreaseStayed the same in 2015 compared to 2014

42.5%

10.9%

46.6%

Producer Compensationand Fees

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

59.4%38.4%

2.1%

Owners Thinking About Selling the Agency

YesNoNot applicable

9.0%

Manager/Owners Producers Staff East $208,569 $66,040 $67,414 Midwest $152,821 $47,991 $51,360 South Central $180,747 $71,465 $62,308 Southeast $126,065 $61,880 $48,657 West $126,931 $65,141 $57,980

Average Agency Salaries by Region

Manager/Owners Producers StaffLess than 3 years $100,500 $44,650 $41,129 3-5 years $71,844 $41,249 $42,956 6-10 years $80,315 $71,837 $47,547 11-20 years $120,302 $64,076 $52,905 21-30 years $186,189 $76,578 $66,280 More than 30 years $170,499 $77,883 $70,052

Average Agency Salaries By Experience

What Benefits Agencies Offer


Under $1 million 25.5%$1 million - $5 million 48.4%$5 million - $10 million 68.3%$10 million - $25 million 76.0%$25 million - $50 million 77.6%$50 million - $100 million 81.7%$100 million or more 69.3%$100 million or more 69.3%

Changes to Health Insurance Plan in Past Year

Increased employee contribution 45.0%Increased deductible limits 61.2%Implemented higher co-pays for participants 39.2%Reduced drug benefit 11.6%Reduced other benefits 12.1%

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

CSR Average Salaries Commercial Lines Personal Lines Support StaffEast $74,776 $55,536 $57,688 Midwest $55,658 $37,466 $51,873 South Central $68,340 $52,154 $45,417 Southeast $48,764 $47,094 $50,825 West $61,965 $40,425 $59,527

What Strategies Agencies Implemented in 2015 vs. 2014 2015 2014Cut benefits 4.1% 6.6%Shift health plan costs to employees 14.9% 13.0%Increase benefits 9.5% 6.4%Force reduction of employees 5.1% 6.6%Postpone hiring 29.8% 30.8%Postpone raises 19.0% 20.1%Increase hiring 31.2% 29.8%Increase compensation 41.0% 38.2%

What Strategies Agencies Plan to Implement in 2016

How Agencies DetermineFees

% of PremiumFlat fee based on account type

70.9%

34.6%

85.9%

5.1%

2016 2015 2014 2013 Group health insurance 75.8% 75.4% 80.6% 77.7% Health Savings Account 35.8% 37.7% 38.3% 32.2% Dental 55.0% 56.3% 57.2% 52.5% Group life/disability 53.7% 55.6% 56.6% 53.7% 401(k) 59.4% 60.0% 63.4% 57.7% Profit Sharing 18.1% 17.5% 18.9% 17.8% IRAs 9.9% 11.2% 8.4% 10.4% Pension Plan 6.4% 5.9% 6.0% 5.7% ESOP 3.6% 4.8% 4.4% 4.6% Stock Options 4.8% 5.3% 4.9% 4.5% Flexible Savings Account 25.2% 28.2% 29.3% 24.4% Education reimbursement 32.2% 30.5% 32.8% 28.0% Childcare/Daycare* 2.6% 3.2% 2.2% 3.0%No Benefits Provided 12.8% 13.7% 10.5% 11.7%

Agencies’ Plans to Change Commission Structure

Changed in 2015Will change in 2016No changes

81.8%

12.8%5.5%

2015 2014 2013 2012 2011 2010Management/Agency Owner/Agency Principal 3.8% 3.9% 4.3% 2.8% 1.1% -0.6%Producer/Sales 2.1% 4.4% 5.1% 2.9% 1.6% -0.2%Support Staff/CSR/Account Executive 3.5% 3.4% 2.5% 2.2% 2.1% 0.6%

Average Agency Salary Adjustment

2015 2014 2013 2012 2011 Management/Owner/Principal 5.7% 6.7% 7.2% 4.5% 3.9%Producer/Sales 4.7% 5.7% 8.8% 5.5% 3.3%Support Staff/CSR/Account Executive 3.0% 3.5% 2.8% 2.3% 2.2%*Includes all income changes in year

Average Agency Total Income Change*2015 5.7% 4.7% 3.0%

2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%

2016 2015 2014 2013 2012Management/Agency Owner/Principal 3.63 3.62 3.68 3.51 3.28Producer/Sales 2.97 3.12 3.19 3.03 2.87Support Staff/CSR/Account Executive 2.84 2.73 2.90 2.75 2.58 * 5 = Most Satisfied; 1 = Least Satisfied

Agency Compensation Satisfaction Index*2016 3.63 2.97 2.84

2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75

2016 Cut benefits 1.7%Shift health plan costs to employees 7.7%Increase benefits 5.9%Force reduction of employees 5.0%Postpone hiring 17.3%Postpone raises 10.4%Increase hiring 49.3%Increase compensation 47.5%

Agency Gives Annual Cost of Living Increase

YesNoNot Sure

9.3%

60.7%

30.0%

Producer Bonus for Exceeding Sales Goal

YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58

Agency Salary Survey Demographics

Management/Agency Owner/Agency PrincipalProducer/SalesSupport Staff/CSR/Account Executive

28.4%

18.1%53.5%

Increase hiring 49.3% Carragher says she could cite other stud-ies that are similar but they are not going to change the industry’s reality. “I think we have to talk about solutions that are action-able and measureable by us as individuals. Every one of our businesses will suffer if we don’t take diversity seriously,” she said. Others see the issue less as gender bias in salaries and more as bias against giving women opportunities to occupy the higher paying jobs in agencies. “I can’t remember the last time it was addressed in a real life situation,” said Al Diamond, president of the Cherry Hill, N.J.-based Agency Consulting Group (ACG), an independent agency valuation and consult-ing firm serving organizations nationwide. That’s not to say that all gender issues have all been overcome, he added. According to Diamond, the real prob-lem remains getting the “good old boys” to recognize that females are just as qualified to become producers as their male counter-parts. “But rarely do I see salary differences between compensation of different genders in the same roles,” he said. Producer compensation is generally defined by the same commission percentag-es, regardless of gender, Diamond says. The gender gap in service positions is generally attributable to agency owners tending to hire females in service roles over males. “But the salaries are generally defined sim-ilarly whether the service reps are male or female,” he adds. Diamond says in ACG’s own analysis of producer compensation, which includes more than 4,000 agencies, the commission rates do not dif-fer for compen-sating male and female produc-ers. “So, if the ‘female’ group sold less overall insurance than the ‘male’ group, wouldn’t it look like they were earning less than their male counterparts when the reality is that an artificially created group (all females) may simply have sold less than the other artificially created group male producers?”

For Mary Newgard, partner and senior search consultant at Capstone Search Group, a staffing and recruiting firm that exclusively serves the insurance industry, a gender wage gap is not a big concern.

“I haven’t seen a ton of it on the agency side, for the most part,” Newgard said. If there is a disparity in pay, Newgard

says it is not a result of malicious intention. “But it’s still a segmented group, where most of your client service support staff are female, and the producers are male,” she said. Newgard agrees with Diamond that

producer compensation is producer com-pensation. “It would be very easy to call out a problem if you noticed that producers, in particular, were being paid differently based on their gender,” she said. “I have not seen anything like that.” With support staff, Newgard says, she hasn’t seen enough hires of men in those roles to really say if there is a salary dis-parity by gender. “Probably, 99.9 percent of your account managers and client service staff are female, at least the positions, and candidates, and employees that we see. … It would be pretty easy to call out.”

Closing the Gap Erin Hamrick, a partner and founder


‘Women need to be much more forceful in standing their ground

and asking for more money.’










8.2%6.0%

33.0%52.7%



45.4%

7.6%

47.0%



42.2%

12.4%

45.4%



46.4%

5.0%

48.6%



42.5%

10.9%

46.6%



59.4%38.4%

2.1%


YesNoNot applicable

9.0%
















70.9%

34.6%

85.9%

5.1%




81.8%

12.8%5.5%





2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%



2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75



YesNoNot Sure

9.3%

60.7%

30.0%


YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58



28.4%

18.1%53.5%

Increase hiring 49.3%

Agency Salary Surveyof Sterling James, a New York-based global specialist in executive search and leadership advisory services for the insurance sector, has spent nearly 20 years negotiating compensa-tion packages for industry leaders. Hamrick led the CEO search for Michael McGavick, XL’s CEO since 2008, and former chairman, president and CEO of Safeco Corp. While many of Hamrick’s top executive clients include men, she takes a personal interest in advocating and placing top female leaders throughout the industry. Gender diversity in the insurance world is “an absolute passion,” Hamrick said. “I speak on the topic all the time and have a reputa-tion of being a big promoter of women in the industry.” Hamrick says some of the issues that create gender disparity in compensation in

insurance sectors can be solved as women get better at asking for what they want. “The reality is that any business is going to get away with paying whatever they need to pay in order to get the talent and keep them happy,” Hamrick said. “With women they tend not to ask for more money, ever.” And that’s a problem. “If you are someone who is responsible for making a profit and you have a woman who is working and arguably very happy, there’s really no incentive to pay them more unless that woman asks,” Hamrick said. “You don’t get it if you don’t ask. So who’s fault is that? It’s not up to the manager to make sure that the woman gets fair pay.” It’s not up to the government either, she said. “You don’t ask, you don’t get,” she said. “Women need to be much more forceful in standing their ground and asking for more money.” Hamrick says in her experience, women


SPECIAL REPORT

‘I think it is pretty clear that there is a bias, as the numbers are significantly different, but pinning it down is difficult unless you have two people doing the exact same job.’











8.2%6.0%

33.0%52.7%



45.4%

7.6%

47.0%



42.2%

12.4%

45.4%



46.4%

5.0%

48.6%



42.5%

10.9%

46.6%



59.4%38.4%

2.1%


YesNoNot applicable

9.0%
















70.9%

34.6%

85.9%

5.1%




81.8%

12.8%5.5%





2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%



2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75



YesNoNot Sure

9.3%

60.7%

30.0%


YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58



28.4%

18.1%53.5%










8.2%6.0%

33.0%52.7%



45.4%

7.6%

47.0%



42.2%

12.4%

45.4%



46.4%

5.0%

48.6%



42.5%

10.9%

46.6%



59.4%38.4%

2.1%


YesNoNot applicable

9.0%
















70.9%

34.6%

85.9%

5.1%




81.8%

12.8%5.5%





2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%



2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75



YesNoNot Sure

9.3%

60.7%

30.0%


YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58



28.4%

18.1%53.5%


do not negotiate in the same manner that their male counterparts do and that has led to pay disparity. “I’ve been negotiating compensation for a long time and men negotiate their comp packages; women don’t,” she said. Women tend to be more focused on company cul-ture and where they can make a difference. “Whereas a man will say, ‘I need all that plus I need this number. And if they don’t get it they don’t move.” She also says that women don’t move as often for a number of reasons, including personal considerations as well as loyalty to their workplace. “They do feel much more loyal so they will stay at one place for a long time and if anyone stays in the same company for a long time they will experience what we call salary compression,” Hamrick said. “A company can only give you so much of an increase on an annual basis whereas if you move you can get a 15 percent to 20 percent increase.” Hamrick says these discussions with women can be painful. “But if you are not


SPECIAL REPORT

Agency Salary Survey

Salary Only

Salary plus commission

Commission only

Draw against commission

Other

15.3%

33.1%

26.2%

Non-Owner ProducerCompensation

9.4%

6.7%

Fees are charged in addition to commissions

Fees are charged in lieu of commissions

61.6%

38.4%

How Agencies Charge Fees

No Incentive

Trips

Contests

Club memberships

Education

Cash bonus

Car

35.2%

15.4%

Incentives for Non-Owner Producers

21.7%

7.9%

31.0%

44.9%

8.7%

No. of policies sold

New business commissions

Renewal commissions

Set dollar amount

Do not offer incentive comp

14.6%

30.4%

13.3%

How Incentive Compensation for CSRs is Determined

8.0%

41.8%

Higher today than ever before

Steadily increasing

Increases only slightly each year Steadily decreasing

Less today than ever before

Same today compared to 5 years ago

32.7%

34.9%

Workload in 2015 Compared to 5 Years Ago

13.7%

5.6%

5.0%

8.2%


happy you need to move,” she said. “Don’t try to make the sandbox you are currently in better; just pick up your toys and go find a better sandbox. … The only person that can take care of you is you.” WAHVE’s Emek says given the nature of the insur-ance industry and what it provides to consumers, more should be done to expand gender diversity, especially in top leadership roles. “Our industry, because it is a knowledge industry, should be at the forefront of enabling women to contribute their knowledge and experience in a flexible environment,” she said. Breckenridge’s Carragher adds that even the indus-try’s business partners should be held accountable when it comes to diversity. “We need to hold our business partners, our vendors, and ourselves responsible to establish and communi-cate gender and race parity,” Carragher said. Her rec-ommendations: “Assess and then shine a light on the composition of your respective team, especially at the manager and senior levels. Clients see it. Investors see it. Talented women see it,” Carragher said. “You have to bring ‘the elephant in the room’ out and rally a few key supporters to develop a relevant plan of action.” Doing so is “absolutely a strategic initiative — involv-ing real work, plans and timelines,” she said. Then engage a diverse team within the agency to develop and implement the plan and report to executives and oth-ers on its progress. The most important part, she adds, is to start somewhere, anywhere. “But start.”

Insurance Journal’s 2016 Agency Salary Survey collected 1,399 responses from independent insurance agencies and bro-kerages nationwide via an online survey. For more informa-tion, contact Andrea Wells at: [email protected].










8.2%6.0%

33.0%52.7%



45.4%

7.6%

47.0%



42.2%

12.4%

45.4%



46.4%

5.0%

48.6%



42.5%

10.9%

46.6%



59.4%38.4%

2.1%


YesNoNot applicable

9.0%
















70.9%

34.6%

85.9%

5.1%




81.8%

12.8%5.5%





2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%



2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75



YesNoNot Sure

9.3%

60.7%

30.0%


YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58



28.4%

18.1%53.5%










8.2%6.0%

33.0%52.7%



45.4%

7.6%

47.0%



42.2%

12.4%

45.4%



46.4%

5.0%

48.6%



42.5%

10.9%

46.6%



59.4%38.4%

2.1%


YesNoNot applicable

9.0%
















70.9%

34.6%

85.9%

5.1%




81.8%

12.8%5.5%





2014 6.7% 5.7% 3.5%

2013 7.2% 8.8% 2.8%

2012 4.5% 5.5% 2.3%



2015 3.62 3.12 2.73

2014 3.68 3.19 2.90

2013 3.51 3.03 2.75



YesNoNot Sure

9.3%

60.7%

30.0%


YesNo

39.9%

60.1%

20113.9%3.3%2.2%

20123.282.872.58



28.4%

18.1%53.5%



IDEA EXCHANGE

By David E. Coons

Compensation

For many recent graduates and young professionals, salary is a key component

of the job search. However, in their focus on a starting wage, Millennials often over-

look the additional perks and benefits that make up a com-plete compensation package. While sal-ary is, of course, an important factor when considering a job offer, take-home pay

is only a fraction of what today’s emerging workers should consider in making a career decision. In an economic climate where Millennials find themselves earning far less than their predecessors, negotiating beyond base salary is key to unlocking the “hidden paycheck” and achieving one’s full earning potential. How does the state of compen-sation for young professionals and recent graduates stack up against past generations? What should these individuals negotiate for beyond salary?

The Growing Compensation Gap The recent recession has played a signif-icant role in deteriorating starting salaries for entry-level professionals. According to the National Association of Colleges and Employers, the average starting salary for college graduates increased by a mere 2.4 percent in 2015 compared to 2014. Currently, the median salary for graduates in 2015 is nearly 24 percent lower than the average starting salary in 2009, at the beginning of the down-town. This disparity is likely to con-tinue throughout the careers of today’s emerging professionals as studies point to an earn-ing potential 2.5 percent to 9 percent less than previous generations. With Millennials predicted to fall short of the earning levels achieved

by their senior counterparts, negotiating a favorable compensation package is an important factor in starting one’s career off on the right foot. Negotiation has become a pivotal piece in combatting the wage disparity between current professionals and the median starting salaries of their pre-recession counterparts. However, not all organizations have flexibility in regards to starting salary. In these cases, what can

today’s professionals do in order to bridge the gap?

Unlocking the Hidden PaycheckWhen it comes to negotiating compensation, many profession-als mistakenly view the process as simply tossing salary figures back and forth. As a result, they often fail to consider the value of the full compensation and ben-

efits package they are being offered. Benefits can comprise

The Whole Package: Negotiating Beyond Salary

up to 30 percent of one’s total salary — no small sum. In fact, total compensation with-in the insurance industry has experienced substantial recent growth thanks to better corporate performance and profitability. The key is understanding the full ben-efits of the total compensation package. Total compensation should cover all needs, not just the monetary ones. What else is being offered along with the base salary? What are the health insurance benefits? Is flexible work an option? Do they offer 401(k) and does the company match contri-butions? How does the PTO policy compare to the industry standard? Considering hiring bonuses, vacation time, retirement plans and other company benefits part of the total compensation package and open for negotiation is a great way to supplement a lower starting salary. Many young professionals may be sur-prised to find that insurers are even beefing up their compensation packages in order to


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compete with other industries that are able to provide larger base salaries. With starting salaries remaining relatively flat, insurers are crafting enticing bonus plans and benefit offerings that appeal to Millennial preferences. This includes flexibility in scheduling, work-from-home and other telecommuting options, as well as tuition reimbursement and commuting assistance. No longer is salary the sole consideration. Today’s professionals must take a look at the entire compensation package lest they pass up an opportunity to unlock the “hid-den paycheck.”

Thinking Outside-the-Box More and more, companies are asking their employees to make a move. As the “war for talent” wages, job relocation is becoming a benefit area applicable to more and more young professionals. Recognizing the need to find and attract recent gradu-ates and emerging talent, organizations are

expanding their search areas, taking advantage of Millennial’s desires to travel and offering potential hires com-petitive relocation benefits. In fact, 29 per-cent of organizations are currently providing employees with a lump sum for relocation, while 19 percent reimburse all shipping fees associated with a move. For professionals willing and able to relocate for an entry-level position, nego-tiating a competitive relocation package is an important, and often overlooked, part of the job search process. Young profes-sionals should look into negotiating for relocation assistance that helps to cover the actual costs associated with the move. This can include temporary housing, realtor assistance and company-provided house

hunting trips. Moving costs and pre-move visits are also being includ-ed. Millennials should approach these negotia-tions with an “it-never-hurts-to-ask” mentality while being reasonable.

Competitive compensation remains a key selling point for today’s job candi-dates. As insurers recognize the value of a well-rounded comp package, great non-sal-ary incentives are being incorporated. For young professionals and recent grads, nego-tiating for these benefits are key to bridging the entry-level salary gap and starting their careers off on the right path.

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

Negotiating beyond base salary is key to unlocking

the ‘hidden paycheck’ and achieving one’s full

earning potential.


IDEA EXCHANGE

Today, successful high-performing businesses are developing creative

programs to guide employees to focus on improving business performance and

rewarding them for their contribu-tions. The long-term winners will be companies that pro-vide a flexible and challenging work environment, along with employee recog-nition and rewards. Organizations have to be willing to share their successes.

What Motivates Employees? In our work as con-sultants we often dis-cuss what owners and

employees think are the key motivating fac-tors. Most business owners initially think money is the key issue. However, many employees state that they are looking for challenges, recognition and empowerment. The shortage of skilled insurance work-ers is still restraining growth for many businesses. Given this environment, what can a firm do to retain and attract the best and brightest employees, while challenging them to achieve the business’ goals? First, recognize that money, by itself, will not do it. High performing employees are searching for something more than just a high salary. The typical employee compensation plan should include a total package of rewards, recognition and envi-ronment. Some of the elements are “satis-fiers” that allow a firm to attract and retain employees such as benefits, flex-time and training. Other elements of compensation are “motivators” such as bonuses, incentives, challenge and opportunity. A well designed plan will have long-term and short-term compensation components. The key to attracting and retaining the

Minding Your Businessbest people is the use of a “total compensa-tion” approach. It is also a critical compo-nent in improving employee performance. A firm that takes the time to carefully cus-tomize a “total compensation” package will transform individual employees into high performing and committed employees. There are three basic ingredients to the total compensation package that every agen-cy must have: Challenging Work: The old system of directing and monitoring every task that an employee performs is out. Employees with multiple skills and authority are in. For example, a major retailer has a one-para-graph employee handbook that states: “Rule No. 1: Use your judgment in all situations. There will be no additional rules.” To truly perform at this level requires enormous trust in employees. However, if a business is able to perform at this level it will reach incredible heights. Provide additional opportunities for learning and skill development to spice work up. Encourage the staff to take class-es to get an industry certification and for courses to earn CEUs. An expansion of training could provide more flexibility through a higher skilled workforce. Work Environment: Today’s workforce is looking for flexibility on the job and balance in their life. Management needs to evaluate ways to realistically provide this sought after flexibility in work. For example, tradition has it that the employees work in an office with established work hours. Could the firm allow for variations, such as four-day work weeks, working at home two days a week or job sharing? Recognitions: Non-cash recognition awards are a very effective way to reinforce the company’s values. They can be a low-cost, high-impact element of the total com-pensation package. For example, employees who provide outstanding or innovative customer service receive special awards. Management needs to think about the types of awards that make sense for employees.

How to Attract and Retain Great Employees Here are some examples:• Provide a day off with pay. • Provide tickets to sports, music or cultural events.• Take out an advertisement in the local newspaper thanking your employees.• Provide a donation in an employee’s name to a charity.• Pay for tutoring for the winner’s child.• Pay for child care.• Provide health club memberships.• Pay to have the winner’s car detailed during work.• Pay for the winner’s house to be cleaned. • Pay for an evening out for the winner and their spouse — dinner and babysitting.

Once the basic ingredients are estab-lished, the firm can consider the following tools to recruit and retain:

Profit Sharing Although money is not always king, it

By Catherine Oak &

Bill Schoeffler


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still has a lot of clout. Firms that establish a bonus plan based on the business’ prof-itability will have employees that strive to increase sales and cut expenses. Profit shar-ing can be based on the profitability of the overall business or by profit centers such as commercial lines versus personal lines versus life and health. The pool of bonus money can then be distributed to the staff based on management’s discretion. A variation of profit sharing is to reduce the employees’ base compensation while providing quarterly bonuses based on a department’s performance. A plan that tracks employee performance will then allow them to see a direct correlation between their effort and compensation.

Deferred Comp Deferred compensation is often used as a method for producers to build long-term value for their efforts directly related to the business they bring to the company. We recommend using deferred compensation instead of ownership in the producer’s accounts. The plan is often phased in over time until the producer is fully vested. The company benefits by having a system that encourages the producers to build their accounts as well as remain with the firm. It must be noted that a deferred compen-

sation plan creates a contingent liability for the firm, which does negatively affect busi-ness value. However, deferred comp is also “consideration,” which helps uphold the cov-enant not-to-compete in a producer contract. This is another good reason to include deferred compensation as part of a producer agreement. The value of this compensation could be used as a discount toward purchasing stock in the agency. This should be with

board approval and not given to every pro-ducer that earns deferred compensation. It is important to know that it is very diffi-cult to ever get rid of a partner, so owners should be very careful who they allow the deferred comp to be turned into stock.

Stock Equity Stock ownership usually conjures up visions of importance and respect. Producers and employees feel that having the word “owner” on their business card will improve sales and stature. Often the employees only understand the benefits of stock ownership and the drawbacks are ignored or not understood. Business owners are often unclear themselves whether or not they should offer stock to an employee. They usually first think about it either when a current employee is about to walk out the door. Owners might feel that they are forced to offer stock in order to entice a new produc-er or to retain a current producer.

We recommend that owners think long and hard before offering stock to an employee. The decision whether or not to make an employee an owner needs to be based on a review of many factors. The right decision can propel the agency for-ward. The wrong decision can mire the firm in unimportant muck.

A Final Thought If owners want outstanding results, they need to be prepared to pay outstanding rewards. Implementation of a great com-pensation plan will motivate employees to improve not only their own performance, but the performance of the firm as well.

Oak is the founder of the consulting firm, Oak & Associates, based in Northern California. Schoeffler is an associate of the firm. Oak & Associates specializes in financial and management consulting for independent insurance agencies, including valu-ations, mergers, and perpetuation planning. Phone: 707-935-6565. Email: [email protected].


IDEA EXCHANGE

Closing Quote

By Laird Rixford

computer. There is a whole generation of keyboard only users who learned how to use a mouse through solitaire. Once comfortable with that, continue with incremental steps. Maybe ditch the old pen and pad, and use an appli-cation like OneNote to take notes. When you convert hand-written notes to text and see how they can be searched across all your devices, you’ll be hooked.

The Matrix User Are you the type of person who is plugged in every-where? Is every aspect of life and business tech driven? If you cannot do it electronically, you don’t need to be doing it, right? Unfortunately, over-reliance on technology might be worse than ignoring it completely. While technology is there to support daily life, it is not infallible. It is just soft-ware and hardware that humans have created, built and coded. Technology will and does fail all of the time. A user who over-relies on technology to support daily needs should assess whether that technology is actually hindering productivity. Is that email marketing software working as advertised? Or, is it over-spamming your loyal client base? Just because it is “working” does not mean it is actually working for you. Make sure you have a backup plan for when technology betrays your trust. Nothing strikes more fear in the hearts of tech heads than a battery with less than 4 percent charge on a Wi-Fi-free flight with an hour until touchdown.

The Everyday User Do you have a tablet and smartphone while knowing your way around Excel? Do you post a lot of cat memes to Facebook and Twitter, yet still need your nerdy relative to install the Uber app? Everyday users understand technology and know just enough to be dangerous. You might not realize that although you use it daily, you’re not using technology to its full potential. Sure, your iPad is great for playing Candy Crush, surfing the web and replying to emails. Did you know you could run your entire agency from one? Rate quotes, manage clients, document claims, scan and sign documents, and take payments on your tablet of choice. Take the gadgets you are already familiar with and see what else they can do. Research problems in your life. Ask yourself (or your youngest child) how technology can help. Technology needs users to realize its fullest potential. Users need technology to realize our fullest potential. Without both working in unison, no one wins.

Rixford is the president of ITC. Website: www.GetITC.com.

Technology’s Full Potential

Technology has transformed how we operate in almost every facet of our life. It has changed the face of busi-

ness for every industry. Insurance is no different. Yet, as I look within our industry I see a problem. I see technology being underutilized, overutilized or, worse, completely ignored. The majority of people’s technology usage will fall into these three categories. Which one describes your technology use?

The Technologically Timid User Scared of technology? Tired of those darn Instagramming kids posing on your lawn? Want to go back to the good old days of pencil and paper? You’re not alone. People of all ages struggle with technology. This is usu-ally caused by a lack of familiarity with the technology. If you don’t understand it, you don’t want it. This mindset leads down a dangerous path of shunning technology for traditional methods.

Where do you start when you want to begin your intro-duction to the digital world? Start small. Take pictures and upload them. Play your favorite card game on your

On the Web:To read more from Laird Rixford in the new Insurance Journal Tech Talk blog, as well as other Insurance Journal blogs, visit: www.insurancejournal.com/blogs

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