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Ad Template.indd 6 6/29/21 3:01 PM PRESIDENT Steve Acunto (Greenwich) [email protected]

PUBLISHER Keith Kenner (Chicago) COVER STORY [email protected]

EDITOR Employees, policyholders, Gavin Souter investors and ratings agencies (Chicago) [email protected] are increasingly scrutinizing how businesses, including DEPUTY EDITOR Claire Wilkinson brokers and insurers, address a (New York) range of environmental, social [email protected] and governance issues, such as ASSISTANT EDITOR climate change, diversity and Louise Esola (New Orleans) inclusion, workplace conduct [email protected] and racial justice. PAGE 22 SENIOR REPORTER Judy Greenwald (San Jose) [email protected]

REPORTER Angela Childers (Chicago) INSIDE [email protected]

REPORTER Matthew Lerner (New York) [email protected] SPECIAL REPORT: BROKER PROFILES & RANKINGS COPY CHIEF John Obrecht Business Insurance’s annual Broker Profiles issue details changes in the ranks of the (Chicago) top 10 largest insurance brokers worldwide and the top 100 brokers of U.S. business, [email protected] highlights market trends and profiles the leading brokers. PAGE 28 COPY EDITOR Brian Gaynor (Portland) [email protected] NEWS ANALYSIS PRESUMPTION TREND ART DIRECTOR A growing number of states are considering permanent Jeremy Werling FOR BREAKING NEWS infectious disease presumptions. PAGE 8 (Cincinnati) [email protected] COVERAGE, VISIT businessinsurance.com DIRECTOR OF RESEARCH, SECONDARY PERILS PLANNING AND INSIGHTS Severe convective storms and wildfires are causing Andy Toh increasingly large insured losses. PAGE 10 (Chicago) [email protected]

MAJOR ACCOUNTS DIRECTOR - INTERNATIONAL NORTHEASTERN U.S. & INTERNATIONAL The growth prospects for Laos’ commercial insurance Ron Kolgraf (Boston) market appear good over the next five years. PAGE 14 [email protected]

SENIOR VICE PRESIDENT, BUSINESS DEVELOPMENT Stephen Acunto (Princeton) PERSPECTIVES [email protected] The intensifying effects of climate change call HEAD OF SALES, EVENTS for resilient design and construction practices, VIEW FROM & REPRINT SALES MANAGER writes Andrew D. Mendelson of Berkley Design Susan Stilwill THE TOP (Nashville) Professional. PAGE 47 [email protected]

VICE PRESIDENT OF MARKETING RICHARD E. Brian McGann ANDERSON (Buffalo) OFF BEAT [email protected] LEGAL BRIEFS Budweiser Canada Dr. Richard E. DIGITAL AD OPERATIONS MANAGER has brewed up plans Anderson is chairman Recent court opinions PAGE 17 Jordan Kilty to offer what it calls and CEO of The (Raleigh) Doctors Company, a [email protected] OPINIONS “unique” insurance Napa, California-based DIGITAL MARKETING MANAGER Ransomware concerns; event risks coverage opportunities. physician-owned Jen Jonasson rise as sports return PAGE 46 PAGE 50 (Chicago) medical malpractice [email protected] MARKET PULSE insurer that was MARKETING & EVENTS MANAGER formed amid the med mal crisis of the mid-1970s. Brittany Collins Products, deals and more PAGE 48 (Lafayette) Dr. Anderson, who practiced as an oncologist for 25 years, [email protected] PEOPLE discusses the rise in the severity of med mal losses and risk MARKETING & EVENTS SPECIALIST management steps that can be taken to reduce physician Beth Wojdyla Insurance industry moves PAGE 49 (Chicago) exposures. PAGE 18 [email protected]

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BUSINESS INSURANCE JULY/AUGUST 2021 3 NEWS ANALYSIS

CLASSROOM HEALTH RISKS Schools hit with cyber price hikes IN SPOTLIGHT Reuters BY ANGELA CHILDERS accinations and the [email protected] safety and health of V students and staff remain irus resurgence remains a major risk man- a priority for schools across agement issue for school districts and the country, with many V universities opening in the fall, but others questioning their ability to are joining the lineup of top concerns, includ- mandate vaccinations and ing cyber protection and campus security. how far they should go with Cyber risk has been a pressing worry in safety protocols. both K-12 and higher institutions, some of “One of the questions which are seeing cyber premium increases of we get most often from as much as 300%, said Julie Theirl, San Fran- members, particularly in cisco-based senior vice president and regional higher education, is can or education practice leader at Aon PLC. should we mandate vaccines,” “Cyber and ransomware are increasing at said Hillary Pettegrew, senior a staggering pace,” she said. “This July 1 risk management counsel at (renewal) cycle has been really difficult for Bethesda, Maryland-based most organizations, and I think schools in United Educators, a reciprocal particular.” risk retention group that “That quick change to online learning cre- provides risk management ated a huge, increased cyber risk,” said John consulting to more than 1,600 McLaughlin, senior managing director of K-12 CYBER INCIDENT TYPES ment liability is coming to the forefront.” schools. “On the federal level, Arthur J. Gallagher & Co.’s higher education Luke Figora, vice president for operations at it’s pretty clear that they can Data breaches/leaks: 36% be mandated (for employees) practice in Rolling Meadows, Illinois. Ransomware: 12% Northwestern University, said that the sensi- Cyber underwriters are looking for institu- tivities surrounding the role of campus police and very likely for students tions that have “stepped up their game” and Denial of service: 5% is a top concern for the university. as well. But you do have to devoted the resources to provide sufficient Phishing: 2% While that risk has always been present, it is allow for certain exemptions. protection; those that haven’t are facing non- Other: 45% “magnified today in terms of the reputation- And some states have specific laws playing on that as well.” renewal or substantially reduced limits and Other includes unattributed malware, class and al risk of having police deployed, and we’re significantly higher premiums, he said. absolutely paying attention to that,” he said. Although many are meeting invasions, email invasion and website expecting the school year San Diego-based Lilian Vanvieldt-Gray, and social media defacement. “If something was to turn violent, when do beginning this fall to be a executive vice president and chief diversity Source: K-12 Cybersecurity Resource Center you escalate toward (police) deployment?” and inclusion officer at Alliant Insurance Ser- College and university risk managers are return to normal, Jennifer vices Inc., who also manages a portfolio of One school district, when faced with just also apprehensive about how divided poli- Smith, partner in the Chicago schools and public agencies, said her school $3 million in coverage for $500,000 and a tics and civil unrest issues may affect students office of Franczek P.C., warns clients collectively have received 37 cyber $1 million deductible, opted to use that pre- back on campus, experts say. that may be premature with declinations this year. Those that have found mium money to invest in technology upgrades “How this might present on campuses is the number of unvaccinated coverage are facing deductibles of $1 mil- instead of purchasing the policy, she said. certainly a concern,” Mr. McLaughlin said. individuals, particularly in lion compared with $25,000 and premiums “I have yet to have a client that just for- “There’s concern with security … how to best lower-level schools with climbing to $500,000 from $55,000 last year. goes it entirely, but I can see it heading in recognize the exposure and provide supportive many children under age 12. that direction,” Ms. Theirl said. “What we’re security service that is viewed positively by all.” “In the fall, everyone trying to do with our clients is say, ‘Here are Higher education is trying to take pro- is going to be used to a the things you need to be doing over the gressive steps to head off potential issues new normal with no new next nine months before you hit the next by talking to the community, reaching out restrictions, and I anticipate renewal cycle.’” to students before they return to campus there will still be some This may include installing appropriate fire and training campus security teams, he said. mitigation that educators CYBER INCIDENTS IN have to follow that people walls and virus protection, using multifactor While a serious unrest issue would normally PUBLIC K-12 SCHOOLS may not like,” she said. authentication and conducting cybersecurity be a general liability claim, “depending on the n More than 400 cyber incidents were awareness training, she said. magnitude of the claim, it could morph into For now, schools should take publicly disclosed by school districts in 2020. Schools are also struggling with rising gen- an event-driven (directors and officers) claim a “wait and see approach” eral liability premiums and seeking ways to for failure to take proper precautions,” he said. regarding their fall safety n More than 75% of all data breach adequately protect their infrastructure from Schools are also much more attuned to the protocols, said Byron Given, incidents affecting U.S. public K-12 damage related to social unrest. However, mental health challenges stemming from area senior vice president, school districts were the result of security with limitations for such incidents embed- the pandemic and looking at expanding regional director, for Arthur J. incidents involving school district vendors ded in policies, it is a challenge and “carriers resources for students and bulking up their Gallagher & Co’s public sector and other partners. are pulling back from the marketplace,” Ms. employee assistance programs for staff, Ms. K-12 education practice. “As we have learned through n Data compromised in breaches has included Vanvieldt-Gray said. Vanvieldt-Gray said. this entire thing, sometimes grades, bullying reports and Social It’s equally difficult for colleges and univer- For a group of K-12 leaders that Ms. Theirl it’s one step forward and Security numbers. sities to sufficiently insure against their expo- speaks with regularly, mental health has sures for law enforcement liability, she said. become a top concern, resulting in a renewed two steps back. I think n School districts in cities and large suburbs “A lot of carriers don’t want law enforcement interest in employee wellness programs. Some the worst is behind us, but and those with a larger proportion of liability or they’re taking out $1 million reten- schools have also purchased an additional we’ve been through it now. higher-income students are the most tions for it … or eliminating their coverage,” trauma coverage that insures against the treat- If there is another outbreak likely to experience a cyber incident. Ms. Vanvieldt-Gray said. “It’s a major con- ment costs related to a traumatic event and … at least we’re prepared.” Source: K-12 Cybersecurity Resource Center cern. At the same time, certainly law enforce- can be accessed by students or staff, she said. Angela Childers

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Ad Template.indd 17 6/29/21 3:02 PM NEWS ANALYSIS Lawsuit funding sparks insurer concerns

BY JUDY GREENWALD tion funding must be disclosed, attempts [email protected] “We don’t need new to pass federal legislation requiring such disclosure have so far been unsuccessful. itigation funding, in which capital is mechanisms in society to sue “It’s a multibillion industry with no provided by a third party to finance regulation and no requirements for trans- L lawsuits in return for a share of the people. We have enough of that parency,” said Page C. Faulk, senior vice ultimate settlement or award, is growing president of legal reform initiatives at the in the United States. probably in most cases, and U.S. Chamber of Commerce’s Institute Insurers and others contend it leads to for Legal Reform in Washington, which increased claims and rates, while often I don’t think we need more.” calls for litigation funding’s disclosure. “It permitting funders to conceal their Jane Njavro, is essentially turning our U.S. courtrooms involvement, thus obscuring potential Woodruff Sawyer & Co. into casinos, which is why the chamber is conflicts of interest. calling for disclosure.” Its proponents maintain they help fund Disclosure “eliminates any conflicts justifiable litigation on a highly selective of interest and sets the floor for the fair basis and have a hands-off policy as to administration of justice,” Ms. Sutton said. becoming directly involved in litigation Katelynn O’Rourke Gorman, a partner strategy. with Clyde & Co. LLP in New York, said Litigation funding, also called litigation she has worked on cases where she sus- financing, is used in a range of lawsuits, “There’s no limit to the types of risk dent, chief legal officer and corporate sec- pects litigation funding was involved but including complex multidistrict and class- that we look at, both first party and third retary for Zurich North America, said in has been unable to confirm it. She advo- action litigation. party, wildfire, hurricane loss, product lia- a statement that litigation funding com- cates disclosure because third parties have At its most basic, unlike contingency bility, and, of course, COVID business panies’ “abusive practices will be largely a vested interest in litigation’s resolution. funding, where plaintiff attorneys oper- interruption,” said G. Andrew Lundberg, borne by insurers in defense costs and It’s hard to track the effect of litigation ate on a no win/no fee basis, third party Los Angeles-based managing director of indemnity payments and by policyholders funding on cases because it is not always funders provide financial help in exchange Burford Capital Ltd., a litigation funding in uncovered losses and higher premiums known whether funding is involved, said for an interest in a potential recovery. The company. related to increased litigation, often friv- Tim McCarthy, actuarial product director financing can be offered to law firms who Widely used in other countries, litiga- olous, driven by the profit motive” behind for commercial liability at data analytics are unwilling or unable to fund a poten- tion funding is being used more frequently the business model. and risk assessment company Verisk Ana- tially protracted case or to help under- in the United States but may not become “We don’t need new mechanisms in lytics Inc. in Jersey City, New Jersey. funded claimants. as popular here (see related story). society to sue people. We have enough of Under Federal Rule of Civil Procedure Many insurance industry participants that probably in most cases, and I don’t 26, insurance details must be revealed CONCEPTUAL FRAMEWORK are unhappy with the growth of litigation think we need more,” said Jane Njavro, and, arguably, the same principle should DEFENDANT funding. Jennifer Marshall, a director in senior vice president and partner with apply to litigation funding “to make sure BUSINESSES the property/casualty ratings department Woodruff Sawyer & Co. in San Francisco. everyone has a full understanding of the at A.M. Best Co. in Oldwick, New Jer- But Eric J. Blinderman, CEO (U.S.) underlying facts of the litigation,” he said. Litigation sey, said it puts upward pressure on claims for litigation funding company Therium Buford Capital’s Mr. Lundberg said liti- costs costs and drives increases in awards and Capital Management Ltd. in New York, gation funding is “not relevant in the same Lawyer fees, settlements. said litigation financing helps in “David way insurance coverage is required to be FUNDERS solicitor fees, Having a third party that potentially versus Goliath” situations where small disclosed in litigation,” where parties are Third-party litigation counsel fees profits from a lawsuit prolongs a claim plaintiffs get litigation help against “well- “effectively insured or indemnified against funding (TPLF) and other “and makes it more expensive to resolve,” heeled, competent, large defense firms” a bad outcome.” disbursement said Meg Sutton, New York-based senior that will “bury them in paper and do Therium’s Mr. Blinderman said judges Share of the vice president of U.S. casualty claims for whatever they can to use the tools of the have “nearly unanimously ruled the extent claimant’s General Liberty Mutual Insurance Group. litigation process” to help win their case. of litigation financing is both irrelevant litigation costs for recovery claimants A settlement may be rejected because An oft-voiced objection raised by litiga- to the underlying merits of a dispute” and of pressure exerted by litigation funders tion funding critics is that, depending on subject to privileged protection. CLAIMANTS seeking a profit on their investment, and a the jurisdiction, its role in litigation is not Commercial litigation funders never select Litigation recovery plaintiff may walk away with nothing if the necessarily publicly revealed. counsel, have no “seat at the settlement trial goes against them, its opponents say. While the U.S. District Court for New table and expressly disclaim in contracts the Source: European Parliamentary Research Service Laura Lazarczyk, executive vice presi- Jersey held in June that third-party litiga- right to control litigation,” he said.

SLICE OF RECOVERY PIE PROVES ATTRACTIVE, BUT FINANCING MAY NOT TAKE OFF itigation funding in the U.S. will growth rate since 2008. It projects Tim McCarthy, Jersey City, New Jersey- RT ProExec, a division of R-T Specialty increase, although it may not become the market could reach more than €48 based actuarial product director for LLC, said he does not believe litigation L as widely used as it is elsewhere in billion by 2025. commercial liability at data analytics funding will make significant inroads in the world. Litigation funding will likely grow as and risk assessment company Verisk the United States. A study released in March by the law firms look for additional funding Analytics Inc., said litigation funding “will He said the U.S. has two things most European Parliamentary Research and investors in financing firms seek continue to grow in use to the extent the other countries do not — contingency Service estimated the European Union increased returns on their investments, financial returns to the people investing fees and “a very sophisticated plaintiffs litigation services market represented said Jennifer Marshall, a director in the in it exceeds their cost of capital.” bar that does not necessarily need almost €39 billion ($46.55 billion) property/casualty ratings department at However, Kevin LaCroix, executive litigation financing.” in 2019 and has had an annual 3.5% A.M. Best Co. in Oldwick, New Jersey. vice president in Beachwood, Ohio, for Judy Greenwald

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Ad Template.indd 1 6/29/21 3:00 PM NEWS ANALYSIS

HEALTH WORKER Expanded presumption laws loom EXPOSURE BY LOUISE ESOLA LEVELS [email protected] re health care s many COVID-19 workers compensa- workers more at risk tion presumption laws put in place last A for COVID-19? A year are set to expire, a growing number A recent study of nearly of states are considering permanent infec- 25,000 of them who faced tious disease presumptions that experts say COVID-19 exposure seems could change the way the industry views and to buck the notion that pays for occupational injuries. the workplace is the likely As of late June, lawmakers in 16 states place of transmission. had introduced legislation that would allow Published in the Journal employees who suffer from a communicable of the American Medical disease to file workers compensation claims Association in March, presuming they contracted their illness at the study concluded that work, according to a roundup of bills by the “exposure outside the Boca Raton, Florida-based National Coun- workplace was the strongest cil on Compensation Insurance. risk factor” for health care “We are seeing preparations for the next workers, especially those pandemic,” said John Hanson, Atlanta-based living in a zip code with vice president at Alliant Insurance Services higher COVID-19 incidence, Inc. “You can see the legislative trend is for and that “none of the contagious diseases.” assessed workplace factors The language in the state proposals varies. were associated” with Most of the presumptions would be rebutta- connected to working in mines. Other exam- contraction of COVID-19. ble, meaning that if an employer can prove the NCCI TRACKING ples cited by experts include Legionnaire’s The study suggested “that worker contracted the illness elsewhere, the COVID-19 DATA disease, a bacterial infection caused by expo- current infection prevention strategies in health care claim can be denied; some would only apply Tracking COVID-19 data sure to the legionella bacteria, which can to certain workers who are at higher risk of is an ongoing project for only be contracted under certain conditions. are effective in preventing contracting an infectious disease, such as the National Council on “To me those rebuttable presumptions make patient-to-(health care health care workers and first responders. Most Compensation Insurance. sense,” said Carin Burford, Birmingham, personnel) transmission As of June: of the measures would only go into effect if Alabama-based shareholder with Ogletree, in the workplace.” there is a state of emergency or a pandemic. n NCCI calculated $260 Deakins, Nash, Smoak & Stewart P.C. and an Meanwhile, COVID-19 million in COVID-19 workers compensation Yet the trend toward accepting claims for adjunct professor who teaches workers com- workers compensation losses, excluding self-insureds, for 2020 diseases that can be contracted almost any- pensation law at the University of Alabama claims from health care in the 36 jurisdictions where it provides workers and first responders where — such as COVID-19 — is problem- ratemaking services. School of Law. “But when you are talking atic, experts say. about broad types of diseases” where there’s represented the lion’s n NCCI estimated COVID-19 claims, excluding share of claim activity. “By its very nature (a communicable dis- self-insureds, have the potential to ultimately community spread, “what you are doing is ease) can take place outside of the work- result in comp losses exceeding $500 million taking the occupational out of the equation; place, and to just presume it occurred in the over the duration of the pandemic. you are just recognizing the disease.” workplace is very dangerous for the workers Jeff Adelson, partner with Newport Beach, compensation system,” said Steve Bennett, California, firm Adelson McLean P.C., Washington-based assistant vice president $10,000, according to NCCI data. which represents employers, said any expan- for workers compensation programs and Yet there’s concern that another commu- sion of infectious disease presumptions has counsel for the American Property Casualty nicable disease could prove catastrophic for the potential to create more litigation. Insurance Association. “We would view any a comp system that could be responsible for “If you bring all these presumptions in presumption, especially of a contagious dis- covering diseases a person could contract with so many different occupations, where ease, as an extremely dangerous precedent.” anywhere, experts say. does it stop?” he said. “I think that is a real indication of why pre- And the potential financial impact is “This is an unprecedented expansion sumption bills are dangerous,” Mr. Bennett impossible to quantify for an unknown risk, said. experts say. of workers compensation into an Mark Walls, Chicago-based vice president “We are the number crunchers and if of communication and strategic analysis for there was a way to estimate the impact of The Boca Raton, Florida- area that is not appropriate.” Safety National Casualty Corp., said such (an infectious disease presumption) then based National Council on widespread disease presumptions are a “fun- we would, but it is difficult to come up with Compensation Insurance Mark Walls, reported in June that Safety National Casualty Corp. damental change in the workers compensa- a number on how to price this,” said Jeff tion burden of proof ” in that a worker would Eddinger, senior division executive of data nursing/convalescent home not have to show that he or she was injured quality and compliance for NCCI, which is employees, other health care at work. “This is an unprecedented expan- still gathering data on COVID-19 claims, workers and first responders Perhaps spurring the trend toward comp sion of workers compensation into an area some of which are now considered long-tail. have collectively accounted solutions in a pandemic is the emerging data that is not appropriate,” he said. Mr. Adelson said the swiftness of the for 72% of all COVID-19 that COVID-19 claims were not as severe as While the wave of disease presumption industry’s reaction to COVID-19 might workers comp claims reported predicted: 61% of the reported COVID-19 proposals is turning heads, the concept of complicate the issue for insurers. “Now to the ratings agency since claims have cost employers and insurers less occupational disease is not new. Black lung, how do you underwrite for something that the start of the pandemic. than $1,500, and 94% have cost less than for example, is typically seen as an illness doesn’t quite exist?” Louise Esola

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40526 RPS 2021 Business Insurance Hail_AD FINAL.indd 1 6/15/2021 12:13:33 PM Ad Template.indd 4 6/29/21 3:00 PM NEWS ANALYSIS Sharp rise in lower tier catastrophe claims triggers policy changes, mitigation strategies

BY MATTHEW LERNER [email protected] NATURAL CATASTROPHE INSURED LOSSES — 2020 evere convective storms and wildfires have caused increasingly large insured Total S losses over the past few years due to $81 billion increased frequency and severity. While traditional windstorm catastro- 2019: $54B phe losses continue to be a major source 10-year average: $74B of claims, the so-called secondary perils losses are reaching levels akin to moderate Secondary peril hurricane events, experts say. $57.4 billion (71%) Insurers continue to focus on loss pre- 2019: $31.9B vention and risk engineering to combat Primary peril the rising secondary peril losses but have $23.2 billion (29%) also begun to make defensive moves. Secondary perils caused $57.4 billion 2019: $22.5B or 71% of worldwide insured losses from Source: Swiss Re Institute natural catastrophes in 2020, with the main drivers being severe convective was a case in point, Mr. Fuller said. The storms and wildfires in the United States storm “activity impacted a number of and Australia, according to a March carriers and reinsurers. This rare, large report by Swiss Re Ltd. er with the climate team at catastrophe at Marsh LLC. first-quarter event required some prima- modeler Risk Management Solutions Inc. “Certainly, there’s been an increase ry carriers and reinsurers to reassess their “I think people recognize there’s “I think people recognize there’s an in losses with respect to severe convec- cat risk management strategies for the increase in the severity and the damage tive storm and wildfire, and we’ve seen remainder of the year.” an increase in the severity and that’s occurring from weather-related increased scrutiny around deductibles Risk assessment and catastrophe man- incidents,” said Scott Ewing, regional and, in the case of wildfire, limitations agement need to be updated, said Mohit the damage that’s occurring from property risk engineering leader in New in capacity from some carriers,” he said. Pande, head of property underwriting, York for Axa XL, a unit of Axa SA. Insurers are moving to re-underwrite U.S. and Canada, at Swiss Re. weather-related incidents.” Wildfire losses are “starting to rise to and reprice exposures in regions of the “Up to now, risk assessment has focused Scott Ewing, levels that potentially affect solvency U.S. that have experienced persistent less on secondary perils than primary per- Axa XL metrics,” said Michael Young, Newark, severe weather in recent years, said Randy ils and we feel that a rebalance is required. California-based vice president, model Fuller, managing director and head of Given the rise of their associated losses, product management, at RMS. the North America property center of secondary perils need to be better under- “There is the potential for a wildfire excellence for reinsurance brokerage Guy stood for the purpose of more complete From 1990 through 2020, aggregate event as large as $100 million” in the Los Carpenter LLC. and accurate risk assessment,” he said. U.S. insured losses from severe convective Angeles basin area under certain condi- “Many carriers are adjusting wind and Risk managers are changing how they storms and winter storms exceeded loss- tions, he said. hail deductibles. Coverage considerations prioritize risk improvements and bud- es from hurricanes by 13% and hurricane As the losses mount, insurers have such as actual cash value for roofs instead geting for those improvements, said losses were greater in only six of those begun to increase deductibles and pare of replacement cost coverage are becom- Amy Brown, staff vice president, man- individual years, said Christopher Allen, back capacity, said Michael Rouse, New ing more prevalent,” he said. London-based senior product manag- York-based U.S. property practice leader The February U.S. winter storm Uri See PERILS page 12

INSURERS TAP TECHNOLOGY TO CUT LOSSES FROM SECONDARY WEATHER RISKS nsurers and others in the sector used to assess elements such as roof catastrophe modeler. virtual meetings with clients for risk are using technology to improve condition and proximity of vegetation The observation teams are able engineering and mitigation discussions. I risk mitigation and loss control in and signal the need for onsite to produce “really high-fidelity The Insurance Institute for Business the face of mounting claims from so- inspections.” measurements,” and data that can be & Home Safety has online tools that called secondary perils, such as severe Risk Management Solutions Inc. used for modelling purposes, he said. small businesses can use to prepare for convective storms and wildfires. collaborates with observation networks, Axa XL, a unit of Axa SA, has potential loss events, said Chris Cioffi, “There is more data available comprised of instrument and data developed its “remote risk dialogue” commercial lines engineer at the group. today than ever before to inform risk scientists, who can deploy portable, to track changes at insured sites Its “Wildfire Ready” tool can help small selection,” said Josh Darr, managing storm-proofed equipment such as and conduct project reviews, said businesses with mitigation, as can other director, head of North America peril anemometers to measure wind speed, Scott Ewing, regional property risk modules for severe convective storm advisory, for Guy Carpenter LLC. “High- said Christopher Allen, London-based engineering leader in New York and thunderstorm, he said. resolution satellite data can now be senior product manager with the for the insurer. The program uses Matthew Lerner

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21 PHLY BI - BrainGenPHLYDiff.indd 1 3/11/2021 10:32:37 AM Ad Template.indd 7 6/29/21 3:01 PM GLOBAL INSURED LOSSES FROM SECONDARY PERILS SINCE 1970, IN USD BILLION (2020 PRICES) Insured losses from secondary perils have been growing steadily. Among them, losses from severe convective storms represent the biggest component. However, in recent years losses from wildfires have been growing fastest. $70B Severe convective storms Floods Wildfires Other secondary Secondary effects of primary perils $60B

$50B

$40B

$30B

$20B

$10B

$0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 Source: Swiss Re Institute ager for natural hazard underwriting, at to adjust one’s priorities,” she said. Home Safety conducts research on build- is also important as an aged system will FM Global. Risk mitigation for secondary perils can ing materials, such as asphalt shingles, to perform less well than a new system, said “As secondary perils are becoming more be straightforward and inexpensive — promote fire resistant construction and Chris Cioffi, commercial lines engineer frequent and are having a larger impact from adding extra fasteners on the corners hail resistant roofing systems, said Anne at IBHS. to loss trends, risk managers are doing of roofs to ensuring that ducts and vents Cope, chief engineer at IBHS in Rich- Studies have shown that investments their due diligence to see how it affects are sealed against embers, she said. burg, South Carolina. in mitigation can return up to four times their portfolio and where it makes sense The Insurance Institute for Business & Maintenance of structures such as roofs their cost in savings, he said.

Wildfire ignition risks rise as temperatures climb

xtreme heat and drought conditions thing,” she said. across the western United States are Designing buildings without gaps under E increasing concerns about a dangerous doors or around windows and installing wildfire season ahead, but there are steps covers over air-conditioner vents help pre- businesses can take to reduce losses. vent sparks from embers that winds blow Some 88% of the land area of Western onto an industrial facility from a distance, states is in drought conditions, while more Ms. Klosowski said. than 50% is in extreme or exceptional Automatic protection such as sprinklers drought, according to the U.S. Drought installed on the exterior as well as inside Monitor, a collaboration between the buildings can minimize damage as well. National Drought Mitigation Center Businesses can install lightning protec- at the University of Nebraska-Lincoln, tion rods on a roof, or highest point of a the U.S. Department of Agriculture and facility, Ms. Klosowski said. If lightning the National Oceanic and Atmospheric strikes the structure, it will hit the rod Administration. and bring the charge down to the ground, Long-term extreme drought typical- she said. ly increases the risks of fire in forested Building in layers of protection is import- regions, even though dry conditions can ant, she said. “Big losses often have a series limit growth of vegetation in grasslands the weather at the time of ignition are crit- decreasing the likelihood of loss, experts say. of events that go wrong. … If you can potentially reducing the risk in those areas, ical, said Philip Cunningham, senior sci- Business owners should keep properties break that cycle, you’ve got a better chance experts say. entist at catastrophe modeler AIR World- well-maintained, clear brush and cut back of safeguarding the business,” she said. Naturally occurring wildfires are most wide Corp. in Boston. trees around the sides of buildings or roofs The cost of lightning-caused claims sky- frequently caused by lightning, while Wildfires caused by man-made ignitions that can potentially ignite, Mr. Cunning- rocketed due to 2020’s wildfires, according man-made ignitions include power lines typically outnumber wildfires from natural ham said. Keeping roofs clear of debris is to a spokeswoman at the Insurance Infor- and utilities, not properly extinguished ignitions, but in 2020 almost all of the big especially important as winds can blow mation Institute in New York campfires, sparks from dragging chains on fires were caused by lightning, he said. embers hundreds of meters or even miles, “The average cost per lightning claim in vehicle trailers, cigarettes, and fireworks. California, in particular, saw unusually igniting materials, he said. California was $217,555 last year, while Among natural ignition sources, light- large amounts of dry lightning last August The best thing businesses can do is the national average for this type of claim ning is of greatest concern, said Robyn that ignited hundreds of fires, he said. control damage to their sites, assuming a was nearly $29,000 in 2020,” she said. Heffernan, national fire weather sci- The August Complex fire, started by wildfire has ignited and is headed toward The severity of wildfires means that ence and dissemination meteorologist lightning strikes in August 2020, was the their facility, said Katherine Klosowski, homes and other structures are often at NOAA National Weather Service in largest in California’s history based on global vice president of natural hazards destroyed rather than partially damaged, Boise, Idaho. acres burned, according to the California and structures at FM Global, in Johnston, which pushes the claims value higher, the The Southwest monsoon season, which Department of Forestry and Fire Protec- Rhode Island. I.I.I. spokeswoman said. The likelihood began June 15, typically includes a good tion. It spread across 1 million acres and Passive protection methods for industrial of total loss is also increased if a wildfire amount of lightning, she said. Monsoon affected seven counties. buildings include using non-combustible spreads quickly in an area that is hard to rains can decrease fire activity in the Unlike man-made ignitions, which tend construction, such as masonry walls, con- access, she said. Southwest, but in adjacent areas, such as to occur in more populous areas, fires ignit- crete block, brick walls or even an insulat- Rebuilding can be costly because the farther north into the Great Basin, the ed by lightning often start in remote areas, ed metal panel of low combustibility, Ms. price of materials such as lumber is higher Rockies and along the west coast, lightning which means they can grow large before Klosowski said. and supply chain issues from the pandem- can ignite new fires, Ms. Heffernan said. they are spotted, Mr. Cunningham said. “Safeguarding the walls and roof of a ic have contributed to rising construction Drought is only one component of wild- Maintaining adequate defensible space facility using non-combustible materials costs, the I.I.I. spokeswoman said. fire risk, and sources of ignition as well as around building structures is critical to is first and foremost the most important Claire Wilkinson

12 JULY/AUGUST 2021 BUSINESS INSURANCE Business_Insurance_Final_Bleed.pdf 1 6/29/21 2:11 PM

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Ad Template.indd 18 6/29/21 3:33 PM INTERNATIONAL

MARKET DEVELOPMENTS Updated June 2021 PROFILE: LAOS n The growth prospects in this small market over the next five The commercial insurance market in Laos is small, years appear to be reasonably generating nonlife premium income of LAK 629.30 good, but the economic effects billion ($71.22 million) in 2019. Nonlife premium volume of the COVID-19 pandemic could is largely composed of construction/engineering and fire have an impact on gross premium (property) business. The country’s new insurance law, volume. The pandemic has hit which went into effect in April 2020, increased minimum the important hospitality sector capital requirements for insurance and reinsurance especially hard as a result of an operations. Important economic and infrastructure almost total halt on the arrival developments have been underway in land-locked of foreign visitors and a ban on Laos, although the COVID-19 pandemic, with its tight incoming international flights. restrictions on cross-border travel, has reportedly The speed of any recovery this caused a significant slowdown in new construction year will depend heavily on how projects. A $6.7 billion railway link being built between rapidly the government can GLOBAL Laos and China is nearly finished and is expected to reinstate pre-pandemic levels of 131 be fully operational this year. It is expected to boost international travel and tourism P/C MARKET local economic development and growth, promoting AREA by relaxing the current strict RANKING enhanced trade and tourism between the two countries restrictions on these sectors. and more broadly within the ASEAN free trade area. n The government’s debt position remains vulnerable and has been MARKET SHARE PROPERTY exacerbated by the COVID-19 26.7% 91,429 pandemic, which has also reduced square miles incoming remittances from abroad by Laotian expatriates. MARINE, n The Insurance Law (Amended) AVIATION & AUTO No 78/NA went into effect on TRANSIT April 15, 2020. Among other 1.9% 12.4% POPULATION things, it increased the minimum required registered capital from LAK 16 billion ($1.81 million) to LAK 30 billion ($3.40 million) for insurance business operations 7.57 and LAK 60 billion ($6.7 million) million MISC. for reinsurance business 59.1% operations. Existing companies have three years to comply with the new requirements. n Under the new law, third- MARKET CONCENTRATION party liability insurance is now MARKET GROWTH mandatory for hydropower dams. In millions, U.S. dollars Life Nonlife n After many years in which foreign broking interests dominated $80 94.9% major project and property $70 market share of top five insurers insurance, it’s interesting to note that by the end of 2020 $60 the insurance regulator had licensed 11 local brokers. $50

$40 2021 GDP CHANGE $30 (PROJECTED) $20

$10 $0 4.6% 2015 2016 2017 2018 2019 Source: Axco Global Statistics/Industry Associations and Regulatory Bodies

COMPULSORY INSURANCE NONADMITTED INTERMEDIARIES MARKET PRACTICE n Auto third-party bodily injury and property damage Nonadmitted insurance is not Intermediaries need authorization The majority of foreign insurable permitted in Laos, because the to do insurance business in interests in the market can be n Professional liability for insurance brokers law provides that insurance Laos. Brokers and agents are accommodated locally. Foreign n Third-party liability for hotels, places of entertainment, must be purchased from not permitted to place business interests can gain government restaurants and markets locally licensed insurers, with nonadmitted insurers. exemption from the nonadmitted n Third-party liability for construction sites with some exceptions. regulations and purchase insurance in their home markets. n Liability for carriers for damage to goods or injury to passengers during transportation by land, air or water n Workers compensation (state scheme or optional purchase of wider coverage in the private insurance Information provided by Axco. market) For free trial access to global insurance intelligence, visit axcoinfo.com.

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Ad Template.indd 9 6/29/21 3:01 PM LEGAL BRIEFS

The Illinois law, referred to as BIPA, Judge Stephanie A. Gallagher’s ruling said. requires businesses that store biometric “In fact, it is the dispositive weight on DOCKET information to inform the subject in writ- the scale in favor of finding ‘no duty’ here, ing that it is being collected or stored and despite the fact that the narrow majority the purpose and duration for which it is of factors, including foreseeability, favor being collected. It also requires that busi- imposition of duty. nesses receive the subject’s written consent. “Maryland courts have made their pri- The law creates a private right of action orities with regard to third-party duties for individuals harmed by violations and clear, and the prospect of an unstemmed RACIAL DISCRIMINATION imposes a $1,000 fine for each violation and ill-defined tide of third-party plain- LAWSUIT DISMISSED caused by negligence and a $5,000 fine for tiffs bringing suit predominates the duty each intentional or reckless violation. analysis,” the court said, in dismissing the A federal district court in Insurers largely lose In 2019, the Illinois Supreme Court held litigation. Chicago dismissed a potential that individuals need not allege injury or an Ms. Madden’s attorney, Dan R. Mastro- multibillion-dollar lawsuit by pandemic ruling adverse effect to successfully assert a viola- marco of the Mastromarco Firm PLLP in Black franchise owners that tion of the act. Annapolis, Maryland, said he had no com- charged McDonald’s Corp. with n A New Hampshire state court ruled The settlement notice states that Six ment on the decision and was “considering racial discrimination, stating the largely in favor of a hotel chain in a Flags has agreed to pay up to $36 mil- the many options available to us.” lawsuit’s allegations were vague. COVID-19 business interruption coverage lion without admitting fault or liability. The proposed class action, led by lawsuit filed against a group of insurers. The class comprises anyone who visited Fired worker’s ADA brothers James and Darrell Byrd, Judge John C. Kissinger Jr., of the state Six Flags Great America between Oct. 1, who operate four McDonald’s superior court in Keene, New Hampshire, 2013, and Dec. 31, 2018, and had their charges reinstated restaurants in Tennessee, was denied a motion filed by most of the insur- fingers scanned. filed in October by the same n ers for partial summary judgment in Schle- Under terms of the settlement, people A federal appeals court reinstated dis- law firm representing 52 Black icher & Stebbins Hotels LLC et al. v. Starr who had a finger scanned between Oct. 1, ability discrimination charges filed by a former franchisees who had filed Surplus Lines Insurance Co. et al. 2013, and April 30, 2016, can receive up former insurance company employee who a similar lawsuit in August. “The Court rejects the argument of the to $200. Those who had a finger scanned charged she was fired despite excellent Defendants that ‘distinct and demonstrable’ between May 1, 2016, and December 31, evaluations because her multiple sclerosis NIGHTCLUB’S COVID-19 changes to property must be readily percep- 2018, can receive up to $60. condition was costly for her employer’s CASE CAN PROCEED tible by one of the five senses, be incapable benefits plan. A Rhode Island state judge of remediation, or result in dispossession,” A key factor in the ruling by the 11th refused to dismiss a COVID-19 the ruling in favor of the Hooksett, New U.S. Circuit Court of Appeals in Atlanta business interruption lawsuit filed Hampshire-based chain said. in Jennifer Akridge v. Alfa Mutual Insurance by a Providence nightclub against The ruling cited an earlier decision by Co. was that Ms. Akridge tried unsuccess- Scottsdale Insurance Co. based the New Hampshire Supreme Court that fully more than a dozen times to depose on executive orders calling for its held that “‘physical loss,’ when used in an the Montgomery, Alabama-based insur- closure because of the pandemic. insurance agreement, includes ‘not only er’s top human resources official, but was Atwells Realty Corp., the licensed tangible changes to (an) insured proper- repeatedly denied by the lower court. operator of the Desire nightclub, ty, but also changes … that exist in the Ms. Akridge worked for Alfa for 27 filed suit against Scottsdale absence of structural damage,’ provided years, beginning in 1989. In 1993, she seeking coverage under its “all only that such changes be both ‘distinct was diagnosed with MS, which caused risk” policy based on Gov. Gina M. and demonstrable.’” her to suffer migraine headaches and Raimondo and Providence Mayor The court did grant Axis Surplus Insur- prevented her from sitting for long peri- Jorge O. Elorza’s executive orders ance Co.’s separate motion for partial sum- Flight attendant’s ods of time. Despite her diagnosis, she closing its business operations, mary judgment based on a virus exclusion lawsuit dismissed continued to receive positive perfor- according to the ruling by the in its coverage, which the other insurers mance reviews, and one year was select- Rhode Island Superior Court in n did not have. A federal district court judge has dis- ed as employee of the year out of nearly Providence Atwells Realty Corp. The hotel chain, which has four hotels in missed negligence charges filed by a South- 1,000 employees. v. Scottsdale Insurance Co. New Hampshire, 18 in Massachusetts and west Airlines flight attendant who blames After being terminated in late 2016, she one in New Jersey, had a total of $600 mil- the airline for her husband’s COVID-re- sued Alfa, alleging the insurer had violat- RACETRACK WORKER lion in coverage, for which it paid $1 mil- lated death, stating that permitting the ed the Americans with Disabilities Act by DENIED COMPENSATION lion in premiums, according to the ruling. litigation could lead to a flood of lawsuits. subjecting her to disparate treatment based A racetrack worker who was Flight attendant Carol Madden said she on her disability. The company contended asleep at a stable when a fire Six Flags settles became ill with COVID-19 three days her position’s termination was a result of a broke out and severely injured his after attending training required by the reorganization and automation introduced back did not suffer a compensable biometric case Dallas-based airline in July 2020, and her to reduce costs. workers compensation injury husband became ill 10 days later and died The district court in Montgomery because he was not working at n The biometric case filed against Six from the virus’ complications in August refused Ms. Akridge’s efforts to depose the time, an appeals court in Flags Entertainment Corp., whose liti- 2020, according to last month’s ruling by the HR executive on the basis that he did Arkansas ruled. Juan Lopez, who gation path included an Illinois Supreme the U.S. District Court in Baltimore in not have material knowledge of the cir- tended to racehorses as part of Court ruling, has been settled for up to $36 Estate of William Madden at al. v. South- cumstances surrounding her termination, his job at the James Divito Racing million. west Airlines Co. and it granted Alfa’s motion for summary Stable in Hot Springs and slept Stacy Rosenbach charged in the proposed The court weighed various factors in judgment. on the premises because living class-action lawsuit that the Grand Prairie, considering whether the airline had a duty A unanimous three-judge appeals court in town was not affordable, had Texas-based company’s Six Flags Great to protect Mr. Madden before concluding panel vacated the lower court’s decision returned from dinner and went to America amusement park in Gurnee, Illi- the risk of numerous lawsuits was the pre- and remanded the case with instructions sleep in a space above the stables nois, had failed to comply with Illinois’ vailing factor. that the executive be deposed, saying, “We before his 6 a.m. shift. When a fire Biometric Information Privacy Act when “Cumulatively, Maryland’s third-party find that the district court committed a broke out at 5:45 a.m., he leaped it scanned her 14-year-old son’s thumb duty case law and its emphasis on limiting clear error of judgment when it impermis- from a second-story window, during a school field trip in 2014, accord- the class of prospective future plaintiffs sibly curtailed her access to discoverable suffering a fractured vertebra. ing to documents in Rosenbach v. Six Flags. heavily informs the Court’s balancing,” information.”

BUSINESS INSURANCE JULY/AUGUST 2021 17 VIEW FROM THE TOP Richard E. Anderson THE DOCTORS COMPANY

Health care workers were on the Telehealth is here to stay. During the clinicians providing casual advice by Q front lines during the pandemic. How Apandemic we went from 1% to 2% of phone to patients they don’t know and did that affect your claims experience? clinical visits being telehealth to a peak haven’t thoroughly examined. So, when of about 70%. My guess is that telehealth we underwrite we try and make sure We had fewer claims in 2020 than we will stabilize at something like 20% to 30% that there are appropriate protocols Aexpected by about 20%. The reason of all clinical visits. At the moment, there and experience, that the physicians are for that is threefold: One, of course, are two issues: the absence of physical qualified to provide care at that level and is the heroic work done by physicians, contact and a physical examination and understand the limitations of telehealth. clinicians and all frontline hospital and determining how much of telehealth is office medical workers; the second is that necessary care or are we giving greater Like in many other areas, there were broad COVID immunities in access to unnecessary care. Despite the Q rates are going up in med the majority of states, so physicians were dramatic increase in telehealth, emergency mal, what’s driving that? Dr. Richard E. Anderson is immunized against COVID-related claims; room visits have not gone down in the U.S. chairman and CEO of The Doctors and third, the whole health care system If we look forward, we will be able to do The single biggest factor is severity. was disrupted by COVID so most “routine” physical examinations via telehealth. For AWe are not seeing more claims than Company, a physician-owned care was delayed, deferred or disrupted. example, you’ll be able to put an iPhone on we expected but the cost of claims is medical malpractice insurer in Our experience at this point in 2021 is your chest and transmit your heart sounds, going up. Most medical professional Napa, California. He has led the that our expected claims are pretty much which can then be analyzed digitally. liability carriers are paying more in back at the point that we would have claims costs and overhead than they are insurer since 2003, after serving expected to see them as the legal process receiving in premium. Historically, we on its board while he practiced has opened up. On the other hand, we have could make up some of that gap with as an oncologist for 25 years and not yet experienced any surge in claims. investment income, but it’s very hard The other long-term issue for our to do that with low interest rates. served as a clinical professor members is burnout. The plaintiffs bar never takes a day off. of medicine at the University of They are always refining their arguments, How does burnout affect they are always pleading for more and California San Diego. The Doctors Q med mal coverage? more damages, and they are very effective. Company was formed amid the And courts tend to expand the theories med mal crisis of the mid-1970s There are two aspects to it. The COVID- of liability over time, so that’s an issue. Arelated aspect was working 24/7/365, The other reason why severity is and insures about 100,000 literally risking your life at the height of going up is that we live in an era physicians. Dr. Anderson recently the pandemic and often having to live away now where a $100,000 claim doesn’t spoke with Business Insurance from home to avoid infecting the family. sound like very much when we are Before that, though, physicians used to talking in trillions or when Editor Gavin Souter about have been challenged in the practice Also, there’s a whole other aspect billionaires have their own rocket ships. increased pressure on doctors, environment. Electronic health care of telehealth in terms of remote Monetary desensitization is real. the rise in the severity of med records have added hours a day to consultations, such as having a the worktime of an average physician. neurologist consult in an emergency Given the environment we are in, mal losses and risk management Many physicians find that they can’t room when they are in another state. Q what steps can health care providers steps that can be taken to reduce accommodate the clerical aspects of the As with all transitions, transition is take to improve their risk profiles? EHRs in the office, so they come home, fraught. We need better technology, physician exposures. Edited have dinner and then spend several better protocols, and we need the legal One is to be present for patients, excerpts follow. hours online updating their records. system to adapt to the new environment Anot being distracted or burned out. The amount of paperwork that physicians in which medicine is practiced. Focus on the problems that the patient have been asked to do over the past is presenting with. Two is to think 10 or 15 years is choking the practice What do your underwriters systematically. A really good integrated of medicine. That’s compounded by Q want to know about physicians delivery system has checks and balances, the production-related environment practicing telehealth? so if you order a consultation or you order of medicine, with requirements to some lab work, there’s a system or flag see so many patients a day. We’ve been insuring telehealth since that says you ordered these results and Doctors are being starved of time to Athe beginning, and overall there’s no you haven’t gotten them, or you ordered do the things that we as patients want extra charge and our risk experience with these results and pay attention because this them to do. That leads to disappointed it has really been quite good. We have one is abnormal. Those kinds of things are patients, can lead to adverse events, very few claims that pivot on telehealth. really important and in this environment and those lead to malpractice suits. On the other hand, there’s another risk where doctors are asked to see large of telehealth, which is the possibility numbers of patients in a day it’s easy for How is the increased use of of getting bad medicine through those kinds of things to fall through cracks Q telehealth affecting the sector? telehealth, if you have unqualified and some can be very, very serious.

The plaintiffs bar never takes a day off. They are always refining their arguments, they are always pleading for more and more damages, and they are very effective.

18 JULY/AUGUST 2021 BUSINESS INSURANCE IT’S TIME TO EXPECT MORE FROM YOUR MEDICAL LIABILITY INSURANCE COMPANY.

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Ad Template.indd 2 6/29/21 3:00 PM SPONSOREDSECTION

Joseph Poliafico Jeffery D. Magoon Mitigate business interruption with the right restoration partner Joseph Poliafico, CSP | Vice President, Global Risk and Safety, First Onsite Property Restoration Jeffery D. Magoon | Senior Vice President of Sales Development and Integration, First Onsite Property Restoration

usiness interruption is a major exposure when organizations and their risk advisors select for any organization that experiences the right restoration provider. property damage. According to the Federal Emergency Management Agency, 40% to Risks touch all stakeholders B60% of businesses fail to reopen after a disaster. Business interruption risks are challenging Business interruption insurance can reimburse enough for risk managers, but the reality is the businesses for lost revenue, but such claims are risk of disruption touches all stakeholders. typically subject to a sublimit and can be difficult to Business owners face loss of income and profit, establish. For these reasons, mitigating business employees are displaced, and customers cannot interruption and quickly and thoroughly document- be served while the business is offline. Business ing the restoration process can help smooth the interruption claims are complex, and unpleasant claims process. When disaster strikes and your surprises during such claims can damage the clients are impacted, you are most vulnerable. relationship between brokers and risk managers. First Onsite can help you retain your clients and Communication gaps can occur during the increase their satisfaction through our use of restoration process, as often a claims adjuster technology and thorough claim documentation, and the insurer on the claim may have little knowl- n What materials and supplies would we need if thereby reducing the length of the claims process edge of independent restoration contractors. Poor we lost our roof? as well as reducing your clients’ overall business communication can lead to unmet expectations, n How long can our contingency plan survive? interruption. and claims can strain the working relationships The risks of property damage and business between risk advisors and their clients, as well Loss of production can have far-reaching interruption may be omnipresent, and there is no as risk managers’ reputation with their organiza- consequences for supply chains, as the world shortage of restoration contractors willing to re- tions’ leadership. learned during the global pandemic. Continuity spond. Increasingly, risk managers and their risk Innovative restoration firms are using tech- planning and supply chain risk management are advisors are realizing that a reactive approach is nology to capture and document information that vital to recovery, but sometimes even simple not the best way to ensure recovery and minimize smooths the claim submission process, making steps can make a big difference. Having a backup downtime for a business when disaster strikes. life easier for risk managers and brokers. Data on generator, for example, can save a business days As a result, there’s a new mindset among leading the loss and transparency in the components and of downtime and reduce secondary damage. risk management professionals: Restoration as services anticipated during restoration enable One way to enhance the continuity planning an end-to-end solution for the entire claims pro- informed decision making and reduce delays that process is to secure professional restoration cess. The best restoration services aren’t limited inflate business interruption losses. services before the need for property restoration to cleanup and rebuilding, and the best time to A clearer picture of the restoration process mit- arises. Data-driven insights and identifying areas think about restoring damaged property and facili- igates the loss impact and underscores the value where organizations can implement loss control ties is before experiencing a loss. that risk managers and brokers bring to the table. are keys to reducing business interruption losses. A data-driven approach, with experience in In addition, closing the loop between policyholder, serving specific industries and technology applied How to mitigate restoration risks broker, insurer and restoration company — involv- to measuring risks, is a good way to not only en- Having a good plan in place before an event ing all of them in the contingency plan — is a sure robust response planning but also maximize occurs is far better than waiting until after it hap- good way to prevent failures of service. The best loss control and prevent damage. pens. Leading brokers and risk professionals have loss is one that never happens, and the next best Despite the record number of hurricanes and discovered that mitigating restoration risks begins is one that is minimized through strong risk miti- wildfires in 2020, catastrophes are not the only with business continuity planning. Good planning gation and planning. events that can disrupt businesses and require shortens the time involving loss of business. restoration services. In the COVID-19 era, infec- Organizations and their risk advisors therefore For more information on First Onsite, tion prevention and decontamination are critical should ask questions to fully understand their visit www.firstonsite.com. for employees and customers. Similarly, special- exposure and impact to operations, including: ized restoration treatment is needed to address n How will our organization function if displaced the secondary damage from fire, smoke, flood by an event? and mold. With the Internet of Things and greater n What will we do if we can’t work in our facilities? connectivity, the overall loss can be much more n Can our employees work remotely? extensive than the visible physical damage. Better n Is our network data in the cloud? Is it backed outcomes in all these risk scenarios are possible up on local servers? SCAN THIS CODE TO PLAN AHEAD AND RETAIN YOUR CLIENTS. COVER STORY INSURANCE SECTOR LOOKS INWARD ON CLIMATE, GOVERNANCE ISSUES Brokers, insurers assess their own carbon footprints, workplace policies

BY CLAIRE WILKINSON [email protected]

rokers and insurers have long focused on helping companies mitigate climate risks, but managing a broad spectrum of environmental, social and gover- nance concerns is becoming a critical part of how the B industry does business.

22 JULY/AUGUST 2021 BUSINESS INSURANCE Employees, policyholders, investors and rat- director at Deloitte & Touche LLP. Ernst & Young, in Paris. MANAGING ings agencies, in addition to climate activists, The primary ESG focus of many companies As investors, insurers initially focused on the ESG RISK are increasingly scrutinizing how businesses, has been on climate change, but there are other asset side, in terms of where they invested their In the 12th edition of including brokers and insurers, address a range important components to consider, Mr. Sher- money and how they could have an effect as an the Deloitte Global risk of ESG-related issues, including environmen- wood said. These include “S” issues, such as investor, she said. management survey of tal stewardship, climate change, diversity and human capital, data privacy and cybersecurity, “Now, what we see is there is a clear shift and 57 financial institutions released in February: inclusion, racial justice and workplace conduct, as well as “G” issues such as business ethics, they are focusing on the liability side, on what experts say. corporate governance, board responsibilities the risks are and what the impact of ESG is on In June, an activist investor forced the board and executive compensation. the risks they write,” Ms. Santenac said. of Exxon Mobil Corp. to elect “climate-aware” Many insurers have set emissions targets for director candidates, and in May a court in the “As a company and collectively as an their organizations and a growing number are 38% Netherlands ordered Royal Dutch Shell PLC restricting coverage for companies that build of respondents named to reduce carbon dioxide emissions by 45% industry we have a platform to enact change or operate coal mines and plants, for example. ESG as being one of the of 2019 levels by 2030. Also in June, Legal & Brokers have an important role to play help- three risk types that will increase the most in General Investment Management, Britain’s in many of these areas, and because we ing policyholders understand what their ESG importance for institutions biggest asset manager, dropped American risks are, what coverages they may need, and over the next two years. International Group Inc. and three other com- have that platform we have a responsibility risk management steps, experts say. panies from several of its funds over what it As climate change risks evolve, brokers called “insufficient” response to climate change. to drive change in many of those areas.” can guide businesses to design a sustainable A changing regulatory and legislative land- Katherine J. Brennan, insurance program, which embeds and rais- scape is also pushing companies to be more es awareness of ESG issues, and explain how 33% Marsh LLC transparent about their ESG practices. As a they can adapt to environmental conditions to of respondents considered result, brokers and insurers, like other financial be better prepared, Ms. Santenac said. Many their institutions to be institutions, are under pressure to make more insurers and several brokers have signed on to extremely or very effective at managing this risk. detailed ESG disclosures, and as the U.S. shifts “When you look at climate and some of the the United Nations’ Principles for Sustainable toward mandated disclosure requirements the drivers behind that and the impact it will have Insurance, a global sustainability framework businesses may be exposed to new risks (see on businesses and society globally, and you look that aims to encourage greater integration of story page 24). at some of the other risks within the ESG cat- ESG issues into insurance. Meanwhile, litigation arising out of ESG and egories, such as cyber, then you can understand It is in insurers’ interests to encourage their 47% sustainability issues is on the rise. why it has the attention of insurers and bro- customers to join in the race to net zero emis- said it will be an extremely ESG covers a broad range of topics and is kers,” Mr. Sherwood said. sions, said Nigel Brook, London-based partner or very high priority becoming a key driver of business strategy for Insurers face broad ESG risks because they at Clyde & Co LLP. for their institutions to insurers and brokers, said David Sherwood, affect both their assets and liabilities, said improve their ability to a Stamford, Connecticut-based managing Isabelle Santenac, global insurance leader at See ESG INTEGRATION next page manage ESG risk.

Our Brokers Trust Us With Their Best Clients “The most important thing we can do to earn that trust is to perform. It is really easy to sell Safety National’s offerings because everyone here genuinely believes that we are providing the best products and services in the industry. I am able to tell people to trust us with their business because we live up to our promises.”

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exposure, Mr. Brown said. In its 2020 Impact Report, for exam- ESG INTEGRATION In March, Brown & Brown published its ple, Aon PLC outlined its commitment first ESG report, a 28-page document that to achieve net-zero greenhouse gas emis- Continued from previous page it said is intended to hold the company to a sions by 2030. “The transition to net-ze- higher level of accountability. The report, ro is a complex, global challenge. There “Ultimately, businesses that don’t care which includes information on a range of is tremendous opportunity for Aon, and about human rights, environmental deg- topics, including ESG governance, diver- our industry in general, around creating radation, and don’t care about governance, sity and inclusion, and climate change innovative new solutions and services that are not sustainable and won’t perform as mitigation, will allow Brown & Brown’s support our clients’ efforts in achieving well. It makes sense that the companies “teammates, investors, carrier partners, and their sustainability goals,” the report said. Enterprise risk that get things right will perform better,” customers to have better insight into the Eric Andersen, president of Aon, said the Mr. Brook said. way we do business,” Mr. Brown said. brokerage wants to be “part of the solution.” controls key Corporate governance, ESG integration, Katherine J. Brennan, general counsel of “We want to help using the risk mitiga- labor relations and human capital manage- Marsh LLC in New York, said ESG issues tion skills we have, the risk transfer capa- to managing ment are material issues for insurers and are playing an increasingly important role bilities, the access to alternative capital, brokers, said Sercan Soylu, Toronto-based in attracting and retaining staff because modeling to be able to help these clients ESG concerns associate director, insurance, real estate employees and job candidates don’t want as they transition,” Mr. Andersen said. and asset management, at Sustainalytics, a to work for an employer that doesn’t Governance of ESG risks for the bro- trong governance and unit of Morningstar Inc. (see related story) address these issues. kerage sector extends from the boardroom enterprise risk management Recent mergers and acquisitions moves, From a business perspective, Marsh is to the projects they choose to take on and S practices will enable insurers in the brokerage sector especially, under- seeing an increase in request for proposal the supply chains with which they engage. to better manage ESG risks and score how important it is to manage these plans from clients to work with companies Marsh McLennan last year developed a opportunities, experts say. issues, Mr. Soylu said. that are committed to ESG, while share- set of client engagement principles aligned ESG issues vary for different As intermediaries, brokers have a strong holders are also looking at corporate ESG around United Nations sustainable devel- types of insurers, said Maura governance responsibility in terms of the practices when deciding where they want opment goals, for example. The principles McGuigan, director, credit rating products they market and sell to policy- to invest, she said. are designed to bolster its commitment criteria at ratings agency A.M. Best holders, he said. “As a company and collectively as an to sustainable goals around health care, Co. in Oldwick, New Jersey. industry, we have a platform to enact human dignity, gender equality, energy “When you think about property/ Broker strategies change in many of these areas, and because security, access to reliable and sustainable casualty insurers, catastrophe risk we have that platform we have a respon- energy supplies, and job creation. comes to mind, when you think of J. Powell Brown, president and CEO of sibility to drive change in many of those The principles have been rolled out to life insurers, it’s more about the “S” Brown & Brown Inc., said ESG strategies areas,” Ms. Brennan said. MMC’s business leaders, and protocols in terms of changing demographics are part of good business practices. “It will Parent company Marsh & McLennan and operational lines within the business- and things of that nature. Governance make us and all other companies better,” Cos Inc. released its first ESG report at es have been established so that if matters and ERM applies to insurers across he said. the end of the first quarter providing more come up that could potentially conflict all lines of business,” she said. For a brokerage, the social and gover- disclosure on a range of ESG-related areas, with those goals, they can be escalated, Weather-related losses and nance aspects to ESG are more significant, from how it measures its carbon footprint Ms. Brennan said. governance or enterprise risk while the “E” in ESG is less so because to how it uses data to manage its workforce. “In that way we are bringing different management – either improvements while brokerages have an environmen- Several of the major brokerages have voices to the table to review proposed in ERM, or failures in ERM – are tal responsibility, they are not like an oil publicly outlined climate pledges and com- projects and evaluate whether a work can the two ESG factors that most company that has extensive environmental mitments in their ESG reports. proceed,” she said. frequently are a primary factor in a rating change or change in outlook for insurers, she said. From the ratings perspective for businesses in all sectors, the Rise in lawsuits highlights range governance part of ESG has been quite prominent and incorporated of exposures financial sector faces in rating methodologies for many itigation on a range of environmental, held companies to diversify their years, said Patricia Kwan, director social and governance issues, boards, and a Nasdaq Stock Market and ESG subject matter expert L such as climate change, pollution, proposal to mandate board diversity, at Standard & Poor’s Global diversity and CEO pay, is on the rise, signal a shift toward a compulsory Insurance Ratings, in New York. putting pressure on companies to compliance regime, Mr. Lavrenko said. “Management governance has been proactively manage ESG risks. “Financial institutions will be held to one of the corporate staples when we ESG-related factors are increasingly a very high degree of accountability as With more compliance, it will be easier look at the rating construct,” she said. sources of regulatory change and liability, respects to ESG actions and compliance, for regulators, investors and others to S&P considers risk management said Anton Lavrenko, regional head of because they make investment, lending hold companies to account on social and and mitigation a governance factor financial institutions, North America, and insurance decisions on a daily basis environmental issues, Mr. Lavrenko said. under ESG. A company’s inability to at Allianz Global Corporate & Specialty for all types of companies,” he said. There is the potential for litigation properly prepare for, respond to, or SE, part of Allianz SE, in New York. Litigation concerning environmental as regulators and legislatures start to recover from a cyberattack could Heightened concerns over ESG rights and human rights is “taking introduce and apply rules and regulations lead to rating pressure, for example. issues could increase potential off,” said Nigel Brook, London-based around ESG, said Eric Dinallo, a partner at Compliance issues are one of the directors and officers, errors and partner at Clyde & Co LLP. While the Debevoise & Plimpton LLP and a former biggest drivers of insurance claims omissions, and employment practices majority of cases to-date are against Superintendent of Insurance of New York. for financial institutions, according liability exposures, he said. governments, the number of cases He cited recent New York Department to a recent report by Allianz Global In the U.S., recent developments against companies is increasing, he said. of Financial Services-issued guidance that Corporate & Specialty SE. such as growing scrutiny of ESG In addition, concerns about lays down certain expectations of how “Failings in governance and corporate disclosures by the Securities “greenwashing,” in which companies New York-domiciled insurers should be risk controls have brought large and Exchange Commission, a 2020 overplay their green or ESG credentials, managing and accounting for ESG risks. losses from a number of different California law requiring publicly- are rising. Claire Wilkinson areas,” the report said. Claire Wilkinson

24 JULY/AUGUST 2021 BUSINESS INSURANCE Better together C ebr  g 25 y rs  tru p tn ship between QBE North America and Midwestern Insurance Alliance

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AssuredPartners: 10 Years of Growth Based on Relationships Focus on value, client service has made it one of fastest-growing brokers By Jim Henderson | Chairman and CEO, AssuredPartners

onsolidation has been an ongoing part of insurance distribution for many years. At AssuredPartners, we’re celebrating the 10th anniversary of our founding. In that Ctime, we have become one of the largest and fast- est-growing brokerages in the United States. But our story is more than just achieving a high level of growth. AssuredPartners is all about building lasting relationships — with our clients, our asso- ciates, our agency partners, and the insurance companies with which we do business to solve our clients’ risk management needs. A lot has changed in a decade, and as we look back since our founding in 2011, we have seen Insurance is still a people business. For more than 390 acquisitions of different agencies some of those changes. Certainly many aspects us, the business of managing risk and procuring around the country and in the United Kingdom. of the insurance business remain familiar, but insurance solutions for our clients is very much We have always believed that the best partner- there are several shifts that come to mind: a people business that is rooted in trusted rela- ships have complementary cultures, in which we Risks have evolved. Our clients face more tionships. become better by coming together. We actively threats from litigation and cyber attacks than they It’s a team sport. Insurance is definitely a seek partners that are looking to grow their value, did a few years ago, to give just two examples. team sport. Collaboration is the way we create not boost profits primarily by suppressing expens- Clients’ risks have become more complex and the best solutions and deliver the best service es. Businesses must consider the bottom line, nuanced. As a result, the array of products and to our clients. The team environment enables our but our model aims to balance EBITDA (earnings services designed to respond to those challenges associates to develop new skills with opportuni- before interest, taxes, depreciation and amortiza- have changed. ties to improve their financial success and wealth tion), people and client service. It’s possible to Clients are seeking specialists. At one time, building. push EBITDA to a very high margin, but that often a generalist insurance professional could serve The work is rewarding. AssuredPartners is means not investing in your people or taking care the needs of the majority of his or her clients. That dedicated to providing an environment where our of clients. The agencies that join AssuredPartners is no longer the case. At AssuredPartners, our top associates enjoy working together and sharing share our commitment to our people and our 50 producers in terms in new business generation success. Helping clients manage risk is a funda- clients, and that will continue to help our company are specialists, with specific product knowledge mentally important and rewarding job, and it’s a and our clients in the years to come. and expertise. We have made excellent progress key part of how we build lasting relationships. in developing vertical skill sets to deliver product Results happen locally. There are a lot Jim Henderson is Chairman and Chief Executive Officer and knowledge to our local offices. For example, of national firms in the insurance industry, and of Lake Mary, Florida-based AssuredPartners. He has one of our partners is a world-class employee AssuredPartners has a nationwide footprint, more than 40 years of experience in the insurance benefits consulting firm in Maryland that is skilled but we recognize that success for our business industry. Before founding AssuredPartners, Henderson at taking care of large employers. Our local produc- is more about what happens at the local and spent 25 years as an executive with Brown & Brown, ers around the country have had the opportunity regional level. For example, culture and relation- a publicly traded national insurance brokerage. to access this specialized knowledge base and ships are different in Bowling Green, Kentucky, skill set in order to best serve their clients. This than in Long Island, New York. Insurers are dif- For more information on AssuredPartners, approach has worked extremely well. ferent in those areas, too, and we need to have visit www.assuredpartners.com. Agencies have become more profitable relationships in those locations to give the best and focused. Through effective use of automa- products to our clients. Our local leaders make tion, communication, and other value add, the all the difference in the world at AssuredPartners agencies joining AssuredPartners are experienc- because they’re responsible for their offices, the ing top- and bottom-line growth. people in them, and the client relationships that What hasn’t changed about insurance in the make up their business. 10 years since our founding? We think it’s a pretty Culture matters in partnerships. In the simple list: past 10 years, AssuredPartners has completed Bus Ins_July2021_outline.pdf 1 6/24/21 12:42 PM

Ad Template.indd 10 6/29/21 3:02 PM SPECIAL REPORT

BROKER PROFILES & RANKINGS

Brokers prosper amid economic recovery

BY GAVIN SOUTER [email protected] INSIDE nsurance brokers have so far endured the COVID-19 pandemic in better condition than some expected, with many reporting significant revenue increases, and the outlook for the remainder of 2021 is for more growth as WORLD’S 10 LARGEST BROKERS I the U.S. economy rebounds and insurance prices continue to rise. Business Insurance's 2021 ranking of the While executives at large brokerages say tors put the brakes on the deal (see profiles world's largest brokers. PAGE 30 they are spending more time navigating pages 37 and 39). a tough market, the increased brokerage And as the pandemic subsides in the 100 LARGEST U.S. BROKERS income derived from rising prices helped United States, brokers say they will contin- balance the fall in exposure units that many ue with many of the practices they adopted Business Insurance’s 2021 proprietary survey of the experienced during last year’s recession. over the past 15 months to improve effi- 100 largest insurance brokers of U.S. business. PAGE 32 As businesses bounce back, mergers and ciency and reduce costs. acquisitions activity in the sector remains When world economies locked down TOP 10 BROKER PROFILES brisk, with the volume of smaller deals early last year, many brokers reacted with Top executives at the biggest brokers review accelerating (see related story). But a cost-cutting programs and in some cases megamerger that was expected to reshape salary reductions as they feared their com- the past year, look ahead. PAGES 37-44 the top of the Business Insurance broker panies would suffer sharp drops in business rankings is on hold after antitrust regula- activity. While businesses in numerous

28 JULY/AUGUST 2021 BUSINESS INSURANCE sectors were hit hard by the pandemic, many got by with significant government NO SLOWDOWN EXPECTED IN BROKER M&A ACTIVITY support and others thrived as demand for their services rose and they maintained or rokerage mergers and acquisitions at Raymond James & Associates. back to the way (the M&A) market increased their insurance needs. continued at a steady rate The brokerage sector will likely continue was and that upward trend line, high All of the brokers in Business Insur- B over the past 12 months, to see substantial numbers of mergers valuations and deal pace still moving at a ance’s World’s 10 Largest Brokers rank- and few in the industry expect a and acquisitions, said Meyer Shields, fairly meaningful clip,” Mr. Marinucci said. ing reported increased revenue last year slowdown in deals anytime soon. Baltimore-based managing director Capital remains available to (see chart page 30) and while some of the Growing interest from private at Keefe, Bruyette & Woods Inc. support M&A activity, said Francesca growth was fueled by acquisitions, organ- equity investors in the brokerage Mannarino, associate director in New ic growth was also achieved by many. sector will likely continue to drive York with S&P Global Ratings. Among the 100 largest brokers of U.S. deal volume, experts say. “S&P expects broker M&A to business, only 13 reported a decrease in And while the outcome of the remain strong for 2021, potentially revenue last year, despite the recession largest ever proposed broker deal stronger than 2020,” she said. (see chart page 32). remains unclear, the regulatory review While time will tell whether Aon PLC’s While there was a lot of uncertainty process is providing insights. proposed purchase of rival Willis Towers for brokers at the beginning of the pan- Among the brokers in the Business Watson PLC will pass regulatory muster, demic, they reduced expenses last year Insurance 100 Largest Brokers of the review process is providing some and the government intervention in the U.S. Business ranking, more than insights into the thinking of regulators U.S. economy dampened the reduction in 40 reported acquisitions last year, regarding an industry that seldom has exposure units placed, said Meyer Shields, and several firms saw triple-digit Larger brokers have more influence on antitrust concerns, analysts say. Baltimore-based managing director at revenue growth, largely on the back of the market and can obtain better deals If the antitrust suit filed by the Keefe, Bruyette & Woods Inc. multiple deals (see chart page 32). for some clients and for themselves Department of Justice seeking to “Given everything, I think the perfor- Many of the most active buyers and can have more resources available block the deal goes to trial, the judge’s mance has been really quite good,” said continued their M&A strategies last to clients than smaller rivals, he said. decision could set the boundaries on J. Paul Newsome Jr., Chicago-based year and have accelerated their “Overall, the M&A market is back broker M&As, said Mark Dwelle, director, managing director of equity research purchases in 2021 (see story page 45) to where it was,” said Joe Marinucci, insurance equity research, at RBC Capital at Piper Sandler & Co. “Business held “There’s more than 20 private equity New York-based senior director at Markets LLC in Richmond, Virginia. up remarkably well and recovered more insurance broker roll ups, which creates Standard & Poor’s Global Ratings. “If ultimately it doesn’t happen, quickly than a lot of folks, including an incredibly competitive market for While there was a lull in 2020 due to what the judge will tell us effectively myself, thought it would.” any broker target,” said C. Gregory a concern regarding the “visibility on is how large these companies And the outlook for brokers is positive, Peters, St. Petersburg, Florida-based valuations,” deals were made, he said. are able to be,” he said. observers say. managing director, equity research, “What we are seeing now is a migration Gavin Souter See BROKERS page 34

6TH ANNUAL

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BUSINESS INSURANCE JULY/AUGUST 2021 29

CRF 2021.indd 1 6/10/21 8:02 AM SPECIAL REPORT

A DECADE OF GROWTH* The world’s 10 largest brokers posted a revenue gain of $2.7 billion, or 4.9%, as a group in 2020. *IN BILLIONS OF DOLLARS

$57.5 $54.81 $50.1 $47.4 $45.8 $46.1 $41.1 $38.6 $36.2 $35.2 $32.7

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1Restated. Source: BI survey

WORLD’S 10 LARGEST INSURANCE BROKERS Ranked by 2020 brokerage revenue PERCENTAGE OF REVENUE*

2021 2020 2020 brokerage 2019 brokerage % increase

rank rank Company/office/website Officers revenue revenue (decrease) Employees Offices Commercial Wholesale Reinsurance Personal lines Employee benefits Services Investments Other

Marsh & McLennan Cos. Inc.1 Daniel S. Glaser, 1 1 New York $17,267,000,000 $16,637,000,0002 3.8% 76,000 763 49.9% 0% 9.8% 0% 28.6% 11.9% 0.3% (0.5%) president-CEO www.mmc.com

Aon PLC Gregory C. Case, 2 2 London $11,039,000,000 $10,939,000,000 0.9% 50,000 500 42.2% 0% 16.3% 0% 30.7% 0% 0.2% 10.5% CEO www.aon.com

Willis Towers Watson PLC John Haley, 3 3 London $9,286,000,000 $8,941,000,000 3.9% 46,100 350 26.0% 2.6% 11.2% 0.7% 51.5% 7.3% 0% 0.7% CEO www.willistowerswatson.com

Arthur J. Gallagher & Co. J. Patrick Gallagher 4 4 Rolling Meadows, Illinois Jr., chairman- $6,070,400,000 $5,716,400,000 6.2% 32,401 650 36.1% 11.5% 1.6% 5.8% 17.8% 13.9% 13.3% 0% www.ajg.com president-CEO

Hub International Ltd. Marc Cohen, 5 5 Chicago $2,697,991,400 $2,391,788,134 12.8% 13,425 488 46.6% 7.1% 0% 16.4% 28.8% 0.7% 0.3% 0% president-CEO www.hubinternational.com

Brown & Brown Inc. J. Powell Brown, 6 6 Daytona Beach, Florida $2,606,108,478 $2,384,737,230 9.3% 11,136 341 32.6% 35.1% 0% 6.1% 19.2% 6.7% 0.1% 0.2% president-CEO www.bbinsurance.com

Truist Insurance Holdings Inc. John Howard, 7 7 Charlotte, North Carolina $2,433,560,000 $2,270,817,000 7.2% 7,623 124 29.1% 48.7% 0% 8.0% 10.2% 3.9% 0.1% 0% chairman-CEO www.truistinsurance.com

Lockton Cos. LLC3 Ron Lockton, 8 8 Kansas City, Missouri chairman; $2,145,619,000 $1,867,579,000 14.9% 8,220 110+ 57.1% 5.8% 4.0% 1.0% 31.6% 0% 0.5% 0% www.lockton.com Peter Clune, CEO

Acrisure LLC Gregory Williams, 9 10 Grand Rapids, Michigan $1,973,247,401 $1,806,569,263 9.2% 8,886 655 53.0% 2.9% 3.1% 11.1% 20.2% 0% 0.1% 9.5% president-CEO www.acrisure.com

USI Insurance Services LLC Michael J. Sicard, 10 9 Valhalla, New York $1,948,867,707 $1,831,286,102 6.4% 8,398 175 47.5% 5.7% 0% 5.5% 36.3% 3.6% 0.1% 1.3% chairman-CEO www.usi.com

*Percentage of revenue may not add up to 100% due to rounding. 1Acquired PayneWest Insurance Inc. on April 21, 2021. 2Restated. 3Fiscal year ending April 30. Source: BI survey

30 JULY/AUGUST 2021 BUSINESS INSURANCE Ad Template.indd 8 6/29/21 3:01 PM SPECIAL REPORT

100 LARGEST BROKERS OF U.S. BUSINESS* Ranked by 2020 brokerage revenue generated by U.S.-based clients

2021 2020 2020 U.S. % increase 2021 2020 2020 U.S. % increase rank rank Company brokerage revenue (decrease) rank rank Company brokerage revenue (decrease) 1 1 Marsh & McLennan Cos. Inc.1,2 $8,115,490,000 3.8%** 51 46 Horton Group Inc. $80,271,352 3.7%** 2 2 Aon PLC1 $5,019,433,300 0.7% 52 48 Towne Insurance Agency LLC1 $78,405,018 2.9% 3 3 Willis Towers Watson PLC $4,643,000,000 8.2% 53 62 World Insurance Associates LLC1 $77,920,417 46.1% 4 4 Arthur J. Gallagher & Co.1 $4,127,872,000 4.7% 54 51 Houchens Insurance Group Inc.9 $72,157,422 6.0% 5 5 Brown & Brown Inc.1 $2,589,950,605 8.6% 55 54 James A. Scott & Son Inc., dba Scott Insurance $72,024,407 8.7% 6 6 Truist Insurance Holdings Inc.1 $2,433,560,000 7.2% 56 66 Sunstar Insurance Group $72,000,000 45.9% 1 7 7 Hub International Ltd. $2,077,453,378 12.8% 57 72 Sterling Seacrest Pritchard Inc.1,10 $69,240,845 1.4%** 1 8 8 USI Insurance Services LLC $1,929,379,030 6.4% 58 95 High Street Insurance Partners Inc. $67,658,028 127.6% 1 ** 9 9 Acrisure LLC $1,870,638,536 9.5% 59 57 Starkweather & Shepley Insurance Brokerage Inc.1 $66,227,625 10.2% 1 ** 10 10 Alliant Insurance Services Inc. $1,777,622,343 12.9% 60 56 The Graham Co. $63,043,937 1.8% 1 11 11 AssuredPartners Inc. $1,687,411,134 18.0% 61 55 Huntington Insurance Inc. $62,551,170 0.7% 12 12 Lockton Cos. LLC3 $1,583,466,822 11.1% 62 58 Sterling & Sterling LLC, dba SterlingRisk $61,924,084 11.2% 13 13 NFP Corp.1 $1,455,797,344 8.3% 63 60 Shepherd Insurance LLC1 $59,184,321 7.9% 14 14 BroadStreet Partners Inc. $860,500,000 15.8% 64 64 Moreton & Co. $55,807,000 8.5% Edgewood Partners Insurance Center, 15 15 $802,594,990 7.8%** dba EPIC Insurance Brokers & Consultants1 65 61 Bowen, Miclette & Britt Insurance Agency LLC $55,579,594 3.6% RSC Insurance Brokerage Inc., 66 71 Robertson Ryan & Associates Inc. $53,709,374 17.2% 16 16 1,4 $651,171,510 26.0% dba Risk Strategies Co. 67 63 Frost Insurance Agency Inc. $51,119,522 (3.7%) 1 ** 17 17 Alera Group $554,000,000 29.7% 68 68 Corporate Synergies Group LLC $47,550,867 (2.9%) Digital Insurance Inc. 18 18 $530,093,000 31.6% 69 75 First Insurance Group LLC $45,747,907 8.6% dba OneDigital Health and Benefits1 70 74 Fisher Brown Bottrell Insurance Inc. $45,706,955 8.2% 19 32 Baldwin Risk Partners LLC1 $426,249,000 209.2% 71 73 HMS Insurance Associates Inc. $45,430,468 4.4% 20 21 Higginbotham1 $316,096,000 29.5% 72 70 M&O Agencies Inc., dba The Mahoney Group $44,238,376 (4.2%) 21 28 IMA Financial Group Inc.1 $301,471,243 71.4% 73 84 The Partners Group Ltd. $43,694,905 19.0% 22 19 Leavitt Group $291,020,000 6.7% 74 77 The Loomis Co. $41,877,000 4.4% 23 26 The Hilb Group LLC1 $260,608,909 31.6% 1 24 20 CBIZ Benefits & Insurance Services Inc.1 $246,300,000 0.5% 75 102 The Liberty Co. Insurance Brokers Inc. $40,509,309 53.9% 25 24 Holmes Murphy & Associates Inc. $241,557,260 8.1% 76 76 Charles L. Crane Agency Co. $40,421,713 (2.2%) 11 26 23 Cottingham & Butler Inc. $240,380,000 7.2% 77 81 MJ Insurance Inc. $40,148,743 6.9% 27 NR PCF Insurance Services1 $235,000,000 298.3% 78 83 Christensen Group Inc. $38,967,785 5.5% 5 28 25 Insurance Office of America Inc.1 $234,864,928 6.1% 79 78 James G. Parker Insurance Associates $38,055,000 (2.3%) 29 22 Paychex Insurance Agency, Inc.5 $232,100,000 (0.1%) 80 82 M&T Insurance Agency Inc. $36,900,000 (0.8%) 30 27 Cross Financial Corp., dba Cross Insurance1 $214,960,000 15.4% 81 86 Ansay & Associates LLC1 $36,769,058 3.5% 31 30 Woodruff Sawyer & Co. $191,200,000 19.9% 82 117 R&R Insurance Services Inc. $36,400,000 5.2%** 32 29 Heffernan Group1 $183,567,730 7.8% 83 88 Kapnick Insurance Group $35,655,000 4.7% 33 39 Unison Risk Advisors1,6 $146,219,648 4.2%** 84 89 Haylor, Freyer & Coon Inc.11 $34,650,000 2.6% 34 31 Hylant Group Inc. $146,180,665 3.1% 85 90 Rich & Cartmill Inc. $34,552,206 3.5% 35 34 AmeriTrust Group Inc. $129,656,436 2.8% 86 96 The Buckner Co. Inc.1 $32,671,837 10.7% 36 35 BXS Insurance1 $125,286,000 1.8% 87 93 Tompkins Insurance Agencies Inc. $32,433,000 3.0% 37 53 Patriot Growth Insurance Services LLC1 $124,350,000 87.3% 88 94 Tricor Inc. $32,426,557 6.5% 38 36 Insurica Inc.1 $122,725,836 6.8% 89 91 PSA Insurance & Financial Partners LLC $32,193,000 (0.6%) 39 37 Relation Insurance Inc.1 $115,760,000 10.5% 90 NR Oakbridge Insurance Agency LLC1 $30,500,000 17.3% 40 40 ABD Insurance & Financial Services Inc. $112,507,000 20.6% 91 103 Ross & Yerger Insurance Inc.1 $29,177,112 11.6% 1 41 41 Propel Insurance $107,602,000 16.7% 92 105 Swingle, Collins & Associates $28,188,444 11.3% 1 42 43 Eastern Insurance Group LLC $96,738,818 6.5% Underwriters Safety & Claims Inc., 93 99 $27,641,790 0.7% 43 38 Insurors Group LLC $96,000,000 (1.2%) dba The Underwriters Group 44 44 TrueNorth Companies LLC $93,428,000 9.4% 94 98 The Daniel & Henry Co. $27,568,000 (1.8%) 45 80 Cobbs Allen/CAC Specialty1,7 $89,568,050 136.4% 95 100 Moody Insurance Agency Inc. $26,392,454 (3.5%) 46 45 Lawley Service Inc. $86,990,186 5.1% 96 104 Gibson Insurance Agency Inc., dba Gibson1 $25,339,000 (0.3%)** 47 47 Acentria Insurance $83,000,0008 8.5% 97 107 Foa & Son Corp. $24,968,750 6.8% 48 49 Marshall & Sterling Enterprises Inc.1 $82,773,396 13.2% 98 108 EHD Insurance Inc. $24,306,148 5.9% 49 52 Parker, Smith & Feek Inc. $82,466,000 21.2% 99 109 York International Agency LLC1 $23,636,158 8.0% 50 50 M3 Insurance Solutions Inc. $81,675,781 12.8% 100 106 Otterstedt Insurance Agency1 $23,629,767 (2.3%)

*Companies that derive more than 49% of their gross revenue in personal lines are not ranked. **2019 brokerage revenue restated. NR = not ranked. 1Reported U.S. acquisitions. 2Acquired PayneWest Insurance Inc. on April 21, 2021. 3Fiscal year ending April 30. 4Formerly Risk Strategies Co. Inc. 5Fiscal year ending May 31. 6Renamed Unison Risk Advisors with the merger of Oswald Cos. and Riggs, Counselman, Michaels & Downes Inc. 7Merged with CAC Specialty, Aug. 15, 2019. 8BI estimate. 9Fiscal year ending Sept. 30. 10Formerly Sterling Seacrest Partners Inc. 11Fiscal year ending Aug. 31. Source: BI survey

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Ad Template.indd 11 6/29/21 3:02 PM SPECIAL REPORT BROKERS LEADING U.S. COMMERCIAL RETAIL BROKERS Continued from page 29 Ranked by 2020 commercial retail brokerage revenue from U.S. offices* “The best time for insurance brokers is when economies are growing Rank Company 2020 revenue % increase (decrease) and insurance prices are rising, and the last several months have been the first time in quite a while that both of those conditions have decidedly 1 Marsh & McLennan Cos. Inc. $4,537,000,000 10.1% been true,” said Mark Dwelle, director, insurance equity research, at RBC 2 Aon PLC $2,133,000,000 0.2% Capital Markets LLC in Richmond, Virginia. Insurance rates, which have been rising for two years or more in some 3 Arthur J. Gallagher & Co. $1,652,463,000 9.0% lines, continue to increase. “Certainly, the market environment and rates have impacted our results 4 Alliant Insurance Services Inc. $1,259,023,612 12.8%1 positively,” although this varies by line of business, region and industry, 5 Willis Towers Watson PLC $1,157,000,000 5.6%1 said Ron Lockton, chairman of Kansas City, Missouri-based Lockton Cos. LLC. “We’ve had record retentions and new business this year,” 6 Hub International Ltd. $1,005,820,200 10.3% he said. 7 Acrisure LLC $999,494,895 2.7% Marc Cohen, CEO of Chicago-based Hub International Ltd. said that as the business of the brokerage’s clients declined because of economic 8 USI Insurance Services LLC $939,096,412 0.6% conditions, their insurance spending also fell. But with increasing rates

2 and the economic rebound, the net effect for Hub in 2020 was low, 9 Lockton Cos. LLC $931,676,000 12.6% single-digit growth. 10 AssuredPartners Inc. $880,578,570 26.8% “Last year, there was an enormous amount of stress in economies all over the world, and that impacted our revenue growth,” said John *Excludes revenue from placement of employee benefits. 1Restated. 2Fiscal year ending April 30. Source: BI survey Doyle, president and CEO of Marsh LLC. “We have started to see a snapback and that has helped us. There’s no question there’s been a tailwind to growth.” LARGEST BENEFITS BROKERS While rates continue to rise in many lines, some signs of a moderation Ranked by 2020 global benefits revenue in increases are beginning to appear, some executives said. In some limited areas, insurers are willing to match expiring rates in an 2020 employee % increase % of 2020 Rank Company benefits revenue (decrease) gross revenue effort to win new business, which effectively limits the increase that an incumbent insurer on an account can obtain, said J. Powell Brown, pres- 1 Marsh & McLennan Cos. Inc. $4,928,000,000 (1.9%) 28.6% ident and CEO of Daytona Beach, Florida-based Brown & Brown Inc. In addition, accounts with exposures in markets that have seen signif- 2 Willis Towers Watson PLC $4,815,000,000 5.6% 51.5% icant increases in recent years, such as coastal property, are seeing lower 3 Aon PLC $3,408,000,000 (2.2%) 30.8% increases on renewals this year “and in some very isolated instances we are seeing flat rates,” he said. 1 4 Arthur J. Gallagher & Co. $1,245,693,000 4.1% 17.8% But slowdowns in rate increases are “on a modest basis in very specific 5 NFP Corp. $783,461,255 5.5% 49.0% lines,” said J. Patrick Gallagher Jr., chairman, president and CEO of Arthur J. Gallagher & Co. “We are not seeing a price reduction situation, 6 Hub International Ltd. $779,460,753 17.6% 28.8% and I think that makes sense; last year was a pretty tough year when it comes to catastrophes.” 7 USI Insurance Services LLC $717,928,197 7.5%1 36.3% As policyholders navigate the hard market, brokers are working more 8 Lockton Cos. LLC2 $680,898,000 9.7% 31.6% on restructuring programs and offering access to alternative risk transfer options, they say. 9 Brown & Brown Inc. $502,676,875 10.8% 19.2% Clients are frustrated by price increases over multiple quarters, especial- Digital Insurance LLC, ly as they struggled with their own businesses during the pandemic, and 10 $478,307,114 18.7% 90.2% dba OneDigital Health and Benefits are more frequently using captives, co-insurance and other self-insurance

1Restated. 2Fiscal year ending April 30. mechanisms during the hard market, said Eric Andersen, president of Source: BI survey Aon PLC. “Ultimately we are helping clients manage the risk as best they can, and LARGEST PRIVATELY OWNED BROKERS* transfer what they can,” he said. Policyholders are looking for ways to manage their total cost of risk, Ranked by 2020 brokerage revenue such as by carrying a higher deductible or buying lower limits, Mr. Rank Company 2020 brokerage revenue % increase (decrease) Brown said. In some areas extensive limits are hard to find. “If you have a heavy 1 Hub International Ltd. $2,697,991,400 12.8% transportation account, getting high limits on an umbrella is not easy, for example,” he said. 1 2 Lockton Cos. LLC $2,145,619,000 14.9% Meanwhile, several business practices brokers took up during the 3 Acrisure LLC $1,973,247,401 9.2% pandemic will likely stick and lead to improved efficiencies, several executives said. 4 USI Insurance Services LLC $1,948,867,707 6.4% “What the pandemic has done is created in the mind’s eye of the mar- 5 Alliant Insurance Services Inc. $1,781,184,712 13.0% ketplace a receptivity of a digital platform,” said Gregory L. Williams, CEO of Acrisure LLC. 6 AssuredPartners Inc. $1,707,906,006 18.3% “It evolved virtual meetings and virtual capabilities by decades,” Mr. Gallagher said. 7 NFP Corp. $1,599,777,301 9.5% For example, Gallagher’s real estate expert in Los Angeles previously 8 BroadStreet Partners Inc. $860,500,000 15.8% might spend two days traveling to and from New York to participate in a meeting. “Today, given the pandemic, it’s very acceptable that she Edgewood Partners Insurance Center, 9 $802,594,990 7.8% participate by iPad. Her expertise comes across and the client doesn’t dba EPIC Insurance Brokers & Consultants blink,” Mr. Gallagher said. RSC Insurance Brokerage Inc., 10 $657,749,000 27.3% dba Risk Strategies Co. Angela Childers, Judy Greenwald and Claire Wilkinson contributed to

*Companies that derive more than 49% of revenue from personal lines are not ranked. 1Fiscal year ending April 30. this report. Source: BI survey

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1914-IND-ad-BI-Magazine-LTC-Conference-10x13.indd 1 6/25/2021 1:36:46 PM Ad Template.indd 14 6/29/21 3:02 PM 2021 BROKERS PROFILES: 10 LARGEST INSURANCE BROKERS SPECIAL REPORT 1 Marsh & McLennan Cos. Inc.

2020 brokerage revenue: $17.27B We’ve got a good pipeline, and makes Marsh’s strategy of doing ues to improve by the day,” and clients, and some have chosen to the pipeline isn’t just at MMA. fold-in deals and relatively small- for the remainder of 2021, Marsh retain more risk, “whether that’s Percent increase (decrease): 3.8% We’ve got a good pipeline outside sized deals far more important. McLennan will benefit from attaching at a higher level, buying MMA as well,” said John Doyle, They aren’t going to attract the much easier quarterly compari- shorter limits, buying less discre- arsh & McLennan Cos. Inc. president and CEO of Marsh same scrutiny or create the same sons than it had in the first quar- tionary cover,” Mr. Doyle said. continued to focus on merg- LLC, the company’s main bro- market concentrations,” Mr. ter, Ms. Greenspan said. “Client by client, we’re helping M ers and acquisitions that kerage unit. Dwelle said. them navigate the more difficult expanded its middle-market busi- There may be less opportuni- Despite the economic headwinds market,” he said. ness in 2020, and the COVID-19 ty to do large M&A deals now, of the COVID-19 pandemic, Meanwhile, Marsh is also ben- pandemic did not curb its appetite especially given regulatory scru- Marsh McLennan’s 2020 broker- efiting from some of the distrac- for the deals. tiny of the Aon-Willis deal and age revenue increased by 3.8% to tion caused by consolidation in The New York-based broker- previously of Marsh McLen- $17.27 billion, retaining its lead the market. “We’re not distract- age’s middle-market unit, Marsh nan’s 2019 acquisition of Jardine as the longtime largest broker in ed, we’re focused on opportunities & McLennan Agency LLC, Lloyd Thompson Group PLC, the Business Insurance ranking. and challenges the current econ- completed seven deals last year analysts say. Marsh McLennan reported 1% omy is creating for our clients,” for a total purchase consideration One of the lessons from the organic growth in 2020, which Mr. Doyle said. of about $877 million, according Aon-Willis merger is authorities accelerated to 6% in the first John Doyle CEO Daniel Glaser said during to SEC filings. appear to be wary of addition- quarter of this year. The compa- its first-quarter earnings call with After a quiet start to 2021, on al large brokerage M&As, said ny’s top executives also said full- Marsh had “good growth” in most analysts that Marsh McLennan April 1 MMA moved to acquire Mark Dwelle, director, insurance year 2021 organic revenue growth geographies and specialty areas in increased net headcount by 500 Missoula, Montana-based equity research, at RBC Capi- could potentially top its 3% to 5% the first quarter, including in cyber, in the fourth quarter of 2020 PayneWest Insurance Inc., an tal Markets LLC in Richmond, guidance, as the economy turns construction and its private equity and added another 100 staff in independent agency with $135 Virginia. Aon PLC and Willis the corner and growth accelerates. practice, Mr. Doyle said. “Last year the first quarter, some of whom million in annual brokerage reve- Towers Watson PLC agreed to The first quarter set the stage there was an enormous amount were from rivals Aon and Willis nue and previously the 33rd larg- sell various businesses to allay for 2021, with results reflecting of stress in economies all over the Towers Watson. est brokerage of U.S. business. antitrust concerns, but the U.S. the improving economy com- world and that impacted our rev- Earlier this year, Marsh A year earlier, MMA had Department of Justice last month bined with the still-sharp proper- enue growth. … In some parts of McLennan ended its political bought Assurance Holdings Inc., sued the brokerages seeking to ty/casualty pricing environment, the world, most notably here in the contributions to lawmakers who previously the 35th largest bro- block the merger. said Elyse Greenspan, managing U.S., we have started to see a snap- objected to certifying the 2020 kerage of U.S. business, based in “Marsh itself was forced to director, equity research, insur- back in the economy and that has presidential election results, and Schaumburg, Illinois. divest a few things when it closed ance, at Wells Fargo Securities helped us,” he said. those contributions have not been “We’ll continue to invest inor- (its purchase of) Jardine Lloyd LLC in New York. The property/casualty insurance resumed. ganically where it makes sense. Thompson. Accordingly, that “On paper the economy contin- market remains challenging for Claire Wilkinson 2 Aon PLC

2020 brokerage revenue: $11.04B regulators have conditionally and the easiest way of accom- revenue rose 9.5% in the first “We are studying ourselves approved the deal. plishing that would be to find quarter and was up 6% on an hard. We want to see what it Percent increase (decrease): 0.9% Additional divestitures would some way of settling with the organic basis. Aon remains at is that we want to take out of likely involve Willis’ large Department of Justice,” Mr. No. 2 in Business Insurance’s these past 15 months,” he said. on PLC’s offer to buy rival account property/casualty and Shields said. ranking of the world’s largest Rival brokers have hired away Willis Towers Watson employee benefits brokerage The Aon and Willis man- brokerages. several high-profile Willis A PLC remains a prospective business, which were singled agement teams appear to be The brokerage’s core business executives and brokers over the acquisition rather than a com- out in the DOJ lawsuit, said committed to completing the performed well “all things con- past year. However, Aon’s and pleted deal more than a year Meyer Shields, Baltimore-based deal, said J. Paul Newsome Jr., sidered” during the pandemic, Willis’ staff retention statistics after it was first announced, and managing director at Keefe, Chicago-based managing direc- but some discretionary insur- remain higher than prior to the it remains unclear how much of Bruyette & Woods Inc. tor of equity research at Piper ance purchases declined, and pandemic, Mr. Andersen said. its rival Aon will buy if the deal Sandler & Co. consulting income fell, said But the extended timeframe goes through. “The senior management of Eric Andersen, president of for the completion of the merg- Regulators have already forced both firms are very invested in Aon, in an interview before the er might lead to further depar- the proposed sale of more than this transaction,” he said. DOJ filed its lawsuit. tures, Mr. Shields said. $2 billion in annualized revenue However, there are few past “The discretionary parts of the “The longer the uncertain- over competition concerns, and antitrust cases in the insurance business really began to pick up ty persists, it’s tempting to go following a U.S. Department sector to look to for guidance, as confidence returned to the elsewhere, and there’s no short- of Justice antitrust lawsuit filed and the DOJ is focusing on the businesses that we serve. You age of elsewheres that would be last month more divestitures are brokerages’ core business, Mr. started to see construction proj- happy to hire some talent from likely needed for the deal to be Newsome said. ects, you started to see M&A, Aon and Willis Towers Wat- approved. Eric Andersen The judge in the case set a you started to see employment son,” he said. Included in the asset divesti- November trial date for the levels begin to rise, and all had Like some other larger bro- tures already agreed to — and Aon, though, could still DOJ suit. Aon said it continues a positive impact on the busi- kers and insurers, Aon suspend- contingent on the Aon-Willis get value from buying a more to expect to achieve $800 mil- ness,” he said. ed its contributions to political deal being completed — are restricted portion of Willis and lion in annual savings through Several of the changes in work campaign committees after the the sales of most of Willis’ would have to pay a $1 billion the merger with Willis. practices that Aon implement- attack on the U.S. Capitol on reinsurance business and sev- break-up fee to Willis if the Aon reported a less than 1% ed during the pandemic, such as Jan. 6, and it has not reinstated eral other European and U.S. deal is scrapped, he said. increase in brokerage revenue bringing experts to client meet- them, Mr. Andersen said. Aon businesses to No. 4 ranked “Our expectation is that Aon in 2020 as economic activity ings virtually, will likely remain, also cut its ties with the Trump Arthur J. Gallagher & Co., and still wants to get the deal done, fell during the pandemic, but but there is still value in col- Organization, which had been a various retirement and health Willis Towers Watson still revenue rose sharply in the laborating through in-person long-time client. businesses to other buyers. EU wants to get the deal done, first quarter of this year. Total meetings, Mr. Andersen said. Gavin Souter

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Ad Template.indd 5 6/29/21 3:01 PM 2021 BROKERS PROFILES: 10 LARGEST INSURANCE BROKERS SPECIAL REPORT 3 Willis Towers Watson PLC

2020 brokerage revenue: $9.29B Florida-based Raymond James have to answer the question interview before the DOJ filing. mercial lines has been positive & Associates. whether they can accept a high- They understand how to func- and that has helped counteract Percent increase (decrease): 3.9% “More than likely it closes, but er divestiture and if they can’t tion on a “business as usual the headwinds for Willis, Mr. there are a lot of moving parts,” close by Sept. 9, Willis has to basis” and what the limits are, Peters said. espite the distraction of he said. decide whether they accept an he said. “For example, we have Willis reported $9.29 billion a protracted regulatory Aon in May agreed to sell extension and on what terms,” to be very careful that we com- in brokerage revenue in 2020, D approval process for its pro- much of Willis’ reinsurance he said. pete as independent companies a 3.9% increase from the prior posed combination with Aon brokerage business and various In a deal-break scenario, Aon up until the day we close.” year, and retained its position PLC and the impact of a global other businesses to rival Arthur will have to pay Willis $1 billion. as the world’s third largest bro- pandemic and economic down- J. Gallagher & Co. If Willis were to proceed with a kerage. turn, Willis Towers Watson The fact that both compa- go-it-alone strategy, it would use The 2% organic revenue PLC delivered 2% organic rev- nies have taken many steps to the proceeds along with cash on growth that Willis reported last enue growth in 2020. satisfy regulatory concerns and hand to initiate a restructuring/ year shows that “they were able That measure of growth accel- found counterparties to sell the retention plan, Mr. Peters said. to deliver even going through erated in the first quarter of businesses to shows they are If Willis remains a standalone a pretty sharp downturn in the this year to 4% as the economy working toward getting the deal company, it may report a “slight- economy,” Ms. Greenspan said. improved. “over the finish line,” said Elyse ly lower organic revenue result Last year was the first full year Its proposed combination with Greenspan, managing director, relative to its peers for a year or of having Tranzact in the orga- Aon had initially been expected equity research, insurance, at two,” he said. John Haley nization, and that business grew to close in the first half of 2021, Wells Fargo Securities LLC in During Willis’ first-quarter by about 40%, Mr. Haley said. but after European regulators New York. earnings call with analysts, John Willis has delivered good Willis had acquired Fort Lee, raised antitrust concerns, the “Until we have all the approv- Haley, the brokerage’s CEO, results, “but we all want to see New Jersey-based direct-to-con- sale of more than $2 billion in als and they’ve announced the said some staff had left, but that this resolved sooner rather than sumer health care organization Aon-Willis assets was agreed to date that it’s being closed there’s these departures had not had later,” Mr. Haley said. MG LLC, which does business in a conciliatory move. Then on still a potential that it doesn’t get a material effect and retention Overall staff turnover in 2020 as Tranzact, on July 30, 2019. June 16, the U.S. Department of done,” she said. bonuses totaling $400 million was lower than in 2019, he said. The reinsurance business deliv- Justice filed an antitrust lawsuit With the DOJ filing, the would be paid at or after the Willis has had some client loss- ered organic revenue growth of to block the proposed deal. divestiture number hypotheti- deal closes. es, but will “work hard to get 9% in 2020, and corporate brok- With the DOJ filing, the cally could increase to $3.2 bil- Many employees are veterans them back,” Mr. Haley said. ing was another “bright spot” odds of a successful close have lion, well above the $1.8 billion of “not just one but two and Despite the loss of some with strong renewals growth diminished, said C. Gregory cap in the original contract, Mr. sometimes three mergers and so back-office staff and some across all lines in North Ameri- Peters, managing director, equi- Peters said. they understand what needs to producers jumping to rivals, ca, Mr. Haley said. ty research at St. Petersburg, “Aon’s management and board be done,” Mr. Haley said in an the rate environment in com- Claire Wilkinson 4 Arthur J. Gallagher & Co.

2020 brokerage revenue: $6.07B chairman, president and CEO. its rivals and continued its sales deals and $452.3 million in 2019. DOJ filed suit. “But we sold a ton of new busi- strategy, he said. “We slowed down, and the If the deal collapses, Gallagher Percent increase (decrease): 6.2% ness. People didn’t leave us.” “They really had one of the sellers slowed down last year,” could have a temporary drag on Gallagher retained its No. 4 better years among the large Mr. Gallagher said. However, its earnings because it has already rthur J. Gallagher & Co. position in Business Insurance’s insurance brokers. Despite the valuations of brokerages are very issued debt and equity to fund continued to grow organical- ranking of the world’s largest pandemic they were able to high and possible changes to the the purchase, but it could use the A ly and through acquisitions brokerages. In the first quarter maintain their relatively better U.S. capital gains tax rate will funds to buy back shares or make last year, but it could potentially of 2021, Gallagher’s insurance organic growth rate,” said Mark likely accelerate the pace of deals other purchases, analysts say. see significantly stronger growth brokerage business reported a Dwelle, director, insurance going forward, he said. Other consequences for Galla- ahead as the economy bounces 12.2% increase in revenue over equity research, at RBC Capi- Whether a future deal will gher would likely be limited. back from the pandemic-related the prior-year period, up 6% on tal Markets LLC in Richmond, include Gallagher’s planned “Presumably, we’d go back to recession and it eyes what could an organic basis. Virginia. $3.57 billion purchase of the the status quo with everybody be its largest deal ever. Gallagher’s client profile various Willis assets will depend competing hard for business,” The outcome of that proposed worked to the brokerage’s on whether regulators allow Mr. Dwelle said. purchase — much of the reinsur- advantage during the pandemic, the Aon-Willis merger to go Meanwhile, amid the growth ance business of Willis Towers he said. through. The deal with Galla- in cyber-related crime since the Watson PLC, chunks of Wil- “A lot of times their clientele gher is contingent on the bigger COVID-19 outbreak, Galla- lis’ European operations and are businesses that are bigger deal being completed and last gher was hit by a ransomware some of its U.S. business — is than small but smaller than big month the U.S. Department of attack last year and temporarily dependent on Aon PLC secur- and accordingly they did not run Justice sued Aon and Willis to disconnected its systems. The ing regulatory approval for its into some of the friction that a block the deal over competition brokerage’s operations were back much bigger deal to buy most of lot of small businesses suffered, concerns (see related profiles). up and running after a few days. the rest of Willis, which remains J. Patrick Gallagher Jr. and they weren’t over-exposed to Potentially, the divested Willis Mr. Gallagher declined to com- uncertain. large businesses that faced their assets would vault Gallagher into ment on whether the brokerage Gallagher reported $6.07 bil- Gallagher saw faster organic own challenges as they worked the top tier of reinsurance bro- paid a ransom. lion in brokerage revenue in growth than most of its peers their way through the pandem- kers and advance its European “They obviously got through 2020, a 6.2% increase over 2019, during the pandemic, said J. Paul ic,” Mr. Dwelle said. strategy by five years, Mr. Gal- it and managed the process despite the economic downturn Newsome Jr., Chicago-based The pace of Gallagher’s lagher said. reasonably well, but there were and restrictions imposed during managing director of equity so-called tuck-in acquisitions of If further divestitures of Wil- certainly lessons learned and the pandemic. research at Piper Sandler & Co. smaller brokers slowed last year, lis assets are required, Gallagher lessons that others in the indus- “I was concerned about our The brokerage appeared to with 27 deals representing a com- would consider buying more of try should take before it’s their culture; we are a people culture,” take a more positive approach to bined $251.4 million in annual- the brokerage’s business, Mr. turn,” Mr. Dwelle said. said J. Patrick Gallagher Jr., managing the crisis than some of ized revenue, compared with 46 Gallagher said shortly after the Gavin Souter

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Ad Template.indd 3 6/29/21 3:00 PM 2021 BROKERS PROFILES: 10 LARGEST INSURANCE BROKERS SPECIAL REPORT 5 Hub International Ltd.

2020 brokerage revenue: $2.70B where it does not have operations tors, Mr. Cohen said. its digital capabilities, Mr. Cohen Altas Partners LP, acquired a and to strengthen existing busi- “We’ve seen over the last three said. minority stake in the brokerage Percent increase (decrease): 12.8% nesses, Mr. Cohen said. or four years that when our peo- “At Hub, we began to invest in in 2018. In addition, “We are diversifying ple specialize, they typically pro- digital marketing capability years “We’re very happy with our cur- ub International Ltd. has our focus on what we are looking duce more business than those ago,” and the investment has rent owner and we believe they’re not relented in its purchase for in our acquisition strategy,” that don’t,” he said. proved itself during the pandemic, very happy with us as well,” Mr. H of smaller rivals despite the including adding retirement In addition to continuing its he said. Cohen said. restrictions and other obsta- planning and employee benefits acquisition strategy during the Mr. Dion said, “Their owner- cles to business imposed by the in Canada, Mr. Cohen said. pandemic, Hub actively recruited ship structure right now is prob- COVID-19 pandemic. Timothy J. Cunningham, man- staff, Mr. Cohen said. ably a good one in the sense that As it continues its years-long aging director at Optis Partners Key hires in the past year … you’ve got the private equity acquisition strategy, it has broad- LLC, a Chicago-based invest- include: Bryan Davis, Chica- ownership group along with ened the range of businesses it is ment banking and financial con- go-based executive vice president some good employee ownership buying, its top executive said. sulting firm, noted that Hub is one and head of personal lines strat- as well.” This provides “a good “The reality is, in 2020 we did of the most acquisitive brokers. egy and business development, balance as long as they’re able to 65 acquisitions, which was really “There’s so much competition who is leading Hub’s transac- generate good cash flow, which in line with what we did in pre- in the traditional retail distribu- tional lines growth strategy, and they do internally, and then vious years,” Hub CEO Marc tion space that the ability to grow” was previously with United Ser- Marc Cohen (they) have the capital markets Cohen said. That compared with in the current M&A environment vices Automobile Association; to raise money if they’re looking 70 acquisitions in 2019, 66 in “may not be as easy as it was Philadelphia-based Pete Reilly, Michael Dion, vice president to buy,” he said. 2018, and 52 in 2017. before, so you expand your prod- a former Arthur J. Gallagher & and senior analyst with Moody’s Hub’s role during the harden- The deals helped Chica- uct thinking a little bit,” he said. Co. executive, who joined Hub to Investors Service in New York, ing market has been to “educate go-based Hub grow its brokerage Mr. Cohen said Hub continues lead the North American health said Hub “has really stood out clients as to why the rates are revenue to $2.70 billion last year, “to focus on creating what we’re care specialty practice; and David since the pandemic’s onset. When increasing, to be diligent and to a 12.8% increase over 2019, and calling a boundary-less organiza- Cloward, a former Allianz Glob- everything was shutting down provide optional program struc- it remains the world’s 5th largest tion” so that the “best resources al Corporate & Specialty SE temporarily, they were still able tures and continue to be consul- brokerage. and experts and specialists are executive, who joined Hub to to generate not only profitability” tative,” Mr. Cohen said. Hub is still looking for strong available to our employees and our lead its entertainment and sports but “fairly decent growth.” “There’s a lot of stress today, growth companies with strong clients regardless of where they’re specialty practice in Los Angeles. Hub is majority owned by San and I think we can help relieve leadership in various geographic located across North America.” During the pandemic, Hub has Francisco-based Hellman & some of that stress by being a areas in North America, such as As part of the strategy, Hub is relied on the business culture it Friedman LLC, which bought thoughtful, empathetic, trusted the Southeastern U.S. and Can- investing resources to expand its has built as it has grown, which the brokerage in 2013. A Toron- adviser.” ada, to extend its reach to places services for various business sec- kept employees aligned, and on to-based private equity firm, Judy Greenwald 6 Brown & Brown Inc.

2020 brokerage revenue: $2.61B Florida-based managing direc- Brown, president and CEO of made sense financially in Cana- growth as a consequence of them tor, equity research, at Raymond Brown & Brown. da and Ireland, and we’d like to being able to act so much fast- Percent increase (decrease): 9.3% James & Associates. While businesses such as expand in those places. But we er and so much more accurately “They are a company that per- restaurants and hotels were hit are looking at other places, too. than, not necessarily the big pub- rown & Brown Inc. contin- formed very well in the face of hard by the pandemic, construc- It’s that simple,” he said. lic brokers, but the tens of thou- ued its long-time acquisition incredible headwinds over the tion contractors and some other Brown & Brown’s overseas sands of smaller guys.” B strategy in 2020, folding in past year,” he said. businesses have seen substantial expansion will likely be slow, said Brown & Brown only complet- 25 smaller brokers, and report- The performance can in part be growth, he said. Meyer Shields, Baltimore-based ed two deals in this year’s first ed 3.8% organic revenue growth attributed to Brown & Brown’s Brown & Brown did not sig- managing director at Keefe, quarter, but the brokerage con- despite the challenges posed by decentralized structure, which nificantly change its M&A pro- Bruyette & Woods Inc. tinues to look for acquisitions, the COVID-19 pandemic. empowers individual agencies tocols during the pandemic, Mr. “Brown & Brown is, maybe Mr. Brown said. The brokerage’s pace of deals to manage their own businesses, Brown said. more than any other broker, Internally, Brown & Brown has slowed in 2021, but it saw and rising commercial insurance “We were not buying business- obsessive about culture, and I consolidated its 25 wholesale nearly double-digit organic reve- rates, Mr. Peters said. es on the internet,” he said. think they recognize that identi- units under the umbrella of nue growth in the first quarter as For the deals it completed, fying culturally compatible com- Bridge Specialty Group, which the economy rebounded. Brown & Brown executives had panies is more difficult when you will enable the units to work Last year’s deals included a pair either met with the companies go to different countries,” he said. more closely, Mr. Brown said. of international purchases and prior to the outbreak or they met The November purchase of “It also enables us to use data an insurtech firm. Internally, the with them during the pandemic CoverHound Inc., a San Fran- in our wholesale division to cre- brokerage reorganized its whole- while taking appropriate precau- cisco-based online insurance ate additional new and different sale operations. tions, he said. platform, expands Brown & products,” he said. Daytona Beach, Florida-based Included in the deals were Spe- Brown’s digital footprint and its With the economy reopening, Brown & Brown reported $2.61 cial Risk Insurance Managers technology could be used by sev- about half of Brown & Brown’s billion in brokerage revenue in Ltd., a Langley, British Colum- eral Brown & Brown divisions, employees are going into the 2020, a 9.3% increase over 2019, J. Powell Brown bia-based managing general Mr. Brown said. office at least one day a week, and retained its No. 6 position in agent, and O’Leary Insurances The deal could lead to more Mr. Brown said. Business Insurance’s ranking of the The 2020 growth was followed Ltd., a Cork, Ireland-based bro- efficiency and growth, said Mr. “We are not a work-from- world’s largest brokerages. by 9.8% organic growth in the kerage. Shields of KBW. home company, we are a work In 2020, Brown & Brown beat first quarter of this year. The international deals don’t “All of a sudden they’ve got this anywhere company, and I do the pre-COVID-19 consensus Exposure unit increases, new signal a specific global growth really, really respected tech mind- believe there’s a distinction. I estimates of equity analysts for sales, good retention rates and plan, Mr. Brown said. “We are set in the company’s employ,” he also believe that you cannot drive revenue and earnings, said C. higher insurance prices drove looking at opportunities, and we said. “I think we are going to see a culture virtually,” he said. Gregory Peters, St. Petersburg, that growth, said J. Powell found two that fit culturally and pretty impressive organic revenue Gavin Souter

BUSINESS INSURANCE JULY/AUGUST 2021 41 2021 AWARDS NOMINATIONS OPEN! #BI_WOMENTOWATCH SUBMISSIONS2021 AWARDS DUE AUGUST 17 NOMINATIONS OPEN! NOMINATE YOUR OUTSTANDINGSUBMISSIONS DUE FEMALE AUGUST 17 LEADERS! #BI_WOMENTOWATCH The Business Insurance 2021 Women to Watch Awards celebrates leading women from every facetNOMINATE of the commercial YOUR insurance BEST industry. FEMALE Since its start LEADERS! as a recognition program in 2006,The it hasBusiness grown Insurance into an 2021 educational Women to Watch program, Awards professional celebrates leading development women and networkingfrom conferenceevery facet of theaimed commercial at the advancementinsurance industry. of Since women its start in commercialas a recognition insurance, risk managementprogram in 2006, and itrelated has grown fields. into an educational program, professional development and networking conference aimed at the advancement of women in commercial Whoinsurance, is eligible risk management to be nominated? and related fields. To be considered for the 2021 Business Insurance Women to Watch Awards, nominees must be working in the sector on Nov. 1, 2021. Nominees must have achieved significant professional success and possess exceptional leadership skills and expertise. Evidence of such must be provided in the nomination form, which should also include threeWhat (3) isrecommendations the Women to from Watch clients, Awards managers program and/or about? coworkers. Celebrating its 16th anniversary, the Business Insurance Women to Watch Awards program recognizes leading women from every facet of the commercial insurance industry. Since 2006, it has grown into an What makeseducational a program good aimed nomination? at the advancement of women in commercial insurance, risk management The most successfuland related fields. nominations A professional are thedevelopment ones that and provide networking a good conference narrative was addedcombined to address with and data to support the assertions.promote For the example, advantages the of nominee achieving greater reduced gender cost diversity of risk in by leadership xx%, conceived roles. and launched a new product, leads diversity initiatives that have achieved xx, added xx new clients, increased revenue by xx% etc. While Is it just for women executives in the United States? we ask forNo, recommendations we have always accepted from internationalmanagers, nominationscolleagues and and/or in 2017 clients, we expanded the information the program to supplied include in the nominationseparate form is awards the main for women basis in for Europe, judging. the Middle East and Africa. Is it justWinner for women Recognition executives in the United States? No, we have• always Winners accepted will be notifiedinternational and announced nominations on BusinessInsurance.com and in 2017 we expanded in September the and program published to include in the December 2021 issue and on BusinessInsurance.com. separate awards• Winners for women will be in recognized Europe, the in aMiddle ceremony East at andthe Women Africa. to Watch Awards & Leadership Conference events. Winner Recognition • Winners will be notified and announced on BusinessInsurance.com in September and published in the December 2021 issue and on BusinessInsurance.com. • WinnersMAKE will YOUR be recognized SUBMISSIONS in a ceremony at theONLINE Women to BY Watch AUGUST Awards & 17Leadership Conference events. Europe, the Middle East and Africa candidates: www.BusinessInsurance.com/W2WEMEA Americas, Asia and rest of world candidates: www.BusinessInsurance.com/W2W MAKE YOUR SUBMISSIONS ONLINE BY AUGUST 17 THANK YOU TO OUR WOMEN TO WATCH EMEA SPONSORS >> WomentoWatch.businessinsurance.com<

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CONTACT US SUSAN STILWILL DEBORAH J. HAMILTON BI EVENTS TEAM HEAD OF SALES - EVENTS EXECUTIVE DIRECTOR [email protected] 312-833-4099 (203) 629-1112 [email protected] [email protected] 2021 BROKERS PROFILES: 10 LARGEST INSURANCE BROKERS SPECIAL REPORT 7 Truist Insurance Holdings Inc.

2020 brokerage revenue: $2.43B “Growth in 2020 wasn’t to the The last deal of 2020 was its aging general agent markets and “Somebody who will really focus same extent it would have been December purchase of Wel- is very active.” on improving client retention and Percent increase (decrease): 7.2% had we not experienced the pan- lington Risk Holdings Inc., an Truist Insurance continued enhancing our value proposition,” demic, but we were still able to insurtech company that operates its wholesale additions with the he said. Henry Wright was pro- ruist Insurance Holdings Inc. grow,” he said. as a managing general agent in May 2021 purchase of Constella- moted into the role on Sept. 1, made seven acquisitions in Truist Insurance reported 4.3% the admitted residential property tion Affiliated Partners LLC, an 2020. Prior to that, he was senior T 2020 and achieved solid pos- organic growth in 2020, which markets, with a strong presence insurance distribution platform vice president and director, risk itive organic growth despite the Elyse Greenspan, managing in Texas. with seven managing general solutions, for Truist Insurance’s economic downturn. director, equity research, insur- Prior acquisitions in 2020 agents and program managers, wholesale unit McGriff Insur- Those seven deals, all in the ance, at Wells Fargo Securities included W. Brown & Associates which will add roughly $160 mil- ance Services Inc. wholesale sector, will generate LLC in New York, said was “a Property & Casualty, an Irvine, lion of annual revenue to Truist’s Another driver of growth for more than $100 million in annu- strong, healthy number given the California-based surplus lines Insurance’s wholesale division. Truist Insurance since the merg- al revenue, according to John impact of the pandemic. From broker and MGA; Specialty Risk er that created its parent com- Howard, chairman and CEO of an organic perspective they were Associates, a Shreveport, Loui- pany is what it calls integrated the brokerage, which is a unit of able to outgrow their peers,” siana-based surplus lines broker relationship management, Ms. Charlotte, North Carolina-based she said. and MGA; and Program Insur- Greenspan said. The broker banking company Truist Finan- Truist Insurance reported 6.4% ance Management of Sarasota, reported that being able to gen- cial Corp. organic growth in the first quar- a Florida-based managing gen- erate revenue through referrals Truist Financial was formed ter of 2021. eral underwriter with specialized from the larger merged business by the 2019 merger of SunTrust While the brokerage acquired programs for industrial chemical added $153 million of revenue to Banks Inc. and BB&T Corp. seven wholesalers in 2020, that manufacturers and distributors. the insurance business in 2020, The insurance operation changed was “opportunistic,” Mr. Howard “They have a presence in both she said. its name from BB&T Insurance said. “We remain very interested the wholesale and retail markets, John Howard To help its employees during Holdings Inc. on June 1, 2019. in retail acquisitions and it just which gives them the ability to go the pandemic, Mr. Howard said Growth was limited in 2020 so happens that in 2020 there after transactions in both sectors,” Truist Insurance also continues Truist Financial provided more but has rebounded this year, Mr. were better wholesale acquisition depending on where the opportu- to add staff. In 2020, the broker than $100 million in support Howard said. opportunities.” nities are, Ms. Greenspan said. brought in more than 50 new programs including additional Truist Insurance reported $2.43 Truist Insurance’s business is Gerard Vecchio, managing producers in excess of retirements paid time off, reimbursement for billion in brokerage revenue last now 29.1% commercial retail director of Woodmere, Ohio- and departures, Mr. Howard child care, enhanced onsite pay, year, a 7.2% increase over 2019, and 48.7% wholesale, with the based mergers and acquisitions said. and a $1,200 COVID-19 relief and retained its position at No. 7 remainder composed of person- consultancy Marsh, Berry & Co. The broker also created a new bonus for those making less than in Business Insurance’s ranking of al lines, employee benefits and Inc., said Truist Insurance under- role, client experience officer, $100,000 a year. the world’s largest brokers. services. stands “the wholesale and man- which reports to Mr. Howard. Matthew Lerner 8 Lockton Cos. LLC

2020 brokerage revenue: $2.15B “Now that we’re on the other Another bright spot for the Lockton said. with a private equity strategic side of it, it’s easy to breathe a company is its reinsurance unit, “We’re not just private; we’re background,” Mr. Clune said. Percent increase (decrease): 14.9% sigh of relief,” said Ron Lock- which “continues to attract perpetually private and indepen- Lockton saw strong new busi- ton, the broker’s chairman. industry-leading talent,” Mr. dent” and “focused on staying ness last year, Mr. Clune said. ockton Cos. LLC has con- “There was a lot of uncertain- Clune said. that way,” he said. “The fact is that there’s some tinued to thrive despite the ty and a lot of fear, and I’ve Lockton formed Lockton Re “What we’re really finding is pain in the market,” he said. L coronavirus, its senior exec- just never been so proud to see in 2019 and hired three former that private ownership brings a “Where clients are receiving utives say. Lockton associates taking care Guy Carpenter & Co. LLC level of stability and focus” and increases, they’re more open The Kansas City, Missou- of clients and each other.” executives to run the unit. has “proven to be a winning for- to talking to our people, and I ri-based brokerage reported Lockton Re opened a Bermuda mula for us.” think our ability to get in and $2.15 billion in brokerage rev- office in June and named Jona- Over the past year, Lockton help clients solve issues is the enue for its 2020 fiscal year, than Davies, formerly a senior has entered markets in Ohio and reason why we’ve had record which ended April 30. That was Aon PLC reinsurance executive, Washington state and added 66 new business.” a 14.9% increase from the prior to run it. new producers. Lockton remains “a very fiscal year. Lockton Re now has just over Other high-profile hires impressive company,” said Tim- Lockton, which added 220 200 associates and has experi- include former Arthur J. Galla- othy J. Cunningham, managing employees to its brokerage enced “phenomenal growth,” gher & Co. area president Pat- director at Optis Partners LLC, business last year, remained Mr. Clune said. rick J. Haraden as president of a Chicago-based investment in the No. 8 position in Busi- The brokerage has adapted its Boston operations. banking and financial consult- ness Insurance’s 2021 ranking Peter Clune Ron Lockton well to the pandemic’s exigen- It also appointed a new chief ing firm. of the world’s largest insurance cies, its executives say. About financial officer, Troy Cook, “They continue to grow sig- brokers. Mr. Clune said one highlight 25% of its employees have who was executive vice presi- nificantly over the years,” It is still the only privately held over the past year was the devel- returned to the office. dent and chief financial officer including to some extent outside brokerage among BI’s top 10 not opment of the broker’s transac- “We’re really empowering our of Pittsburg, Kansas-based NPC the United States, but “they do wholly owned by a private equity tional liability team. In January, leaders to find a flexible work International Inc., a restaurant it without making acquisitions, firm or hybrid of private equity Lockton announced that Matt force that works best for our franchisor and operator. He which is a bit unusual in this day and private ownership. Heinz, formerly of Aon PLC, people, their families and their replaced Henry Bond, who left and age,” he said. “Our performance even at the would co-lead the practice with clients,” Mr. Clune said. the company in July 2020 after “They keep a relatively low financial level was the best it’s fellow partners Joseph Halpern, While the brokerage sector nearly eight years as CFO. profile” and “they’re not really ever been,” and “actually far Eric Ziff and Gaurav Sud, all of has seen significant mergers and Mr. Cook previously served on splashy,” Mr. Cunningham said. exceeded my expectations,” said whom joined Lockton in 2020. acquisitions activity over the past Lockton’s board. “He brings an “They go out and they deliver to Peter Clune, Lockton’s presi- There are now 25 people on several years, Lockton is com- amazing perspective as a client, their clients.” dent and CEO. this team. mitted to remaining private, Mr. board member, and someone Judy Greenwald

BUSINESS INSURANCE JULY/AUGUST 2021 43 2021 BROKERS PROFILES: 10 LARGEST INSURANCE BROKERS SPECIAL REPORT 9 Acrisure LLC

2020 brokerage revenue: $1.97B for-stock trade, and Tulco tial strides to implement artifi- a result, (Acrisure’s) potential headquarters in Grand Rapids became a significant minority cial intelligence more broadly to achieve positive growth was and is expected to announce a Percent increase (decrease): 9.2% shareholder in Acrisure. within their organizations.” impacted by that.” new chief financial officer soon. Mr. Williams described the In 2020, the brokerage also “(Last year) was a tough year In April, Acrisure’s CFO Matt crisure LLC has continued acquisition as “highly inten- rebranded Beach & Associates to go out and grow business Schweinzger stepped down its breakneck acquisition tional” and a way to continue Ltd., which it acquired in 2018, organically, and we knew it when another company where A strategy while juggling a to leverage technology. as Acrisure Re and Acrisure was going to be,” Mr. Williams he serves as a principal, JJMT move to a new headquarters, “We chose to deploy technolo- London Wholesale. Grahame said. “This year, we rebound- Capital LLC, was connected to changes in the C-suite and a gy in a way that helps the human Millwater, who joined Acrisure ed nicely. If you look at the an alleged Ponzi scheme. JJMT continued drive toward making relationship side of our business. via the deal, was recently named last two months, basically we and Mr. Schweinzger are not technology a cornerstone of its … It is transforming every facet of head of global insurance. averaged double-digit organic accused of wrongdoing. Mr. business. of our business,” he said. Mr. Williams said that growth.” Schweinzger, who also served The brokerage has already “In the P/C industry itself, through the London-based as chief acquisitions officer, closed or signed letters of intent there’s more discussion today reinsurance unit Acrisure has will continue at Acrisure in an for more than 85 acquisitions about value chain compression “been able to quickly replenish advisory role. The brokerage since the start of the year and than there has ever been, there’s and bring capacity to any mar- has since appointed two inter- is on pace to eclipse the 110 more talk about tech deploy- ket that we’ve needed to. The im co-CFOs, Sozon Vatikiotis acquisitions that closed in 2020, ment than there has ever been,” Acrisure Re folks have stood and Kent Snyder. A company CEO Gregory L. Williams said. Mr. Williams said. “Those that very tall as it relates to helping spokesman said the CFO role The 2020 deals helped Grand have deployed (technology) us as a brokerage firm.” will be filled “with a full-time Rapids, Michigan-based Acri- thoughtfully are going to have Like much of the industry, person soon,” but that the chief sure grow its brokerage revenue a differentiated capability.” Acrisure’s organic growth in acquisition officer position 9.2% to $1.97 billion and move “They’re one of a small hand- 2020 was flat. That can be par- Gregory L. Williams would remain open for now. up one notch to No. 9 in Business ful of companies that have made tially attributed to its target mar- While the situation is “unfor- Insurance’s ranking of the world’s certain investments that are ket segment of small and mid- Acrisure is on track to exceed tunate,” Acrisure’s strategic largest brokers. more forward tech-oriented,” dle-market companies that were its approximately 5% organic growth has appeared unaffected A key transaction was its said Chris Scott, New York- “impacted by rate and exposure,” growth average each year for by the change, Mr. Marinucci July 2020 purchase of artificial based assistant vice president at said Joe Marinucci, New York- the past five years, excluding said. “They have a plan to incor- intelligence company Tulco Moody’s Investors Service Inc. based senior director at Stan- 2020, he said. porate (artificial intelligence) to LLC’s insurance practice — the “That’s not to say that they are dard & Poor’s Global Ratings. The brokerage is amid some enhance their competitiveness broker’s largest investment in the only broker doing that, but “There were some accounts that changes this year. In late sum- and seek out potential new ave- a single asset at the time. The I think they’re in a small group didn’t make it or had to scale mer or early fall, Acrisure will nues for growth.” $400 million deal was a stock- of brokers that have made ini- back on exposure units, and as move into its new Studio Park Angela Childers 10 USI Insurance Services LLC

2020 brokerage revenue: $1.95B Risk Consulting in a $266 mil- active M&A year for the broker- it’s a little dilutive to margins at full benefits of insurance price lion cash deal from seller Associ- age. Privately held USI does not the outset, they have a long-term increases if their clients’ spend- Percent increase (decrease): 6.4% ated Banc-Corp added 400 staff disclose the number of deals it view and focus,” Ms. Mannarino ing remains flat. to USI’s ranks. closes or exact revenue figures. said. “They might have a certain ergers and acquisitions sup- At the time, Associated Ben- Phil Trem, president, financial “We’re making hundreds of amount they can spend on an plemented by some organic efits & Risk Consulting was advisory, for Woodmere, Ohio- new hires a year,” Mr. Sicard insurance program, and with M growth comprised the for- the 39th largest broker of U.S. based mergers and acquisitions said. “Think of it as a nine-fig- rates going up, clients are going mula for growth at USI Insur- business, according to Business advisory and consulting company ure investment for USI. It’s very to have lower limits, change ance Services LLC in 2020. Insurance’s ranking, reporting Marsh, Berry & Co. Inc., said its material.” deductibles to more easily absorb The broker saw only marginal $92.6 million in 2019 brokerage research shows USI completed USI was able to achieve slight- rate,” Ms. Herman said. organic growth last year but is revenue, mostly employee bene- 10 acquisitions in 2019, 10 more ly less than 1% organic growth Commercial insurance rates are expected to return to mid-sin- fits and retail business. last year and six so far in 2021, for 2020, in line with S&P’s expected to continue to rise, Mr. gle-digit organic growth in putting the broker slightly ahead forecast, Ms. Mannarino said. Sicard said. “In the near term, 2021 and remains committed to of its historical pace for deals. The forecast is for the broker to we expect to see rate pressure recruiting more staff. Pricing for acquisition targets return to the “low-single-dig- in single to double digits across Valhalla, New York-based USI is rich. “Valuations have never it range” of organic growth for most lines of business,” with loss reported $1.95 billion in broker- been higher than they are today, 2021, she said. affected accounts seeing rate age revenue in 2020, up 6.4%, and they continue to go up,” Mr. Like many brokers, USI saw pressure of 20% to 40% and even but slipped one place to No. 10 Trem said, adding that pricing its business constrained in 2020 higher, he said. in Business Insurance’s ranking of levels may be as much as 10% by the economic slowdown tied USI has for roughly the past the world’s largest brokers. higher than just six months ago. to the COVID-19 pandemic. year been analyzing locally avail- “We expect mergers and acqui- “Valuations today for the The broker was, however, “able able data on infection rates, hos- sitions to support growth, mainly Michael J. Sicard industry are at the highest level to adapt to selling strategies vir- pitalizations and more to guide focused on tuck-in acquisitions,” they’ve been on a historical tually with good digital market- small amounts of employees back said Francesca Mannarino, a In October, USI bought Nash- basis,” Mr. Sicard said. ing,” underpinned by its Omni to offices, but the vast majority New York-based associate direc- ville, Tennessee-based employee The acquisitions also help technology platform, said Julie of the workforce through June tor at S&P Global Ratings. USI benefits and human resources provide a steady stream of new Herman, director in New York was still working from home, also made some “more materi- company Findley Inc., which talent along with recruitment by with S&P Global Ratings. Mr. Sicard said. ally sized acquisitions in 2020,” added some $41 million in annu- USI. While increasing commercial Moving forward the broker will she said. alized revenue, according to Ms. “They are very heavy in terms primary insurance rates helped likely implement a hybrid model USI’s June 2020 purchase of Mannarino. of producer recruitment and to offset some of the decline of home and office work, Mr. Minnetonka, Minnesota-based Michael J. Sicard, USI’s chair- continue to invest in that ini- in exposures, Ms. Herman Sicard said. broker Associated Benefits and man and CEO, said 2020 was an tiative, specifically citing that if said brokers may not reap the Matthew Lerner

44 JULY/AUGUST 2021 BUSINESS INSURANCE RESEARCH & DATA First-half M&A pace hints at torrid ’21 finish

BY TIMOTHY J. CUNNINGHAM, TOP BUYERS the rise across most segments, and it is DANIEL P. MENZER & The top buyers during the first half of 2021 are shown below with comparable totals important to note that the overall pace STEVEN E. GERMUNDSON for 2017 through 2021: of large agency transactions is on the rise 1st half 1st half 1st half 1st half 1st half this year as well. Whereas we recorded nsurance agency/brokerage mergers and Buyer Company type 2017 2018 2019 2020 2021 only two large M&A transactions among acquisitions activity in the first half of Acrisure LLC Private equity/hybrid 48 42 39 39 31 retail agencies in the first half of 2020, I 2021 returned to normal volumes fol- there have been seven logged so far in lowing a second-half 2020 race to the PCF Insurance Services LLC Private equity/hybrid 0 4 3 13 22 2021 (see chart). exits that set record deal activity. Will the AssuredPartners Inc. Private equity/hybrid 12 19 20 19 21 Not included in the chart is the backend of 2021 be a repeat of last year? announcement of BRP Group’s purchase Let us look. BroadStreet Partners Inc. Private equity/hybrid 18 14 17 30 19 of RogersGray Inc. ($38.8 million rev- The total number of U.S. and Canadian Hub International Ltd. Private equity/hybrid 21 33 26 28 17 enue), effective July 1, 2021, and there property/casualty, benefits, managing gen- could be more announcements coming. eral agents and third-party administrator World Insurance Associates LLC Private equity/hybrid 4 5 8 12 16 transactions during the first half of 2021 Relation Insurance Inc. Private equity/hybrid 1 0 3 2 14 It’s no surprise that private equity was up 10% to 338 from 307, an all-time high though only 5% above the five-year High Street Insurance Partners Inc. Private equity/hybrid 0 0 1 3 13 continues to drive the increased average. On a quarterly basis, there were Alera Group Private equity/hybrid 27 15 11 5 12 181 transactions during the second quarter The Hilb Group LLC Private equity/hybrid 6 3 9 10 9 pace of deals, with more established of this year, compared with 131 report- ed in the same period for 2020, a 38% TOP 10 TOTALS 137 135 137 161 174 firms generally keeping pace with increase. On a trailing 12-month basis, ALL OTHERS 196 165 190 146 164 current deal count is 882, much higher their historical activity, fairly than the 791 reported in 2020 and 630 TOTALS FOR 1ST HALF OF YEAR 333 300 327 307 338 reported for the previous 12 months. Source: Optis Partners LLC new firms starting to hit their This backs up what sellers, buyers and advisers are all experiencing: The pace of stride with increased activity, M&A continues to rise. TOP FIRMS SOLD It’s no surprise that the private equity Major 2021 acquisition announcements of sellers with more than $25 million in revenue included: and several brand-new entrants world continues to drive this increase, with the more established firms generally Seller Buyer Date PY revenue starting to close some deals. keeping pace with their historical activity, Murray Insurance Associates Inc. AssuredPartners Inc. January $31,000,000 fairly new firms starting to hit their stride with increased activity and several brand- Fifth Third Insurance Agency Inc. Foundation Risk Partners Corp. January $35,400,000 Further, there was one notable private new entrants starting to close some deals. equity-related transaction announced in Grand Rapids, Michigan-based Acrisure AP Intego Insurance Group LLC Next Insurance Inc. March $33,000,000 the second quarter: Huron Capital sold its LLC continues to complete more transac- Fiorella Insurance Agency Inc. AssuredPartners Inc. March $33,000,000 interest in High Street Partners to Abry tions than all other buyers and reported 31 Partners, which had recently exited Con- deals for the first six months of the year, Confie Alliant Insurance Services Inc. April $475,000,000 fie Seguros. down from 39 in the first half of 2020 and PayneWest Insurance Inc. Marsh & McLennan Agency LLC April $134,000,000 We and many pundits believe that deal well below its five-year first-half average count for 2021 will be at an all-time high. of 40. PCF Insurance Services in Wood- Bolton & Co. IMA Financial Group Inc. May $57,000,000 Both anecdotal and data-driven evidence land Hills, California, followed with 22, Source: Optis Partners LLC in the first half of the year are strong indi- up 69% from 13 reported in the same cators this will be true. period last year and three in 2019. Lake Mary, Florida-based Assured Partners Inc. logged 21 transactions, up from 19 in TRANSACTIONS BY QUARTER BY TYPE (2017 – Q2 2020) the first half of 2020 and slightly above its PE/PMFS Private Public All other first-half average of 18, and BroadStreet 350 Partners Inc. in Columbus, Ohio, record- ed 19, approximating its five-year average 300 of 18 first-half deals. In total, the 10 most active buyers 250 booked 51% of the announced trans- 200 actions. There were 134 buyers in total Timothy J. Cunningham, Daniel P. Menzer and Steven E. Germundson are principals that completed the remaining 49% of the 150 deals, 29 of which made more than one at Optis Partners LLC, a Chicago-based investment banking and financial acquisition. 100 Historically active buyers whose transac- consulting firm that serves the insurance tion count in the first half of 2021 dropped 50 distribution sector. Mr. Cunningham can be below their first half five-year average reached at [email protected] or included Acrisure, with nine fewer, Hub 0 312-235-0081; Mr. Menzer can be reached Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 with eight fewer, Alera with two fewer, at [email protected] or 630-520-0490; 2017 2018 2019 2020 2021 and BroadStreet with one fewer. and Mr. Germundson can be reached at The number of deals being done is on Source: Optis Partners LLC [email protected] or 612-718-0598.

BUSINESS INSURANCE JULY/AUGUST 2021 45 OPINIONS

COMMENTARY

FIGHTING Cybercrime needs CYBERCRIME Cyber defense practices advocated by the FBI:

 Regularly back up data and verify its integrity.  Disable macro scripts from Office files balanced response transmitted via email.  Focus on awareness and training. he surge in ransomware attacks over the past year is fuel-  Employ best practices for use of ing wide-ranging debates over how to stop the alarming  Patch the operating system, remote desktop protocols. trend but few concrete answers are emerging. software and firmware on devices. The international nature of the crimes, the difficulty in  Implement application whitelisting.  Ensure antivirus and anti-malware tracking and recovering ransoms paid in cryptocurrency T solutions are set to automatically update  Use virtualized environments to and the vulnerabilities to cyberattacks that are evidently present and that regular scans are conducted. execute operating system environments at many organizations are all complicating the discussions. or specific programs. In addition, some security experts and policymakers have sug-  Implement the least privilege for file, gested that the payment of ransoms is a big part of the problem, directory and network share permissions.  Categorize data based on organizational value. because the ill-gotten gains finance the operations of criminal networks and encourage hackers to launch more attacks.  Implement software restriction policies or  Require user interaction for end-user Some public policy experts in the U.S. and overseas have also other controls to prevent the execution of applications communicating with websites suggested that cyber insurance that covers ransomware payments programs in common ransomware locations. uncategorized by the network proxy or firewall. is part of the problem. Clearly, if organizations refused to pay ransoms, criminals would have little financial incentive to carry out future attacks, but equally clearly, it’s not as simple as that. VIEWPOINT As we have seen with recent attacks on infrastructure, financial compa- nies and health care systems, hackers have the potential to cripple oper- Sports require backstop ations through the attacks. Those companies that pay the ransoms BY CLAIRE WILKINSON necessarily reached amid variant surges and ongoing appear to regain control of their sys- [email protected] gathering restrictions in certain areas, it’s not just the tems quickly and those that don’t, safety of athletes and spectators and local commu- such as Ireland’s health system, face s the summer months unfold, it’s wonderful to nities that is in the balance. The event cancellation weeks or months of disruption. see the return of live sporting events from the insurance market was among the hardest hit by the Failure to return systems swiftly delayed UEFA Euro 2020 soccer tournament pandemic, with billions of dollars in claims. Since can put lives at risk, disrupt oper- A to the 2021 Wimbledon Championships, and then, rates have increased, and capacity has tightened. ations at other organizations and as the postponed 2020 Tokyo Summer Olympics Communicable disease exclusions were often a feature Gavin Souter lead to the release of sensitive infor- gets underway on July 28, I will be among the mil- of pre-pandemic policies, but a “buy-back” option lions watching from home on television, assuming was typically offered under which policyholders could EDITOR mation. it goes ahead as scheduled. remove the exclusion and secure the coverage by pay- For many organizations attacked, That thought struck a note during the recently ing an extra premium. Nowadays, communicable dis- the ransoms they pay are significantly less than the money they televised U.S. Olympics gymnastic trials when one ease coverage is no longer available, even though new would potentially lose through lost revenue or from the liabilities commentator made the point that for the athletes capacity has entered the event cancellation market. they would face from a swath of lawsuits. going on to Tokyo this would be the last time For organizers of sports tournaments, music fes- Faced with the unappealing choice of paying millions of dol- their families would see them perform live in-per- tivals, conventions or shows, the lack of pandemic lars to a hacker or potentially significantly more if they don’t, son ahead of the event. Overseas spectators were insurance coverage adds to their problems as they many companies opt to pay the criminals. According to a recent banned from the Tokyo Games months ago, and try to ensure that events go ahead as planned and survey by insurer Hiscox Ltd., 58% of companies targeted with just recently the president of the Olympic organiz- more revenue isn’t lost. Billions of dollars are tied ransomware met the cyber kidnappers’ demands. ing committee said that the decision to allow some up in many of the megaevents. Potential insured Banning or restricting insurance coverage for the payments local spectators into venues might be revisited. losses from the Olympics are estimated to be in would likely make little difference, other than put the already Risk management protections to control the the $2 billion to $3 billion range if the Games are distressed organizations under even more pressure. Looking at spread of COVID-19 in Tokyo are understand- canceled, for example. the size of most of the ransom payments that have been made ably top of mind amid concerns over the spread of Meanwhile, several countries are moving toward public, few of the companies involved would be unable to make coronavirus variants and as the city reported rising establishing government-backed entities covering the payments if they did not have insurance. case numbers after it lifted a state of emergency the COVID-19-related cancellation risks facing Instead, cyber insurance can be part of the solution. During the in June. Recent reports of a surge in COVID-19 event organizers. Such a scheme is reported to be underwriting process, insurers can highlight potential weakness- cases among Scottish soccer fans who attended a imminent in Britain and possibly Germany, fol- match in London during Euro 2020 are a reminder lowing a similar approach in the Netherlands and es in policyholders’ cybersecurity frameworks and help provide that large live events still present a challenge. For- Switzerland. These temporary safety nets are a good access to resources that can make networks more secure. If the tunately, there are some successful prototypes to way to support businesses and supply chains that carrot of improved risk management does not work, the stick of learn from. For example, the National Basketball have been decimated by the pandemic, but whether higher insurance premiums or coverage declines might. Association’s bubble environment that was put in there should be a permanent backstop for pandemic Government has a big role to play in fighting the ransomware place at Disney World during last summer’s 2020 insurance remains an open question in the industry. crime wave, but those efforts should center on ransom recovery, playoffs was extremely effective at keeping athletes As private insurers continue to absorb the losses centralization of breach information and improving public and within its perimeter COVID-19-free. from prior canceled events, a temporary backstop private cyber defenses. Undercutting organizations’ ability to As the world continues to move toward, a new nor- would at least give them time to assess whether they recover crucial data won’t help. mal with vaccinations in arms but herd immunity not can address the risk going forward. 46 JULY/AUGUST 2021 BUSINESS INSURANCE PERSPECTIVES Resilient design for a safer, more secure future

he consequences are undeniable. Global climate change has affect- ed everything from the design and building of roads, bridges, T homes and office complexes to the upgrading of our nation’s electrical grids and pipeline systems. Unfortunately, the forecasts of many of the world’s leading climate research agen- to normality in the short term with min- Consequently, mere compliance with cies are less than optimistic. According imal interruptions. local codes may not be enough to pro- to NASA, the effects of global climate For this to happen, the adoption of tect design or construction professionals change are likely to continue “over this resilient strategies ranging from the from the liability associated with poten- century and beyond” as the growing inten- design and construction of structures that tial environmental disasters. This can be sity and frequency of severe storm events, can withstand the impact of severe storms particularly true for high-impact storm heat waves and wildfires increasingly to the installation and implementation areas that can reasonably be expected to wreak havoc on the nation’s infrastruc- of renewable energy and potable water sustain additional losses in the foreseeable ture and ecosystem. In fact, the National sources must be conducted on multifac- future. To prepare for such instances and Centers for Environmental Information, eted levels that jointly involve local busi- mitigate the potential liability risks, pro- recently reported that 25 storm-related nesses; energy, water and other utilities; fessionals should: n disasters in the U.S. caused more than a and state and local governments. Anticipate code and practice stan- Andrew D. Mendelson is billion dollars in damages each from 2018 On the construction side, practical and dard upgrades. Engage with professional senior vice president, chief to 2019. Of these, the top five combined realistic solutions often begin by empha- associations to understand future trends. risk management officer, to cause more than $75 billion in damages. sizing the building of highly durable, Stay informed with the latest climatology As a result, a renewed emphasis has self-sustaining structures that remain models, reports and studies to guide proj- at Berkley Design Professional, been placed on the creation of buildings habitable no matter the challenge. This ect criteria and site designs. n a W.R. Berkley Corp. company. and infrastructure that not only withstand includes expanding the livability of these Think long-term durability and He has more than four decades severe natural events but remain habitable facilities with features such as compostable safety. Recommend to project own- under extreme conditions. Even President toilets, rainwater harvesting techniques, ers the establishment of design criteria of experience as a licensed Biden’s American Jobs Plan proposed and passive heating and cooling. For many with protocols not yet memorialized in architect and insurance risk wide-ranging initiatives promising that communities, this also means focusing on building codes to address the likelihood manager. He can be contacted infrastructure projects developed under better management of stormwater, pro- of increased severe storm events and the plan would include funding to pre- tecting aquifers, implementing enhanced excessive wind, rain and flooding. Con- at [email protected]. vent, reduce and withstand the impacts wildfire mitigation measures and reducing sider additional features such as structural of the climate crisis. urban heat island effects with advanced reinforcement, storm water management, Given that researchers from Colorado technologies, components and materials. spillways, retention ponds, and sea and State University have already forecast an retaining walls to provide extra layers of “active” 2021 hurricane season, with 18 building and infrastructure protection. Standard of care issues n named storms of which four or more may Document everything. Document become major hurricanes, resilience has How has climate change affected the owner directives, especially the ones that become a prominent topic among engi- standard of care of construction proj- decline the added resilient design criteria neers, architects, environmental consul- ects? What is the potential culpabil- you have recommended. n tants, legislators and property owners. ity of designers and contractors? What Disclaim third-party reliance. To Defined by the Resilient Design Insti- exposures accompany the compliance or some degree, this can mitigate risk based tute “as the capacity to adapt to chang- non-compliance with non-binding stan- on the decisions and directives of clients ing conditions and to maintain or regain dards? These questions are increasingly who would rather design to code mini- functionality and vitality in the face of being debated within the design and con- mums than to the enhanced levels recom- stress or disturbance,” resilient design struction communities as today’s building mended by design professionals. has moved to the forefront of criteria codes and regulations steadily evolve to There is significant evidence that global necessary to protect critical infrastructure address the new environmental normal climate change will have a profound influ- systems, structures and the environment posed by the ever-increasing threat of ence on the way we live our lives for years from severe storm damage. In its 2018 global climate conditions. to come. Fortunately, the methods exist publication titled “Building Communi- The challenge for many professionals, to assist in protecting against its devastat- ty Resilience through Modern Model particularly engineers and environmental ing effects. Resilient design offers a prac- Building Codes,” the International Code scientists, is the need to strike a balance tical approach for fortifying everything Council defines four of the initiative’s pri- among a project’s budget, client goals, com- from roads and bridges to public safety mary components. They are: munity best interests and resilient design facilities and commercial and residential n Efficient disaster mitigation and recovery. principles, which can be affected by a wide properties from the costly, destructive and n Ensuring mental and physical health range of factors from the area’s storm histo- sometimes deadly circumstances resulting and well-being. ry to the latest climatology studies. In such from severe weather events. n Improving building lifecycles. cases, the typical standard of care definition But resilience alone will not work with- n Creating a sustainable community. used as a defense by design professionals, out common sense. Professionals need contractors and subcontractors in most to protect against unforeseen liabilities Resilient design strategies negligence cases may not be sufficient. by advocating and employing strategies This is because the reasonable degree of intended to mitigate the risks of severe Resilient design and construction is care and skill applied in similar instances climatic events. Fortunately, numerous intended to maintain the ongoing oper- by members of the same profession may insurance alternatives exist for profession- ation of key infrastructure, systems and be significantly stretched in regions where als presently working within this increas- facilities during and after severe weather comparable buildings and structures were ingly volatile, unforgiving and highly liti- events, and restore the capacity to return designed and built to a higher standard. gious environment.

BUSINESS INSURANCE JULY/AUGUST 2021 47 MARKET PULSE DEALS & MOVES

BRP buys Mass. Aon unveils hurricane ISMIE Mutual Insurance Co. brokerage group forecasting model The program provides errors and omis- PRODUCTS sions coverage for small to mid-sized Brokerage BRP Group Inc. said n Aon PLC released its new Impact insurance agencies, wholesalers and man- it has agreed to buy South Dennis, Forecasting Florida hurricane model. aging general agents, offering limits of Massachusetts-based RogersGray Inc. The model incorporates a range of & $500,000 to $5 million. and two related brokerages with combined wind mitigation options and secondary First-dollar defense coverage, unlimited revenues of about $38.8 million. building characteristics and features an tail coverage and a modified coinsurance The purchase will be made by two event set that calculates wind hazards SERVICES hammer clause of up to 80/20 are available of BRP’s indirect subsidiaries, Baldwin during the life cycle of each simulated under the program, the Rolling Mead- Krystyn Sherman Partners LLC and hurricane. ows, Illinois-based wholesale broking and Millennia Specialty Insurance LLC, and Aon says the model can assist insurers managing general agent unit of Arthur J. will include RogersGray Inc., Breakwater with the identification of risk drivers at Gallagher & Co. said in a statement. Brokerage LLC and Monomoy Insurance the location level, with calculating port- Group, according to a BRP statement. folio loss metrics, and with understanding RogersGray and its affiliates provide the impact of climate change. Founder Shield unit adds commercial and personal lines coverage The Florida Commission on Hurricane social influencer coverage and employee benefits insurance to large Loss Projection Methodology has cer- and mid-sized companies and individuals, n tified the model for rate making in the Scale Underwriting Services LLC, a BRP said. state, Aon said in its statement. managing general agent and a Founder AIR updates bomb Shield company, has launched media AssuredPartners Hub adds transportation liability coverage for social media influ- blast modeling encers and their agencies with up to $5 buys Delaware agency excess liability/umbrella million in limits available. n AIR Worldwide, the Boston- The coverage is backed by specialist AssuredPartners Inc. has bought B&H n Hub International Ltd. launched an based catastrophe modeling firm insurer Beazley PLC. Insurance LLC, an insurance agency with excess liability/umbrella coverage for the and part of Verisk Inc., said it had Scale Social covers U.S.-based influenc- about $8 million in annual revenue. transportation industry, backed by Okla- improved modeling of the extent of ers and agencies, particularly those with Newark, Delaware-based BHI offers homa City-based Trisura Specialty Insur- damage from conventional bomb paid brand partnerships, from potential commercial property/casualty insurance, ance Co. blast attacks in its terrorism model lawsuits involving their social media personal lines, employee benefits, and Hub Drive Excess Liability Shield will for the United States. activities, the New York-based MGA safety and human resources consulting provide coverage with limits of up to $5 The model can help show damage said in a statement. services. million, or a component of a transporta- and loss estimates, including prop- The online policy covers influencers’ The team of 26 will join Lake Mary, tion policyholder’s excess tower, Chica- erty damage and workers compen- advertising, publishing and regulatory Florida-based AssuredPartners and go-based Hub said in a statement. sation, and personal injury, by using exposures. remain under the leadership of John The coverage, which is available in all the size and location of the bomb, Coverage also extends to influencers Boykin, president and CEO of BHI. states except New York, is designed for AIR said in its statement. Model who promote goods without a direct con- transportation policyholders, including users can obtain loss results for a tract with a brand if a party asserts there general freight, moving and storage, and specific floor within a structure. was a negligent or unflattering promotion. IMA unit buys wholesale last mile, auto/truck dealers, public auto Clients can use AIR’s Touchstone Crisis management costs can also be insurance brokerage and rail. online platform to select a blast size covered under a sub-limit. Trisura Specialty Insurance Co. is a and location to analyze the impact “The emergence of TikTok and other An IMA Financial Group Inc. unit subsidiary of Toronto-based Trisura it will have on their specific book digital content platforms requires the said it has acquired Professional Lines Group Ltd. of business. insurance industry to think different- Underwriting Specialists Inc., an AIR used 3D computational fluid ly,” Christine McCarthy, underwriter at Austin, Texas-based wholesale insurance dynamics simulations and incorpo- Scale, said in the statement. brokerage that specializes in management Aegis launches parametric rated input as recent as from the and professional liability. active shooter cover detonation of a recreational vehicle The announcement was made by bomb in downtown Nashville, Ten- Skyward, tech underwriter Towerstone, the Dallas-based wholesale n Aegis Managing Agency Ltd., known nessee, on Dec. 25, 2020, in devel- partner on flood risks division of IMA. Financial terms were not as Aegis London, launched a parametric oping the model. disclosed. n active shooter insurance policy. Houston-based Skyward Specialty PLUS will operate as a specialty division The product insures small business- Insurance Group said it has entered of Towerstone, with its eight employees es against economic losses following a will be notified that an insured event has into a partnership with Denver-based continuing to operate out of the company’s shooting or malicious incident that occurs occurred and asked to confirm they have eThought Insurance Corp., a technology Austin office, Towerstone said. within 250 meters of the policyholder’s suffered a loss. and underwriting managing general agent business, Aegis said in a statement. The insurer said it intends to make pay- that will underwrite complex commercial Limits are flexible, with up to $50,000 ment within 14 days after the event. flood risks. PE firms complete per event or a maximum of $500,000 per Aegis London is part of a group of com- It said coverage will be available through purchase of CoreLogic policyholder. Limits are capped at 10% of panies of which Associated Electric & a select group of partner distributors for a an insured’s annual business interruption Gas Insurance Services Ltd. is the parent. broad range of classes, with primary and CoreLogic Inc. said its purchase by values or rental income. excess limits of up to $20 million per risk private equity firms Stone Point Capital The product is being marketed initially and $100 million for replacement values LLC and Insight Venture Management to small and medium-sized enterprises in RPS offers E&O cover available. LLC for $80 per share in cash has been the Dallas area with up to 10 properties. for agents, brokers Skyward said eThought brings to the completed. Aegis monitors open-source data from partnership the ability to visualize, assess, CoreLogic will continue to be based in n the Dallas Police Department to identify Risk Placement Services Inc. has underwrite and price commercial flood Irvine, California, and its management when a triggering event has taken place. launched a professional liability program coverage for complex risks with its pro- team led by president and CEO Frank Within 48 hours of relevant data being for agents and brokers underwritten by prietary underwriting methodology and Martell will remain in place. published by the police, policyholders ISMIE Indemnity Co., a subsidiary of risk assessment technology.

48 JULY/AUGUST 2021 BUSINESS INSURANCE PEOPLE ON THE MOVE

Charles Taylor PLC named London-based John Pickersgill to the newly created role of group chief UP CLOSE commercial officer. Previously, Mr. Pickersgill was head of global client management Susan Chmieleski at Axa XL, a division of Axa SA. Liberty Mutual NEW JOB TITLE: Hartford, Connecticut-based head of professional liability, Insurance Co. Lexington Insurance Co., surplus lines unit of American International Group Inc. promoted Tim Sweeney to the PREVIOUS POSITION: Hartford, Connecticut-based head of health care, newly created Lexington Insurance Co. position of company OUTLOOK FOR THE INDUSTRY: While there are differences and nuances in president. Previously, individual segments, I remain positive. Professional lines have been challenged by a Mr. Sweeney was prolonged soft market, rising loss costs and most recently the uncertainty around the president, global retail markets. “We’ve focused on effects of the pandemic. However, we have done the hard work over the last couple of years to remediate portfolios and position our business for success. We’ve focused The Hartford Financial underwriting discipline that on underwriting discipline that looks at the unique qualities of each risk and provides Services Group Inc. clients with appropriate terms, limits and pricing. The clear leaders will be those promoted Brea, looks at the unique qualities markets, like AIG, that navigate the headwinds and stick to their strategy. California-based

GOALS FOR YOUR NEW POSITION: To more closely align strategy and execution Gretchen Thompson of each risk and provides across health care, LexPro and architects and engineers professional lines and to head of construction, clients with appropriate capitalize on the talent we have assembled. Our goal is to be the market of choice and inland marine, excess employer of choice in each segment. solutions and complex liability solutions. Previously, Ms. terms, limits and pricing.” CHALLENGES FACING THE INDUSTRY: As we emerge from the pandemic, it will be Thompson headed the Western division. important to watch loss development patterns and ultimate costs. She was named one of the Business Insurance Women to Watch in 2016. FIRST EXPERIENCE: My first experience in the insurance field was in the area of professional liability and medical malpractice claims adjusting. Lockton Cos. LLC ADVICE FOR A NEWCOMER: I advise early career professionals to take advantage announced its Lockton of opportunities in a number of different industry segments and products — to stretch Re unit is opening and try new things — before setting a long-term career path. a Bermuda office headed by Jonathan DREAM JOB: Criminal defense attorney. Davies, former LOOKING FORWARD TO: Supporting the development of our early-career head of Global Re professionals and creating more career paths and opportunities across the entire Specialty Bermuda for professional lines team. Aon PLC. Mr. Davies was named CEO of Lockton Re (Bermuda) Ltd. COLLEGE MAJOR: Nursing.

FAVORITE MEAL: My mom’s chicken and dumplings. Woodruff Sawyer & Co. has recruited former FAVORITE BOOK: “The Pillars of the Earth,” by Ken Follett. Marsh LLC managing HOBBIES: Golf and traveling. director John Fuhrman as Southern California FAVORITE TV SHOW: “Jeopardy.” practice leader, a new ON A SATURDAY AFTERNOON: Play golf. position based in Irvine, California. At Marsh, Mr. Fuhrman led the brokerage’s Pacific South partnership. He joined Marsh in 2016 after 10 years as a managing partner at Willis Towers Watson PLC.

AssuredPartners Inc. hired former M&T Bank broking executive Nick Napolitano as captives practice leader. Mr. Napolitano, based in White Plains, New York, was previously national sales leader Visit www.businessinsurance.com/ComingsandGoings for a full list of this month’s personnel at M&T Insurance Agency Inc., part moves and promotions. Check our website daily for additional postings and sign up for the of M&T Bank Corp. Prior to that, he SEE MORE ONLINE weekly email. Business Insurance would like to report on senior-level changes at commercial insurance companies and service providers. Please send news and photos of recently worked at Brown & Brown Inc. promoted, hired or appointed senior-level executives to [email protected].

BUSINESS INSURANCE JULY/AUGUST 2021 49 OFF BEAT

Beer says cheers to DAVID LETTERMAN insurance offerings erhaps in line with its slogan “enjoy life responsibly,” Budweiser P Canada is now brewing plans to provide insurance coverage plans, GETS SERIOUS WITH the company announced. Offering a modern take Responsible drivers on classic insurance will unlike this plans, the company says Budweiser recent insurance survey revealed INSURANCE SPONSOR Insurance will provide that 5% of those behind the wheel “unique coverage A can’t wait to tell their friends and opportunities that have followers where they’re going, what they been designed around meaningful did, what they ate, who they’re with insights about customer experiences.” or what they think of (insert political The announcement included few discussion of the day). details on offerings, but a Labatt Just in time for summer road trip season, Breweries of Canada spokesman Erie Insurance Group surveyed 500 U.S. said he understood there would be residents ages 18 and older in February. Of doubters, but he said the venture those surveyed, 50% admit they use their makes sense for the beer brand. smartphones while driving. In that group, “Unconventional as insurance 5% are engaging in social media. may seem, Budweiser is known for And of them, 89% say they are usually putting our customers first,” he said. scrolling through photographs, 63% are “... Bud’s got your back.” either taking or posting photos, 22% are watching or shooting videos, and 19% are commenting on other people’s photos or videos.

Panic-buying life insurance research report for Expertise.com found many young Americans A “panic-bought” life insurance during the pandemic and now Shady Dollar Tree 21% of them regret it. Of a survey of 1,000 ripoffs lose out Americans, the report hings you can no longer buy for a revealed that 25% dollar: Vera Bradley’s fabulously bought a life insurance T floral and quirky lookalike eyeglasses, policy during the sunglasses and cases. pandemic and within this Dollar Tree Stores Inc. and Vera Bradley group, 21% were ages 18-24, Designs Inc. have settled for an undisclosed 32% were ages 25-34, and 26% were amount a lawsuit that accused the discount ages 35-44. Just 22% were over 45. retailer of using copyrighted designs on And among those who bought life its own eyeglasses, sunglasses and glasses insurance during the pandemic, 21% obody’s laughing at a Boca Raton, Florida, insurance agency reneging on cases, Bloomberg Law reported. now regret it while another 13% a $500,000 deal to sponsor an IndyCar racing team owned by retired late Vera Bradley alleged in legal documents preferred not to say. Within that group night television host David Letterman. filed in the U.S. District Court for the of 21%, 74% were between the ages of With its company logo already emblazoned on race cars and drivers’ Northern District of Indiana in late 2020 18 and 44, according to results. uniforms, Seeman Holtz Family of Cos. saw its name on tracks across the that it learned about the copycat versions In following up with the people who Ncountry, including at the famed Indianapolis 500, yet never paid the racing team of its goods from a Facebook fan page that regretted their life insurance purchase, despite its early excitement over the deal, as reported in the Palm Beach Post. showed a pair of glasses and case featuring Expertise.com asked if they will cancel “We are excited to partner with Rahal Letterman Lanigan Racing to continue to one of its signature designs that a fan had their policy now that the pandemic expand our business, raise awareness of our services and deliver on consumer- scored at their local Dollar Tree, according appears to be winding down: 9% have focused strategies,” Marshal Seeman, president of Seeman Holtz, said in 2018 to the news outlet. already canceled it, 16% indicated they announcing the partnership. Officials with Vera Bradley reportedly will cancel it eventually, 26% were not Reported as a “messy divorce” two years in the making, the team, renowned bought such eyeglasses from Dollar Tree sure either way, 41% will not, and 9% IndyCar driver Bobby Rahal and motorsports fan Michael Lanigan, all sued, upon investigation, and went on to sue opted not to say. claiming Seeman Holtz failed to pay the $500,000 to sponsor the 2019 racing the chain store for copyright infringement, series, the newspaper reported. according to the news outlet.

50 JULY/AUGUST 2021 BUSINESS INSURANCE VIRTUAL CONFERENCE OCTOBER 28 Join the conversation and be part of the change

You don’t want to miss the virtual Diversity & Inclusion Institute’s Annual Conference on October 28, 2021! This event will train members of the commercial insurance industry with diversity and inclusion strategies they can implement right away. Additionally, it will equip diverse professionals with tools and strategies to advance their careers in order to build the pipeline of insurance C-Suite talent. Virtual networking opportunities are maximized at this conference for leaders at all levels to build relationships with each other and organizations to drive change. THE CONFERENCE WILL FEATURE: • How to measure diversity accurately and how to effectively implement the data in your business • A multi-generational discussion on DEI experiences in the workplace • Spotlight discussion on lack of diversity in higher positions • How internship programs impact DEI

NEW ALONZO HERNDON AWARD The Business Insurance D&I Institute is proud to open nominations for its first annual Alonzo Herndon Award. Every year this award will be presented to an inspirational leader who is committed to furthering diversity, equity and inclusion in the insurance industry and who exemplifies Mr. Herndon’s courage, leadership and good will towards others. LEARN MORE & NOMINATE TODAY>> BusinessInsurance.com/conference/DiversityInclusion NOMINATIONS DUE JULY 30

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