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  • August 03, 2018 4:30 PM | Vaughn Lawrence (Administrator)

    Stepping through the doors of the Windsor-Mount Joy Mutual Insurance Company, one is awed by the nautical theme and intricate model ships scattered throughout the building. Former company manager and the namesake of G.R. Klinefelter Underwriters once owned and operated a cruise ship in the Chesapeake Bay. The 4-masted schooner, which he called the Grace G. Bennett, sailed the Chesapeake from 1946-1951.

    His time operating the Grace G. Bennett would eventually inspire a book of insurance business that included ocean marine policies.

    Before taking charge of the Windsor Insurance Company, G.R. Klinefelter had been serving on the Board of Directors for the Berks & Lehigh Mutual Insurance Company. At the time, he was running G. R. Klinefelter Insurance Agency from his basement.

    When the Windsor and Mount Joy Insurance companies were founded in their respective towns, their mission was protecting the interests of businesses and families in their communities. The Mount Joy Company was founded on August 4, 1844, and the Windsor Company followed shortly after. The rich histories of the two companies came together when Klinefelter pushed for the merger in 1963 that formed the Windsor-Mount Joy Mutual Insurance Company.

    Klinefelter’s leadership at the company is as apparent through the scrolls of its history as it is in the walls of the building. At one point, he was managing ten companies, including casualty relief organizations and other small mutual companies. Following the merger of the two troubled companies from Windsor and Mount Joy he led the company to consolidate business and target the Mid-Atlantic region.

    Over the years that followed, the company would go on to consolidate management of the Allen Mutual Insurance Company in 1965, the Eastern Shore of Virginia Fire Insurance Company in 1966, the Farmers American Mutual Fire Insurance Company of Bucks County in 1969, and the Towamensing Mutual Insurance Company in 1975.

    The company today sits on the main street of downtown Ephrata, PA. Since moving on July 1, 1982, this location has represented the history of creative underwriting at the companies that formed the Windsor-Mount Joy Mutual Insurance Company. Throughout the history of the company, they have shown a strong ability to compete with larger carriers by finding niche markets to serve.

    Since moving to Ephrata, the company has continued to expand by acquiring the Farmers Mutual Insurance Company of Dug Hill in 2009, the Washington Mutual Fire Insurance Company of Lawrence County, PA in 2010, and many others.

    While many of the same principles apply to insurance as they did in 1844, the methods of delivering coverage and determining risk have changed. The company has always been proud to offer high-quality customer service, and now with a focus on competing in the digital era, they can be closer to clients than ever before.

    The leadership of Windsor-Mount Joy, Michael Klinefelter, President and CEO, Douglas Underwood, Chief Operating Officer, and their colleagues, are taking the company forward by utilizing technology and metadata to assess risk better, allowing agents to write and learn about policies offerings remotely, and providing 24/7 coverage when a claim occurs.

    Technology has allowed the company to communicate with policyholders, agents, and employees in ways that make the business of insurance stronger and improve customer relations. Behind the technology is a knowledgeable staff that understands the needs of their customers and are available to provide expert assistance throughout the claims and underwriting processes.

    The winds of change have steered the vessel that is Windsor-Mount Joy Mutual Insurance ever forward with a focus on creative policy offerings, strong underwriting practices, and flexible dedication to serving their policyholders’ distinct needs.

    This article was previously published in the PAMIC Pulse. 

  • August 03, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    This year PAMIC formed the Student Involvement Committee to address the challenges that member companies are facing when attracting young talent. The focus of the committee is to become involved in on-campus student events and to assist in the formation of insurance minors at Pennsylvania state schools. 

    The Committee recently had its first success, as the Bloomsburg University has decided to move forward with the development of an insurance minor. This minor will be an extension of the Zeigler Business School and aims to offer four courses for students to gain a better understanding and knowledge of how the insurance business operates and careers within the field. Additionally, the committee plans to continue to focus on Bloomsburg University by being involved in the upcoming Zeigler Institute for Professional Development (ZIPD). The ZIPD conference brings students together to learn about the various career opportunities that are available post-graduation. PAMIC plans to be involved in a speaking and outreach capacity. 

    If your company is interested in becoming a member of the Student Involvement Committee or participating in the ZIPD conference, contact Vaughn Lawrence at vlawrence@pamic.org.

    This article was previously published in the PAMIC 360

  • August 03, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    Acts 22 (SB 877) (PN 1458) Amends the Insurance Department Act allowing insurance providers to offer or give to an insured or prospective insured money or any favor, advantage, object, valuable consideration or anything other than money which has a cost or redeemable value of $100 or less, which is not specified in the contract of insurance. The amount may be increased by the insurance commissioner. Further provides an insurance producer may not make receipt of anything or value contingent on the purchase of insurance. 

    Act 23 (SB 878)(PN 1459) Amends the Insurance Company Law allowing insurance providers to offer or give to an insured or prospective insured money or any favor, advantage, object, valuable consideration or anything other than money which has a cost or redeemable value of $100 or less, which is not specified in the contract of insurance. The amount may be increased by the insurance commissioner. Further provides an insurance producer may not make receipt of anything or value contingent on the purchase of insurance. 

    Act 26 SB 630 The Travel Insurance Modernization Act provides for the licensure of limited lines travel insurance producers, for requirements for sale of travel insurance, for authority of limited lines travel insurance producers, for registration and training of travel retailers and for renewal of license. The bill requires the licensure of limited lines travel insurance producers to sell, solicit or negotiate coverage under a policy of travel insurance. Also requires the producer to establish and maintain a list of each travel retailer in the Commonwealth where travel insurance is offered on the limited lines travel insurance producer’s behalf. Further requires the register to be maintained and updated annually by the limited lines travel insurance producer. Also provides the information in the register shall be maintained to a period of at least three years following the date the information was entered into the register. 

    Act 41, HB 1851 - (PN 3797) Amends the Insurance Department Act, in examinations, further providing for purpose and for definitions and providing for scheduling conference, for budget estimate and revisions, for billing invoices and for annual examination and analysis report by the department and for the Pennsylvania Professional Liability Joint Underwriting Association; and making a related repeal. Prior to commencing examination field work under this article, the department shall hold a scheduling conference with a company and within 30 days of the scheduling conference, the department shall provide the company with a detailed written budget estimate for the examination. “Company” is defined to include the Pennsylvania Professional Liability Joint Underwriting Association and the bill declares that a review of the JUA is needed to modernize the association in order to produced needed economical and administrative efficiencies. The association shall continue as an instrumentality of the commonwealth and shall operate under the control, direction and oversight of the department and is granted additional duties. 

    Act 48, House Bill 152 (PN 3556) Amends The Insurance Company Law, in life insurance, further providing for surplus or safety fund and providing for contact information and for life policy locator service; and, in suitability of annuity transactions, further providing for definitions, for applicability and scope of article and for duties of insurers and insurance producers, providing for insurance producer training, further providing for mitigation of responsibility and for recordkeeping and providing for regulations. The intent is to align the bill in accordance with the National Association of Insurance Commissioners (NAIC) model act and repeal a surplus cap imposed on domestic mutual life insurance companies. 

    Act 74 (SB 1101) PN 1875) Amends Title 75 (Vehicles), in a certificate of title and security interests, further providing for content and effect of certificate of title and for theft vehicles. If the cost of repairs is more than 50 percent of the replacement value of the vehicle and the owner elect to retain title to the vehicle, the owner shall apply for a certificate of title branded recovered-theft vehicle. If the insurer is a self-insurer, the assessment of damage shall be completed by a licensed physical damage appraiser who is not affiliated with or employed by the self-insurer. 

    This article was previously published in the PAMIC 360.

  • July 18, 2018 4:30 PM | Vaughn Lawrence (Administrator)

    By Phil Schmoyer, Baker Tilly

    Insurance technology (InsurTech) is often regarded as external companies disrupting the insurance industry (e.g., Lemonade, MetroMile, ClearCover, Kin, etc.). The real landscape of InsurTech is driven by traditional insurance companies directly creating, investing in or partnering with technology companies. This environment makes new InsurTech companies ripe for collaboration with insurers to provide enhanced customer experience, new insurance offerings, increased analytics and streamlined processes.

    1. Customer

    Younger generations are demanding easier, more accessible and better ways to conduct business. Many incumbent insurance organizations, products and distribution channels have not changed as quickly as the consumer base. In fact, older generations are adopting this agile mentality as well demonstrated by some of the InsurTech companies’ average age of policyholder being in the 40’s.

    In today’s digital world, the pace at which we and the upcoming consumer generations are exposed to technology is unprecedented. While we all grow accustomed to near instant gratification when we have a demand for a product or service; consider it the Amazon-effect. This results in a desire, or a demand, that insurance organizations meet its new customers on the channels which they frequent the most and that they deliver real-time results. This has shifted (i.e., threatened) the traditional insurance distribution channels and brought on a host of new entrants to the insurance distribution networks; most of which are focused exclusively on enhanced customer experience and the use of data in efficient decision making. The platforms of which these entrants are operating and the agility in their core operations, gives an edge to the new entrants/disrupters. 

    While the technology and customer-first mindset is a true upside provided by the disruptors entering the market place, these organizations have yet to fully deploy any revolutionary product that works on all risks, or in all regulatory jurisdictions. While there are new products focusing on the sharing economy, with many predicting these new products will continue to expand as robotics and autonomous transport becomes more prevalent, the fact remains that the legacy products are what is being sold. This, coupled with the idea that experience can be changed with the right partner (i.e., collaborating), the sheer reach already maintained by incumbent insurers and brand awareness of their security/value proposition is too instrumental that a slight edge in given to incumbents in this category.

    2. Distribution

    The insurance contracting process has changed drastically over the last year for both incumbents and new entrants. While disrupters have spent billions of investment dollars finding a more digital and engaging way to interact with customers, incumbents have invested in streamlining its existing operations and better utilizing data/knowledge to deploy new technological advancements (i.e., automated underwriting, robotic process automation, etc.). These factors have led to vastly different distribution/contracting processes for insurance products. The disruptors tout themselves as being able to provide customers a quote in seconds, and being able to complete the entire process with a few thumb movements while waiting for an Uber to pick them up. On the other hand, incumbents have taken years of data collection and experience in underwriting/claims adjudication to provide better pricing and predictive models/decision trees in order to fully automate business processes and enable its employees to focus more effort on value-added offerings.

    No matter which way people look at it, buying insurance is a tiring process and it seems people don’t know what coverage or caliber of a company they are getting until they have a loss, and at that point it’s too late. What has been seen over the last few years is a lot of personal preference, or comfort, which goes into the decision on how or why people are buying insurance. During an innovation workshop, senior leaders from a major incumbent indicated “Millennials want to buy things quick and easy when it’s only to fit a need. But when you’re buying a significant amount of life insurance to manage your wealth or cover their family in their absence, even they will want to speak to an agent and make sure they understand everything will be taken care of for them.” This further reinforced the notion that personal preference makes this too close to call, and since the industry created the rules, a tie seems like the best outcome here.

    3. Technology

    Technological advancements and improved customer experience are some of the key driving forces around this transformation. As such, it comes to no surprise that the new entrants to the marketplace typically have the most state of the art technology to flex and scale based on business and customer demand. On the flip side of this, the incumbents have seen its business(es) grow throughout the years through organic and M&A growth. This expansion, all supported by legacy systems, provides incumbents with a tremendous challenge, and therefore opportunity. Many times these legacy systems are built on old, outdated technology stacks which causes support, integration and enhancement issues throughout the life of the application. These systems house vast amounts of data and support business processes which makes quick, agile, iterative enhancements extremely difficult to plan and deploy. Alternatively, simply sun setting these systems for large enterprises is difficult due to the key role they play in day-to-day operations. Therefore it should come as no surprise that the edge on technology goes to the disruptors. 

    4. The Tiebreaker

    Both disruptors and incumbents have ups and downs to its respective value proposition within the insurance marketplace. While choosing a real “winner” is what everyone is hoping to learn, this is unattainable since the future of the industry lies with collaboration. 

    It’s often spoken that following in the footsteps of leading, innovative and disruptive organizations is the best course of action. However, disrupting an entire industry is hard, especially a well-regulated one. There are no shortage of great ideas coming from the world of new entrants and incumbents alike. The true secret sauce will be in finding a delicate balance of where incumbents have weaknesses that new entrants can help improve, and where new entrants need the incumbents to prove a concept and/or develop critical mass for long term success. The industry has already seen these collaborations happening throughout the industry and the creation of venture capital/innovation investment funds at large carriers (e.g., XL Innovate, Nationwide Ventures, etc.). Furthermore, expect the need for collaboration to increase as carriers deploy technology to better manage newly emerging products (e.g., pay-per-use, on-demand insurance, etc.) and where new entrants need data and policyholders to evaluate its business model and garner regulatory approval for new products/operations.

    In the end, collaboration always wins. We look forward to being part of this innovative journey.

    This article was originally published by Baker Tilly and was also featured in the PAMIC 360

    Phil is a senior manager in Baker Tilly’s risk and internal audit and cybersecurity practice, and has more than 10 years of experience. He provides internal audit and IT audit-related services to clients in the financial services, healthcare and life sciences, higher education, insurance, manufacturing, distribution, and technology sectors.  He uses leading practices in risk-based consulting and auditing standards to maintain an effective and efficient approach to enterprise risk management. He also assists with internal audit engagements for a variety of clients, performing internal controls, general IT, application and business process controls reviews using a risk-based approach.

  • July 18, 2018 4:15 PM | Vaughn Lawrence (Administrator)

    On behalf of the Boards of Directors, Jay W. Chadwick today announced a strategic reorganization of executive teams to capitalize on the rapidly changing insurance industry landscape.

    “The new structure positions our multiple holding and insurance companies for future expansion and aligns the business with our current growth strategies,” states Mr. Chadwick.

    Core business operations-- Tuscarora Wayne Insurance Company, Keystone National Insurance Company and Lebanon Valley Insurance Company are now organized under the leadership of Todd E. Salsman, who after previously serving as Senior Vice President and Chief Operating Officer, has been elected President of the three companies.

    With roots planted in the agricultural sector of the insurance industry that date back to 1856, each company offers unique commercial insurance products that capture the founders’ original mission of serving the underserved.

    “As our companies continue to grow in this digital age, it is important for us to leverage the traditional business practices that have been instrumental in our success with the power of the cutting-edge technology we have heavily invested in,” stated Mr. Salsman.

    In addition, Russ L. Oldham has been elected President of recently acquired Capitol Insurance Company based out of Lafayette Hill, Pennsylvania. Mr. Oldham joins an executive management team of industry experts who collectively bring over 150 years of extensive insurance experience. Capitol Insurance Company offers private passenger personal automobile and motorcycle insurance.

    “Backed by the financial strength of the Tuscarora Wayne Group of Companies and the Insurance Capital Group, LLC, Capitol Insurance Company is now positioned to meet market demand with state-of-the-art insurance solutions. The future is bright for Capitol Insurance Company,” Mr. Oldham stated.

    Brian K. Bolinger, who after serving as Senior Vice President and Chief Financial Officer, has been elected to President of the holding companies, Tuscarora Wayne Mutual Group, Inc., Susquehanna Capital Corp., and Glacier Capital Holdings, LLC. Mr. Bolinger remains the Treasurer of the seven companies that comprise the Tuscarora Wayne Group.

    “This is an exciting time for the Tuscarora Wayne Group of Companies as we continue to seek out new business opportunities to move us forward in this ever-changing insurance marketplace,” stated Mr. Bolinger. “In many respects, we possess the exuberance of a startup organization which happens to have more than 160 years of history behind us.”

    Jay W. Chadwick leads this exceptional executive management team as the Chairman and Chief Executive Officer of all companies.

  • July 18, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Keith Raymond, Novarica

    As insureds carry the customer experience expectations that have been set by other industries into the claims experience, digital transformation is becoming more important for those in the insurance industry. Today’s digitally-immersed customers have grown accustomed to being able to interact with companies anytime, anywhere, and from any device. To address these expectations, new digital opportunities enable insurers to leverage data from sources such as telematics, wearable devices, IoT sensors, GPS, and the weather.

    The claims interaction is a crucial touchpoint through which insurers can demonstrate their value to policyholders and establish a positive relationship. By enhancing digital capabilities, carriers can significantly improve the claims experience, thus simultaneously solidifying policyholder relationships and gaining internal efficiencies.

    Digital is not just about mobile or omni-channel capabilities. Digital describes the whole progression required to fulfill an external request from an agent, broker, or (in some cases) IoT sensors at FNOL through the back-end processes triggered during “moment-of-truth” interactions with carriers. Digital enables the evolution of both business and how companies interact with customers and stakeholders. It is forcing carriers to rethink the relationships between people, information, and processes given new technology-enabled capabilities.

    As insurers move into the digital future and look to target today’s tech-savvy consumers, they will need the right mix of tools, applications, and capabilities to set their organization up for success. These tools include modern core systems; predictive analytics capabilities; emerging technologies in the claims process; and growth in collaboration between claimants, vendors, medical providers, and carriers.

    Modern uses for artificial intelligence, machine learning, and the Internet of Things are evolving at light speed. Advanced analytics is gaining significant traction as a method to enhance digital offerings and the customer experience, and insurers are beginning to utilize predictive analytics for fraud detection and underwriting.

    Predictive analytics, powered by IoT and other sources of current and future data, is one of the driving forces of the digital evolution. The insights generated by advanced analytics reveal issues like fraud detection and claims prevention, as well as allow services to be tailored based on human digital records. These capabilities underpin digital initiatives and lay the foundation for carriers to prevent leakage, serve customers more efficiently, and compete for new market share.

    Large insurers tend to have more developed predictive capabilities. While smaller insurers have less mature capabilities, adoption is growing among midsize property/casualty insurers who may be in the early stages of predictive analytics projects. Many carriers are still at the beginning of the process to build out these predictive analytics capabilities, but it is becoming imperative to enable digital and enhance the customer experience.

    There are four areas of focus for insurers to fold digital capabilities into claims: fraud, customer experience, straight-through processing (STP), and risk avoidance. With analytics-enabled digital initiatives, instances of claims fraud can be lessened by leveraging automated claims payouts to detect hidden fraud patterns and leakage, and customer- and agent-facing technologies can decrease fraudulent claims submissions. A self-service claims process across a variety of channels offers the opportunity for carriers to establish a positive touchpoint with customers.

    STP offers gains in operational efficiencies, along with the potential for increased customer satisfaction. Plus, cost savings are likely to be gained; digital claims submissions and self-service require fewer resources to respond to claims inquiries and staff call centers. New digital channels also allow insurers to connect with consumers in different ways and push policyholders to the forefront of risk mitigation. New technologies like IoT and telematics devices can lower risk (and thus claims frequency), increase claims prevention, and provide data that can be used to predict claims complexity more accurately.

    Technologies that can work in tandem with updated core systems and advanced analytics capabilities continue to emerge. Investing in and staying aware of these emerging technologies can help insurers keep up with the pace of change both inside and outside the industry—especially those in line with changing customer expectations. New entrants and InsureTech startups are disrupting parts of the insurance value chain, including claims, and while these companies can present a threat to the existing model, they also present opportunities for partnerships and innovative learning experiences.

    Digital capabilities that can automate parts of the claim process drive operational efficiencies; improve decision-making; provide a better customer experience; and spur significant growth in collaboration capabilities between claimants, vendors, medical providers, and carriers. As insurers mobilize their organizations into a digital-based future, reinforcing claims capabilities will be a critical next step.

    This article was originally published in the PAMIC Pulse

    ClaimsKeith Raymond is a Vice President of Research and Consulting at Novarica. He is an expert in IT leadership and business transformation, back-office operations, mergers and acquisitions, and process improvement for both property/casualty and life/health/annuities. Prior to joining Novarica, Keith served as CIO/COO of Futurity First Insurance Group; his previous roles include AVP of Distribution Systems and Field Technology for Mass Mutual; CIO of Trumbull Services, a wholly owned subsidiary of The Hartford Insurance Group; Principal Consultant at HCL Technologies; and CIO of FPI, a software development and service company. Keith has a BS in Technology from Central Connecticut State University. He can be reached directly at kraymond@novarica.com.

  • June 25, 2018 9:49 AM | Vaughn Lawrence (Administrator)

    After the long process of creating a bill and working with legislators and staff, HB 1851 was been signed into law by Governor Wolf on June 22, 2018!

    PAMIC proposed numerous changes to the Insurance Department and General Assembly in Fall 2017 addressing long-simmering concerns over examinations costs and length. Working with our industry partners, PAMIC achieved a tangible success for our members. 

    This Law goes into effect on July 23, 2018, and affects any exam started after that date. However, the Department intends to follow the requirements in this new law to current exams as well.  

    Executive Summary: 

    House Bill 1851 amends the Insurance Department Act of 1921 (act) to require transparency, further establish procedural guidelines for Insurance Department (department) examinations, and to establish the Joint Underwriting Association (JUA) under the act. assign additional duties to the JUA, and statutorily create the JUA Board House

    This law amends Article IX(examinations) under the act to require the department to work with the insurance industry to utilize the most efficient means to conduct examinations, minimize costs, facilitate cooperation and communication between insurers and the department and increase transparency and efficiencies.

    • This law requires the department to hold a scheduling conference with an insurance company before commencing examination fieldwork. The scheduling conference shall include a discussion of the purpose and scope of the exam, the estimated costs for the exam, the types of information the company will be asked to produce, the most efficient means of conducting the exam, and any alternative approaches in performing the exam. The bill requires the department to provide a company with a detailed budget estimate no more than thirty days after the scheduling conference.
    • Within fifteen days of receipt of a budget estimate, the company and the department shall have an additional discussion regarding the most efficient means of conducting the exam and producing information. If necessary, revisions to the budget estimate shall be made the department, and the company may mutually agree to modify the time allotments. If the department determines that the cost will exceed the budget estimate by 10% or if there is a material change in staffing assignments, the department shall hold another scheduling conference.
    • This law establishes detailed requirements for billing invoices submitted to companies for examination work by contractors and the department.
    • This law requires the department to produce an annual examination and analysis report within thirty days of the end of each fiscal year. The report shall include the total amount of money billed to companies by the department and its contractors for financial conduct examinations, market conduct examinations, review of transactions required to be filed by regulated entities with the department, and solvency monitoring.
    The report shall also include:
    • the identity of each contractor retained by the department and the amount of money billed by the contractor to companies,
    • the total amount of deposits into the Insurance Regulation and Oversight Fund as a result of market regulation activities for which regulated entities are responsible for paying,
    • an analysis of the effectiveness of the procedures under this article and recommendations to further improve the efficiency and transparency of the examination.
    A last-minute amendment affects the Joint Underwriting Association (JUA) - the residual market provider of medical malpractice insurance in Pennsylvania.

    This law requires the JUA to complete the following additional duties: 

    • Submit monthly reports to the commissioner of premiums collected and claims paid during the immediately preceding month;

    • Provide to the commissioner additional documents and information regarding the association's operations as the commissioner may request;
    • Within sixty days following the effective date of this section,
    • prepare and submit a new plan of operation for approval by the commissioner;
    • Submit to examinations. The law statutorily the JUA board and clarifies that it shall operate under the department.

    This act shall take effect in 30 days. HB 1851 would not have been possible without the efforts of the PAMIC PAC. We hope that you will consider supporting our efforts to create legislation and regulations that will improve how insurance companies in Pennsylvania do business. Donate to the PAC today!

  • June 20, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Victor T. Ehre, Jr.

    Ours is a competitive industry and in a changing world which has added online multi-carrier marketing, multi-distributional selling (including those who are competing directly with their own independent agents), and even direct writers with their own agencies selling non-direct writer policies, everyone is looking for the “secret sauce” which can create separation from their competitors and with it, success.

    Watch any football game and multiple times one announcer or another will reference the receiver’s attempt to create separation to improve the potential for a successful pass reception.  Seeking advantages in sports may take the form of enhanced equipment, all to gain that separation which hopefully results in success.  But, what about our industry?   Our technical enhancements may take the form of improved computer systems, unique product tweaks (Drone insurance, Cyber policies, etc.) not to mention new social media, apps, blogs and more.  Your competition, however, is often exploring similar paths, so any perceived advantages sought are usually short-lived.

    In the search for that elusive “secret sauce,” management may create internal task forces to develop new directions to pursue.  Consider the following “P’s” which are some of the first tossed out in those committees:  Product.  Management frequently looks at the products the company offers and considers one of two things.  First, they may look at ways to tweak an existing product’s coverages, scope, and market.  What frills or expanded coverages can they add to separate their product from others?

    Years ago, I was with a company which decided to enhance some BOP classes and presumably make them hot tickets for their agents.  When launched, I was sent out to do sales meeting to ramp up interest.  One of the classes was funeral parlors.  We bombed!  The brainchild of senior management, it had corporate underwriting research the rates for the top 20 commercial writers in the state without verifying that those carriers wrote any funeral parlors.  Done without any outside research by marketing, no one knew that those carriers, while having the class, were NOT active writers of the product.  A little research with funeral directors or even their agents would have uncovered the fact that a non-top 20 commercial carrier had the monopoly on a statewide program!

    Besides the tweaking of an existing product, there is the whole impetus to add a completely new product line to a portfolio.  The pressure may come from outside the company (the agency plant) and be pushed up the line by marketing, department management or others.  I have seen that all too often the necessary supporting infrastructure is forgotten.  How involved was underwriting?  Do they have underwriters with the expertise to assess the exposures of a new product line?  Were appropriate underwriting guidelines created, so all know what is acceptable?  Was the company’s claims department brought into the picture?  Will their Claims personnel have the necessary knowledge and training to be assured of the proper assessment of coverages to competently adjust a potentially unique set of exposures, unlike anything they have known and worked with before? 

    Then, of course, there is Price.  Talk about a topic to potentially divide the camps in a company!  Marketing, as a proxy for the agency plant, is promoting lowering prices, sending presumed solid marketing data showing what the competition is doing.  Meanwhile, underwriting is pulling company data defending the need for no change or, heaven forbid, a rate increase!  And frankly, pricing remains the two-edged sword: it may cut a temporary swath of increased writings, but it may equally cut one’s profitability if that pricing was poorly thought out.

    I believe that the most tried and true ways of creating separation and success lie in the Third “P,” our People.  Recently I was rereading a chapter I had contributed to a book entitled The Effective Manager, written by Karl F. Gretz and Steven R. Drozdeck.  The title of the chapter I contributed was Internal Branch Communications.  As I reread it, I was reminded of every company’s “not so secret” sauce for growth and success: its staff and the right types of communication within the company internally as well as externally with their agency plant.

    Regardless of a company’s size, our Front Line is not our systems, but our people and their understanding and embracing of their roles and the value they add to the company’s success.

    Systems and factors such as products and price may add temporary advantages over your competition.  One of the biggest “catch phrases” in our industry is the ease of doing business.  Rating systems, online applications, and other programs attempt to offer unique attractions to the customer.  As noted before, these are often short-lived advantages since these are the focus of so many other carriers.  But it is the very uniqueness of our people, which when properly cultivated, will lead to a truly positive experience for your customers AND ultimately to creating the separation which will lead to long-term success.

    If you have ever watched the reality TV show “The Profit,” you know the premise is for billionaire Markus Lemonis to look into businesses which might have the potential to be saved with changes in approach and operation (and yes, some additional capital).  In one of his episodes, he expounded on his 10 Rules for Success.  Rule #2:  Make your employees #1, not your customers!  Why?  Your employees are the ones who “touch” your customers.  To the extent your people see and understand how they fit into the business, they will understand their value in building the positive separation every company seeks.

    Most company Mission Statements I have read usually note the importance of their employees.   Sadly, all too often it is relegated to “lip service.”  While the right people are willing to work and dedicate themselves to your company, it will only become a reality with a true corporate commitment to the following two halves of the “communication” whole.

    Having worked in all sizes of companies, I observed early on the dozens of different positions companies may have.  Now assuming that every position has actual value to the success of the company:

    This is, unfortunately, not always the case.  I once sat in an agent’s office with one of the CSR’s.  When I asked what her job was, her response was “Oh, I’m just a CSR.”  That response told me all I needed to know about her feeling of worth to that agency.  Knowing how valuable a good CSR is, I responded: “Oh, so you’re about the most important person in the agency!”  After confirming that her role included being the first line of contact with the agency’s clients (at the counter or answering the phone), the quoting of business for producers, making changes to policies, and so much more, she began to see her true worth in the agency.  Her posture straightened and the smile that crossed her face was worth it.  She now saw the value of her role in that agency.

    Answer this: if your employee were at a family picnic and a relative asked him or her about their job, how would they begin their response?  If the response starts out, “Oh I’m just a …,” your company communication is falling short, and with it, the feeling of pride one seeks in their work.  Communication is not solely telling an individual the procedures associated with the job, but also adding an understanding of the position’s value and worth to the company. 

    The SILO effect

    If one looks at their organization with an eye toward how communication is disseminated, there may be a significant cause for alarm.  I have worked with many companies during my career.  In nearly all, I have observed and often been in the middle of what one might call the SILO effect.

    At the executive level, communication meetings among department heads either seldom move down the “silo” to department personnel, or are filtered so significantly that by the time the message reaches those on the “front line,” it is of little value.

    This communication, all too often, is vertical in nature, and sadly, often one way.  In addition, as communication is passed down the layers, the sanitized version may look like a redacted “top secret” communique leaving the staff feeling uninformed and unimportant.  Elon Musk once sent an email setting policy that any employee has not only the right, but the duty to reach out to any other department if that communication is critical to the tasks assigned to them.

    While silos on a farm are separated to avoid “cross-contamination,” departmental silos create barriers to “cross-communication” and, with it, departmental isolation.  Consider a pricing strategy proposed by Underwriting without communication to IT or Marketing.  It is the implementation and the sharing in advance of strategies that will help avoid serious problems internally and negative issues externally.

    In summary, products and pricing are superficial and short-lived attempts to separate oneself from the competition.  The competition all too easily and quickly duplicates them.  Your “secret sauce” to success lies in your employees understanding of their value in your organization and the willingness to permit cross communication.  Implementing these will create an atmosphere of inclusion and self-worth which will lead to the creation of separation and long-term success.

    The article was published in part in the PAMIC 360.

    Victor T. Ehre, Jr. is the General manager of Centre County Mutual Fire Insurance Co and a member of PAMIC.  He is the author of the motivational book The Three Legged Table, The three Principles of Life Living.  Vic holds a BS in Economics from the Wharton School of Business with a Major in Insurance as well as a Master of Insurance degree from Georgia State University.  In his 45 years in our, industry Vic has been an agent, a casualty facultative reinsurance underwriter, founder, and president of an Excess and Surplus Lines Agency, as well as holding senior management positions with both stock and mutual carriers.  Vic served in the United States Army as a Lieutenant and platoon leader and earned his Airborne Jump Wings.  Vic is a father of three and grandfather of five and shortly will celebrate his 45th wedding anniversary.

  • June 20, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Mike Dubin, Baker Tilly

    During the recent National Association of Insurance Commissioners (NAIC) Spring Meeting, several working groups and committees discussed items of import for actuaries, including the Big Data (EX) Working Group, Casualty Actuarial and Statistical (C) Task Force, Health Risk-Based Capital (E) Working Group and International Insurance Relations (G) Committee.

    Big Data (EX) Working Group: Complex Model Review

    There was debate over a centralized or decentralized mechanism and structure for a mechanism to assist state regulatory review of complex models. Insurance organizations indicated they feel a centralized structure inappropriately delegates state responsibility, and prefer paying higher fees to individual insurance departments for a more complete review versus a centralized NAIC center for review. One state gave an example where it is currently receiving state filings based on predictive models that may be against state law, but they do not have the requisite expertise to approve or disapprove within their staff.

    In the best case, the Casualty Actuarial and Statistical Task Force should be asked to draft best practices, state guidance and to facilitate training. However, given the lack of consensus and multiple committees involved, it seems unlikely that a state assistance mechanism will be initiated soon.

    Casualty Actuarial and Statistical (C) Task Force: Appointed Actuary

    There was significant debate about the “Appointed Actuary Project.” This project aims to require actuaries to opine annually (on a company by company basis) on what is needed to be qualified, whether they are qualified and what they have done to be qualified. Significant opposition was expressed from the actuarial community. On the surface, this doesn’t seem extraordinary as examinations usually require that the examining actuary opine whether the appointed actuary is qualified to be the appointed actuary for the specific company. However, the draft “Attestation of the Appointed Actuary” form in the meeting materials had over 100 questions indicating many are concerned with a checklist approach to credentials. Some of the issue may be concern that years of experience will be discounted in favor of standard coursework.

    Health Risk-Based Capital (E) Working Group: Stop-loss Interrogatories and Expanding use of NAIC Designations

    There was healthy debate over two proposals. The first is regarding stop-loss interrogatories. The American Academy of Actuaries expressed concern that information collected for RBC purposes would be used for other purposes. The other side of the debate is that information on stop loss contracts is needed to appropriately reflect their risk in the RBC calculation.

    The second is regarding expanding the use of NAIC designations on Schedule BA from Life Insurers only to Health Insurers. The stated reason for proposing the change is to more accurately reflect investment risk and increase consistency between life and health insurers. One main objection was that it would be an additional cost to carriers without additional risk identification.

    International Insurance Relations (G) Committee: Foreign Reinsurer Approval Framework

    There was discussion about a common framework for states to approve reinsurers from outside the U.S. The purpose would be to allow reinsurance receivables to be an admitted asset without collateral. One point debated was whether states could require the other jurisdiction to accept the state’s solvency monitoring and regulations.

    This article was previously featured by Baker Tilly and was published in the PAMIC 360.

    Actuarial ChangeMichael Dubin joined Baker Tilly in 2017 as a member of the financial services practice group and the firm’s director of actuarial services. Mike delivers forward-thinking solutions to help clients drive growth, generate revenue, ensure regulatory compliance and achieve significant financial savings.

  • June 20, 2018 4:00 PM | Vaughn Lawrence (Administrator)

    By Ashley Popham, BriteCore 

    Emerging technologies dominate insurance headlines and conferences today, offering digital strategies to enhance multi-channel customer engagement, automation, and operational efficiency. The overwhelming buzz requires companies to distinguish practical, cutting-edge strategies from bleeding-edge red herrings.

    This two-part series overviews current technology trends and realistic use cases in insurance. In this edition, learn which technologies are improving customer experience and advancing digital data capabilities, and which are low-return distractors.

    Customer Experience

    Insurers are applying new technologies to enhance customer experience, focusing on connected, easy-to-use, self-service processes for insureds. Customer experience technologies revolutionizing insurance include direct distribution, chatbots, augmented and virtual reality, and gamification.

    1. Direct Distribution – Insurers use self-service technology to anticipate and meet digital consumer expectations. These initiatives build insurance products from the inside out, starting with customer experience and adapting products to fit ideal experiences. Examples include websites, portals, and apps from which insureds can purchase and maintain insurance products. Insurers are also launching agent and adjuster apps to expand self-service and multi-channel opportunities.
    2. Chatbots – Chatbots (through programmed rules or artificial intelligence) interact with users through chat messages. Insurers can use chatbots to automate customer service and enhance direct distribution processes. There are three major use cases for insurance chatbots:

      1. User-initiated processes, such as FNOL submission or policy application
      2. Information retrieval directly from your website, insured portals, or staff portals
      3. Product integrations with digital assistants, such as Alexa, Siri, and Google

    3. Augmented and Virtual Reality – In augmented reality, users superimpose digital elements onto the world around them, much like stickers on social media platforms allow you to add digital layers to pictures taken from your smartphone camera. In contrast, virtual reality refers to immersion into a virtual world. Insurance use cases are limited, generally focusing on interactive courses for staff and insureds
    4. Gamification – Gamification applies gaming qualities to everyday business processes. Fitbit’s downloadable app provides a prime example of gamification. From the app, users can view progress towards daily walking goals, log eating and exercise habits, and challenge friends. Insurers can offer similar social engagement opportunities and incentives for wearables, telematics, and Internet of Things (IoT) data, rewarding safe habits that lower risk. Insurers are also investigating gamification (sometimes in combination with augmented or virtual reality) to enhance insured and employee education.

    Digital Data

    Advances in data collection (drones, IoT, telematics) and data processing tools (big data, artificial intelligence, robotic process automation) create more comprehensive data than ever before, offering groundbreaking insights.

    1. Internet of Things (IoT) – More than 20.35 billion connected IoT devices are installed today worldwide, and the number is projected to grow to more than 30.73 billion connected devices by 2020. IoT devices, such as smart thermostats and smart locks, enable constant monitoring and remote access for everyday processes. These devices can provide carriers with detailed data about property safety and insured lifestyle. IoT data has potential to boost claim processing and risk analysis efficiency.
    2. Automobile Telematics – Automobile telematics offers new data sources to insurers. Through device installation in policyholder vehicles, insurers track detailed vehicle data, such as speed, location, and sudden stops. Insurers can process data to enhance risk assessment precision. Many carriers (including Allstate, Progressive, and State Farm) offer premium discounts for telematic installation and safe driving habits, improving customer experience.
    3. Big Data – Big data is infrastructure that stores carrier data and tools used to query and build visualizations on top of the data. Big data also relates to predictive analytics. By inputting IoT, social media, demographic, and website analytics, carriers can create customer profiles. Through profile comparison, carriers can predict behaviors such as cancellation and renewal likelihood. Carriers can even use big data for fraud detection, comparing a claim submission with an insured’s previous claims to check for similar language.
    4. Artificial Intelligence (AI) – AI uses computers to learn and make decisions. AI has a variety of insurance use cases, including data processing, driverless cars, and advanced image, voice, and text recognition for chatbots. Most promising of these use cases involve data processing. Carriers implement AI to search extensive databases for patterns, leading to new insights. AI works hand-in-hand with big data, IoT, and telematics: IoT and telematics provide vast data sets, big data provides an interface for manipulating data, and AI analyzes data to draw new insights.
    5. Robotic Process Automation (RPA) – RPA and AI both use computers to process vast stores of data. While AI uses machine learning to learn and improve decisions over time, RPA machines can only process and make decisions through defined algorithms. RPAs automate repetitive processes, such as time-consuming duplicate entry. Carriers investigated RPA to improve malfunctioning core systems, but attempts were found unfavorable.
    6. Drones – Drone and satellite use are rapidly expanding among insurers. Adjusters and inspectors use drones to automate site inspection processes further. Through visual and thermal imaging, drones provide precise data allowing carriers to assess risk and damage more accurately. Drone usage can increase underwriting and claim information efficiency by as much as 40%.
    7. Blockchain – Insurers use blockchain to manage policies and payments. Created to eliminate unnecessary third-parties in transactions, blockchain offers secure digital record management. Using cryptocurrencies, like Bitcoin, carriers automatically create contracts to process transactions when publicly recorded events occur (such as flight cancellation for travel insurance). Records cannot be changed, providing reliable records. However, difficulties arise if an error occurred in the original transaction but cannot be undone. Blockchain also gives everyone complete access to read and write transactions, increasing transparency but decreasing privacy.

    Innovative technologies are beginning to mature, creating perfect opportunities to implement new use cases into your product offerings. Consider your business strategies today and how you can enhance your customer experience and digital data offerings. In the next edition, we will discuss how to create a holistic digital strategy that can truly modernize your company.

    This article was originally published in the Spring edition of the PAMIC Pulse.

    References: 

    1. Internet of Things (IoT) connected devices installed base worldwide from 2015 to 2025 (in billions),” Statista, 2018, https://www.statista.com/statistics/471264/iot-number-of-connected-devices-worldwide/
    2. EY Digital Transformation in Insurance,” EY, 2017, http://www.ey.com/Publication/vwLUAssets/ey-digital-transformation-in-insurance/$FILE/ey-digital-transformation-in-insurance.pdf

    Ashley Popham is a Communications Specialist at BriteCore with 5 years of combined experience in research and technical communication. Ashley holds a B.S. in Professional Writing from Missouri State University and a certificate for Inbound Marketing. Since joining BriteCore, Ashley has created numerous custom training videos, articles, and instruction guides for insurers aimed at helping them better engage staff, agents, and customers. If you’re curious about digitalization strategies or want to learn more about BriteCore, email Ashley at ashley@britecore.com.

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