New Market, New Opportunities

Peter Eastwood-Photo Credit LinkedIn

A new player is on the block and the P&C industry may never look the same.  Warren Buffet’s Berkshire Hathaway Inc. has added another weapon to its already powering arsenal with the opening of Berkshire Hathaway Specialty (BHS).

The new insurer will be led by Peter Eastwood formerly of American International Group (AIG).  Eastwood spent over 20 years at AIG and was the CEO of the property-casualty division in America.  Eastwood attended Ohio Wesleyan University to earn a degree in economics and continued to NYU’s Stern School of Business for his MBA.  He made the move to AIG from Lexington Insurance out of Boston and was President and CEO at both companies.

According to the Insurance Journal, BHS will have staff in Boston, New York, Chicago, Los Angeles and Atlanta with staff coming primarily from AIG & CAN Financial Corp.  Along with Eastwood, the company brings along:

David Bresnahan – Photo Credit LinkedIn

David Bresnahan was President of Lexington Insurance Company out of Boston, Massachusetts. He completed his undergrad at Boston College in economics and continued on to earn his MBA at Boston University in 1999. David is the Executive Vice President overseeing casualty, health, professional and executive liability.

Sanjay Godhwani attended the University of Illinois at Urbana-Champaign and studied actuarial science.  He worked with Eastwood at AIG and will be the Executive Vice President of property & programs at BHS.

Sanjay Godhwani

Sanjay Godhwani-Photo Credit LinkedIn

David Fields, also formerly of AIG, headed the global casualty department out of New York City.  After earning a bachelors in physics at Rutgers University in 1977 he continued to become an actuarial assistant at ISO. David worked his way through the ranks at AIG and will assume the Executive Vice President position overseeing underwriting, actuarial finance and reinsurance.

David Crowe leaves Chartis Insurance out of Boston, Massachusetts to become the Sr. VP of Claims with BHS.  He was the head of Commercial Property claims at Chartis for just under two years before making the move in April.

American International Group

American International Group (Photo credit: Wikipedia)

Although BHS has yet to announce products yet alone release a website, it is believed that they will target larger classes of P&C business similar to that of which Eastwood was familiar with at AIG.  A few of those products include Coastal Condo/Hotel/Motel program, a wide appetite for commercial transportation, a program design for the Firearms Industry, and a program for recycling businesses. These lines of business may transfer over to BHS due to their leadership’s experience for the respected niches.

As a large account P&C carrier, BHS is poised to be the perfect complement to Berkshire Hathaway’s other growing company, United States Liability Insurance (USLI).  Automation, quick turnaround and competitive coverage is what has propelled USLI into the position they are in today.  With a sister company such as BHS, producers could have market access for the risks that do not fit USLI’s “box” qualification.

Larger accounts certainly need more underwriting, but with the technology already in place at USLI and Geico, this new Buffet company could redefine the mid-large size business insurance market.

Will you seek an appointment with Berkshire Hathaway Specialty?

Let us know your thoughts… and by the way, they are hiring!

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PRISM & Data Breach Response

The emergence of PRISM has caused a stir in the United States.

What is PRISM?

It is a collaboration between the National Security Agency (NSA), the Federal Bureau of Investigations (FBI) and the biggest tech companies in the country.  The agreement has provided the U.S. Government access to data including audio communication, videos, photos, emails, documents, call logs and text messages since 2007.

Headquarters of the NSA at Fort Meade, Marylan...

Headquarters of the NSA at Fort Meade, Maryland. 

How has PRISM come to light?

On Wednesday June 5th, a classified order was shared and made public.  The order to Verizon Wireless by the Foreign Surveillance Court directed the company to turn over domestic & foreign call data from the past and in the future.  Such data would be gathered by the millions and would provide sender and receiver of calls, duration, time and location.

PRISM came about through leaked PowerPoint slides that described the collaboration between the government and the tech giants.  When questioned, companies such as Google, Facebook, Apple, AOL, Yahoo and Microsoft gave the same canned response, “we do not provide the government with direct access to our servers.”

James Clapper, the Director of National Intelligence made statements suggesting that the collaboration existed and that the government was operating within the legal system.  Here’s what Clapper wrote about PRISM.

The whistle-blower

, 29 year old, Edward Snowden was a member of defense contractor Booz Allen Hamilton.  Snowden claims that a “massive surveillance machine” is in the making and that he leaked the information to  “inform the public as to that which is done in their name and that which is done against them.” Snowden is currently in Hong Kong, China while various US diplomats are calling for the country to extradite him.

As if internet security and privacy were not already a hot topic, it can be an effective transition into offering Data Breach Response Coverage.

The Breach Response product is tailored to healthcare, retail, hospitality and higher education operations.  The product is geared to moderate the results of a breach of data.  These mitigation tools will help minimize brand damage and legal liability by offering the following coverage.

Data Breach Response Features

For claim examples for Data Breach Response, click here.

Commissioner Change in TX

Kitzman is out as Commission after 21 months

After the long Memorial Day weekend, the Texas Department of Insurance and Gov. Rick Perry wasted no time before putting the confirmation of Eleanor Kitzman as Insurance Commissioner to a vote.

Kitzman was appointed by Gov. Perry in 2011 and remembered by many Senators for having far more interest for the companies and not for the consumers.  Her presumed bias becomes more evident with some of the events that took place during her tenure.

–          Kitzman removed a rule that would require insurers to give fair warning about any out-of-pocket costs that would be incurred for out of network expenses.  Insurance Journal

–          Kitzman declined to put any restriction on premium hikes in 2012.  This led to some of the most profitable years from companies such as Allstate, Farmers and more specifically State Farm who implemented a 20% rate increase in 2012. Dallas News

  • Kitzman and the TDI put off multiple requests for premium and loss figures.  The statistics that are usually released in April were not available until this past Memorial Day Weekend, just before her confirmation hearing.
  • The following are the Loss Ratios for the largest home insurers in Texas. Dallas News
    • State Farm – 47.5%
    • Allstate – 50.8%
    • Farmers – 66.3%
    • USAA – 54.4%
    • Liberty Mutual – 58.3%

–          Kitzman has been criticized for spending over $1.5 Million of tax dollars on consultant fees with a New York based firm. Insurance Journal

After Kitzman failed to be confirmed by the senate after 21 months of service, Gov. Perry appointed Julia J. Rathegber as the Insurance Commissioner of Texas.  Rathgeber was the deputy chief of staff in the office of Lt. Gov. David Dewhurst.  Rathgeber studied at the University of Texas at Austin and earned both her bachelors and law degree.  Rathgeber is involved in other various associations such as the State Bar of Texas and the Seton Fund Development Board. Texas State DirectoryRick Perry

Rathgeber will serve as Commissioner until 2015, when she will face the same confirmation process that Kitzman failed to conquer.  Rathgeber has a clean slate with potential for major impact.  How she handles the steady increase in property rates, the impeding hurricane season and how her office harnesses the economic boom in the state will seal her fate in 2015.

Thank you for reading the blog of AUI, Inc. MGA & Surplus Lines Broker.image

The End of Distracted Driving? – Continued

Earlier this week we posted an article about distracted driving and various movements to reduce the exposure.  In this article we discussed a government grant that was given to Massachusetts and Connecticut to spot texting offenders on the road as well as a new mobile application that aims tto prevent distracted driving by disabling a phone’s functionality while it is in the hands of a driver.

We received a tweet from @freshgreenlight later that afternoon with more information to contribute to the discussion of distracted driving.

* Fresh Green Light describes themselves as a “21st Century driving school” with locations in Rye, NY, Greenwich, CY and Darien, CT. 

Here’s what we found:

Insurance Companies HAVE already joined the cause to prevent against distracted driving.  Esure has developed a free app for Android phones that disables various apps and blocks phone calls and texts while drivers are traveling in excess of 10 mph.  The DriveOFF application has yet to offer discounts or incentives to download.

DriveScribe is another free app that focuses on monitoring driving habits of young drivers.  The system blocks text messages and calls while also reporting speed to the administering party.  The app can also detect whether a driver has blown a stop sign or not.

Canary certainly dominates the monitoring aspect of distracted driving, but does little to prevent said behavior.  The app lets parents see phone use and exact driver location in real-time.  The app will also send notifications to parents when their driver enters “restricted zones” that can be established.  This app will have success with those who behave when they know they are being monitored.

We have also found a very helpful map that communicates how quickly this country has adapted safe driving laws in regards to texting and driving.  The map can be found here from the Insurance Institute for Highway Safety.

While new model vehicles are being equipped with their own on-board computing systems, the communication between phone and car will begin to optimize for safer and more convenient travel.  Until the day that driverless cars rule the road, there will always be risk for distracted driving, but until then, it is up to entrepreneurs and investors to create safer and more secure solutions to prevent accidents.

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The End of Distracted Driving?

Campaign From Massachusetts State Police

Campaign From Massachusetts State Police

Insurance companies, law enforcement, employers and parents across the United States have been brainstorming a variety of ways to cut down on the biggest risk on the road; distracted driving.  This exposure can take many shapes and forms, from a woman applying mascara in her rearview, a man taking the form of Neil Peart when “Tom Sawyer” plays, to someone consuming an extra value meal that requires two hands to hold.  These however do not distract drivers nearly as much as the main target; mobile device use.

Although car manufactures have reduced the risk with the integration of Bluetooth Technology, the exposure and danger is still prevalent due to the lack of supporting vehicles and inaccuracy of commands.  So far, 11 states have banned the use of hand-held devices while driving including Connecticut, New Jersey, Nevada and Arkansas.  This law encourages the use of Bluetooth or headphone sets.

The Federal Government is serious about the issue and has granted $550,000 to Connecticut and Massachusetts for landmark research on how to spot and charge prosecutors.  The program grants each state $275,000 for methods of spotting such as looking at motorists on overpasses.

Yes, the government is showing initiative to save lives, but this method is outdated, moronic and will have minimal impact.  That $550,000 would have been much better used to develop a mobile application such as DriveID.  This state of the art mobile application is downloaded and disables the device when a driver tries to access the phone.  The software is so advanced that it unlocks itself and can be used when handed to the passenger.

It is only a matter of time before Insurance Companies catch on and begin to give discounts for drivers who download and utilize the application.  I can see this fitting in very well with the Progressive Insurance SnapShot device.  If the companies and government incentivized the use of this software, we would have safer roads, better use for law enforcement and $550,000 back in the taxpayer’s pockets.

Keep your eye on DriveID and Wall Street in the next few years.

Check out DriveID on Insurance Journal.               http://bit.ly/13Ge7cp

 

The Texas Boom & Your Agency

Flag of Texas

Flag of Texas (Photo credit: Wikipedia)

Texas State Capitol, Austin TX

Texas State Capitol, Austin TX (Photo credit: Wikipedia)

We are not breaking news when saying that Texas is in a boom.  The state that arguably has the most available area left to develop is making good use of it.  This growth certainly hasn’t happened overnight and certainly won’t stop overnight either.  The question remains, how will this growth effect the Insurance Industry.

The four major metropolitan areas; Austin, Dallas, Houston & San Antonio have sustained leading unemployment rates even with such rapid influx of new residents.  The U.S. Census reported the following statistics for population growth from July 2010 to July 2011.

#1. Dallas, TX – avg. 345.3 new residents/day

#2. Houston, TX – avg. 301.6 new residents/day

#9. Austin, TX – avg. 151 new residents/day

*Courtesy Austin Business Journal http://bit.ly/LErrop

This rapid growth has not prevented new residents from finding jobs.  The major industries; Energy, Technology, Healthcare & Finance have sustained growth over the past ten years to avoid major layoffs while opening new positions.  As unemployment & the economy was the hot-button issue for the 2012 Presidential Election, neither candidate cited the growth and success of the Lone Star State.

Forbes, often known for their “Top 10” lists, ranked the fastest growing cities from 2001 to 2011.

#2. Austin, TX                                    44.9%

#7. Houston, TX                                  31%

#9. San Antonio, TX                            29%

#10. Dallas/Fort Worth, TX                27.9%

Courtesy Forbes Magazine http://onforb.es/15iOUpH

One would imagine that with such rapid growth, the competition to find a job with decent salary would be beyond difficult.  Strangely enough, the exact opposite is to be said as the four major Metropolitan Areas in Texas all made the top 15 in Lowest Unemployment Rates, according to the Bureau of Labor Statistics.

#3. Austin, TX                    5.5%

#8. San Antonio, TX          6.0%

#12. Houston, TX              6.1%

#14 Dallas                         6.2%

US Average 5/2013          7.5%

*Courtesy Bureau of Labor Statistics http://1.usa.gov/bkALp4

 What does all of this mean for insurance professionals?  First, it shows that business are growing which correlate directly to premium size for all risks rated by number of employees or payroll size.  This means larger policies & more commissions for the agency.

Second, those businesses that are growing may be changing operations or offer a larger variety of products or services.  This means that the agent should be reevaluating the risk, adding whatever endorsements necessary or maybe even reclassification.  That being said, if it is an endorsement that requires additional premium it means more earned commission.

Third, more citizens means more insureds.  More insureds means more policies.  More policies mean more earned commissions

See the trend here?

As insurance agents, we should not let the growth in Texas intimidate, upset or deter us from writing more business.  In such turbulent economic times, we are fortunate enough here in Texas to be expanding at this rate.

That being said, it is important to have the markets available to accommodate all of your current and prospective insurances.  Having a reliable, competitive and motivated MGA & Surplus Lines Broker such as AUI, Inc will give you the confidence & support needed to solicit & write new business.

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Favorite Mobile Apps for Agents

In a tech savvy atmosphere, it is important to have information at the palm of your hands.  In the insurance industry, it can be a difference of mere minutes that determine if you have a market blocked by a competitor or not.

Below, we have included some Mobile Apps that we feel can increase submission time and increase the chances of binding coverage.

ACORD ONE – Allows users to complete various Agency Company Organization for Research and Development forms with digital entry on your mobile device.  This is a free application for all CapDat Acord users. Available on Apple & Android tables & Phones.

Expensify – This is for those on-the-road producers or those who may expense various purchases for business. The app can read receipt images, track your driven mileage & sync bank account & credit cards.  The app is free at the Apple Store & GooglePlay.

SignNow – Digital signatures may become more and more popular as more companies & brokers do not print tangible policies.  This is a rather simple application for signatures, but expect growth with this application as technology permits more secure authentications.

For more information about mobile applications that may be useful for you as an agent, visit http://bit.ly/13vlFSL.

Don’t forget to Like AUI, Inc on Facebook and Follow us on Twitter.

AAMGA To Change Name & Qualifications

An email from AAMGA Executive Director, Bernd G. Heinze, Esq. highlights the organization’s intentions to change it’s name and qualifications for entry.  The American Association of Managing General Agents will now be recognized as the American Association of Wholesale Insurance Professionals.

This move is an effort to include the entire population of wholesale insurers.  It is believed that this change will further connect companies and professionals throughout the industry.

The AAMGA conference takes place in New Orleans from May 19th to 22nd.

Please visit www.aamga.org for additional information.AAMGA Logo