CANNABIS Insurance Headache - SELF-DRIVING CARS
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MARCH 2019
THE VOICE OF INDEPENDENT INSURANCE AGENTS
CANNABIS SELF-DRIVING CARS
Insurance Headache
May One Day Kill
LAAIA Auto Insurance
Legislative Efforts As We Know It
INSURANCE SOLUTIONS
PRESIDENT’S MESSAGE
Jeremiah Perez PIAM, CPII
As we begin closing the first
quarter of the year, we realize how
fast another year is going to come
and go! We are working tirelessly
to provide you, our members, the
services and benefits you deserve.
Since my presidency began my
only focus has been to strengthen
our unity of purpose within our
association. Our Board of Directors
exemplifies the meaning of leadership,
by steadfastly exhibiting unselfishness and passion toward our
The Latin American Association WWW.LAAIA.COM industry. As part of this thought process, we present our new
of Insurance Agencies (LAAIA) and improved newsletter; wherein both chapters and future
WWW.BLAAIA.COM
is an association of insurance chapters will collectively collaborate in providing our members
professionals whose purpose PUBLISHER meaningful input. Our newsletter team, editors and corroborators,
is to protect the rights of Maribel Ramirez are constantly seeking content that will help you understand the
its member for the benefit trends in our industry, provide you with important insights to
of the consumer through EDITOR keep you ahead of the competition, enable you to know what
education, information, Janet Lorenzo-Garcia our combined efforts are doing for you in the legislative arena,
networking and active Cynthia Scott and keeping our members abreast of upcoming events, including
participation in the political a myriad of educational and networking opportunities.
environment and community CONTRIBUTOR An organization is only as good and strong as its member-
service. Alessandra Ramirez ship. We will keep on working diligently to ensure the best
interests of our members. I encourage all of you to advocate for
our industry and invite you to get involved in our organization.
Have you visited our Facebook group, One way is to volunteer and join one of our committees. Each
available to members only? It is fun, one of us in unity can make a difference within our industry.
easy, and a great place for encouragement,
en-lightenment, and to celebrate our successes “Success is where preparation and opportunity meet” ... Looking
and events. We welcome your comments and forward to seeing you at our upcoming networking events at
suggestions. It’s another privi-lege of membership! Casa Juancho in Miami-Dade, Plantation Preserve in Broward
Visit us at: or at our infamous Legislative Fly-in.
Facebook.com/latinagents.
Our Leadership team is eager to see you there.
Facebook.com/Broward-LAAIA.
INSPIRATIONAL CORNER
By Barry Sanders
“Accepting change is something we need to do!
This allows us to grow and move forward.
Take that leap of faith! It’s all about your future!”
T H E T O R C H | M ARCH 2019 1
N AT I O N A L
MARCH 2019
Wednesday, March 6th
Monthly Networking Dinner Meeting
UPCOMING
6:30 to 9:30 p.m.
Casa Juancho, Miami, FL
Sponsored by: Olympus Insurance & Rytech
This month we will be offering 1 CE Credit to those in
attendance. Attendees will learn the current ins and outs of
water damage technology and the science behind it. They
will have the opportunity to study the current methodology
professional water damage company’s use to extract, dry,
dehumidify, measure, record, and document what is occurring
within the structure; including the affected and non-affected
areas of the loss. In addition, the attendees will learn about
Wednesday, March 27th the Industry Standard of Care as it related to water damage
and the recognized organization that is responsible for keeping
Member Connection Dinner and Meeting
the guidelines and standards current. Finally, why this standard
Please join your Broward LAAIA officers and members at:
of care is important to carries, insured’s, agents, adjusters
Plantation Preserve Golf Course & Club
and professional water damage companies
7050 West Broward Blvd.
Plantation, FL Speaker: William D, Ryan, Director of Rytech
from 6:30 to 8:30 p.m. To Register go to: https://cvent.me/Klv2d
COST:
First BLAAIA Member and Sponsors: FREE with Coupon
(check your email for coupon code) March 19 - 21
Additional LAAIA & BLAAIA Members: $25
Legislative Fly-in
Non-Members: $35
Guests & Walk-Ins: $45 Tallahassee, FL
Sponsored by: Olympus Insurance & Rytech
To register, please CLICK HERE:
https://www.blaaia.com/events/upcoming-events
This is your opportunity to connect with fellow colleagues,
The LAAIA will be in Tallahassee representing our consumers
company partners, and industry leaders. The potential
for our Annual Legislative Fly-in. Together we are one voice
connections that you establish can be a successful impact
for our industry and the consumers of the State of Florida.
on the growth of your agency. We look forward to you
joining us to participate in reaching our goals together!
T H E T O R C H | M ARCH 2019 2
UPCOMING EVENTS
T H E T O R C H | M ARCH 2019 3
SPECIAL THANK YOU!
The Broward LAAIA Board would like to thank Citizens Property Insurance
Director of Agent Services, Carl Rockman and his team for hosting our annual OUR SPEAKER CARL ROCKMAN
Citizens Agent Recertification class as well our membership dinner meeting.
There are a lot of changes happening with Citizens and you can always count on us to bring you the latest most up to date
information. Remember to mark it on your calendars for next years class in February as you won’t want to miss out.
SPONSOR ITC ERIK FINSTAD AND PRESIDENT JEREMIAH PEREZ
T H E T O R C H | M ARCH 2019 4
OUT & ABOUT
LAAIA TRAVELED TO TALLAHASSEE IN JANUARY
The LAAIA traveled to Tallahassee in January to have preliminary
meetings with key figures in the House of Representatives, the Senate, the
Insurance Commissioner, the CFO, DFS, and the Consumer Advocate, to
present continuing issues that we’re encountering in our industry. Our trip
was powerful, impactful, and we were received well by all we met with!
The LAAIA is heading up again to our Capitol on March 19th – 21st for
our 2019 Annual Fly-in! We will meet with legislators in order to discuss
upcoming bills and many insurance issues that our association continues
to focus our efforts on. Leading this year’s topics is AOB reform, PIP,
Workers Compensation, and Diligent Effort requisites for commercial LEGISLATIVE TEAM WITH FLORIDA INSURANCE
COMMISSIONER DAVID ALTMAIER
residential policies.
We have been diligently working on and looking forward to continuing
our conversations with our legislators that will keep the best interest of
our agents and clients on the forefront. Together we are one voice for
our industry and the consumers of the State of Florida. Please continue
to support our efforts. Your donations help us continue to fight for and do
right by our members and the consumers!
Click here to make a contribution:
www.laaia.com/legislative
LEGISLATIVE TEAM WITH
FLORIDA’S CFO JIMMY PATRONIS
CASA JUANCHO
NETWORKING MEETING, FEBRUARY 6, 2019
FROM LEFT TO RIGHT:
ANGEL PEREZ, CARLOS
OSORIO, DAVID GIL, JULIO
DOMINGUEZ ENJOYING
OUR COCKTAIL HOUR
SPEAKER THANK YOU TO
TED MAURELLI OUR SPONSOR
FROM AMTRUST AMTRUST!
T H E T O R C H | M ARCH 2019 5
EVERY DAY 1 in 7 CHILDREN IN BROWARD COUNTY GOES TO BED HUNGRY!
People struggle with hunger in every county in Florida. They are our neighbors,
kids in our children’s classes—or families we never noticed.
On February 10th, Part of the Broward LAAIA Board was very excited about
attending Andy’s 17th Annual Family Pasta Dinner which is a very enjoyable
event for adults and children to raise money for LifeNet4Families. There’s
scrumptious Italian food, fun-packed games & activities for kids, exciting silent
auction items, and much more. Being part of helping people and giving
back has never been more rewarding!
If you would like more information on Andy’s Pasta Dinner or Lifenet4families,
please click on the following links:
http://www.andyspastadinner.com/
http://www.lifenet4families.org/portal/home
We encourage you to get involved in supporting these great organizations here in our own
backyard. You can volunteer your time, donate money, clothes, shoes, and personal items.
Every bit helps!
CHARITY
CORNER
Strike Out Hunger
Bowl-a-thon
benefiting
Lifenet4families.
Thank you to everyone for your support
and participation in our annual Strike
Out Hunger Bowl-a-thon benefiting
lifenet4families. A great time was had
by all. We look forward to setting new
records next year.
NATIONAL | MARCH 2019
SUPPORT THE HOLTZ CHILDREN’S HOSPITAL
Registration Link:
https://www.arshtcenter.org/#
Use promo code HOLTZ
for a discounted price
Promo Video: CLICK TO VIEW >>
Video Link:
https://youtu.be/BidY-On6x74
T H E T O R C H | M ARCH 2019 6
THE INFORMED AGENT
PROSPECTS LOVE AN OPEN MIND
This May Sound Easy But It’s Deceptively Difficult.
SOURCE: NU National Underwriter Property & Casualty, February 2019 | Reprinted with sincere thanks.
by John Pojeta
A
first propect meeting can be complex as you and some may need to research prospects extensively before
your prospect do your best to determine whether taking a meeting. I prefer to cover the basics and go in
continuing the conversation is worthwhile. with a blank slate so that I don’t fall into the trap of showing
It’s critical to create an engaging, thoughtful off my research instead of asking good questions.
meeting. Here’s why: The prospect may already Regardless of your exact approach, be wary of preconceived
have an agent, and she fields pitches from your competitors notions your process creates, and of bringing those notions
on a regular basis. To win the business, you have to stand to the meeting.
out, and that means having a different kind of conversation. 2- Be okay with not knowing an answer. When you enter an
What do most insurance agents forget to do when they open conversation, you will encounter unexpected twists.
enter a meeting? Listen. It’s okay to be surprised, and it is okay to admit that you
The sales instinct is to talk. You launch into value points don’t immediately have a response to a question. Embrace
and competitive differentiators, and work through your those moments instead of hiding from them. You don’t have
agenda step-by-step, often asking the prospect clever but to know everything immediately.
simple, leading questions to which you already know the 3- Give your prospect space to talk.
answer. When you approach the first meeting this way, If you wait to speak, your prospect will
your agenda and rigid commitment to your predeter- often continue talking and go deeper. If
mined structure can close your mind, even if you you need to, a prompt of “tell me more
consider yourself an open-minded individual. about that” can be enough encouragement
Making this more challenging is that many to get your prospect to share more. With
agents still believe what they’re selling is needed. this approach, prospects often share what
But not all prospects automatically need what truly bothers them without you feeding
you offer or are a fit for how you work. That’s them a script.
the reality of the market we are in and the nature 4- Check your bias at the door.
of our business, and it’s okay. But when we make As you sell with this mindset, become more
assumptions about the prospect, we ignore a great mindful of the assumptions you’re making
deal of what a prospect could contribute to a con- about the prospect. After years of sales
versation. experience, we can start to jump to conclusions
Just keep an open mind. Accept that you that are not accurate and cloud our ability
might not know the prospect’s true need or what to have an open conversation.
actually setsyou apart from the incumbent agent. Approaching sales with an open mind can
be deceptively difficult. After all, most agents
4 WAYS TO KEEP AN OPEN MIND would consider themselves open-minded
Here’s how you can keep your mind from inadvertently closing: individuals. If we don’t address the subtle influences that
start to narrow our thinking, however, we will miss out on
1- Resist the urge to overprepare. potentially lucrative sales. e
Every salesperson has a different approach. I respect that
T H E T O R C H | M ARCH 2019 7
AGENT PROVOCATEUR
CANNABIS INSURANCE HEADACHES
Marijuana Company Insurers Still Face Legal And Regulatory
Challenges—Despite The Booming ‘Legal Weed’ Business
SOURCE: NU National Underwriter Property & Casualty, February 2019 | Reprinted with sincere thanks.
by Jonathan Bergner
W
ith the successful passage of ballot initiatives in Despite all of this, cannabis, which is the scientific term for
Michigan, Missouri and Utah in November’s marijuana, remains illegal under federal law. This fact has
midterm elections, cannabis is now legal for created a complex legal landscape that property & casualty
medical use in 33 states and Washington, insurers are now forced to navigate.
D.C., and available for recreational use in 10
states and Washington, D.C. P&C INDUSTRY CONCERNS
Attitudes toward the substance have shifted dramatically since in Consider the potential criminal and civil exposures resulting
1969, when only 12% of Americans supported the legal use of from marijuana’s illegal status under federal law, which extends
cannabis. Shortly thereafter, cannabis became outlawed nationwide. beyond those individuals or businesses directly involved in
T H E T O R C H | M ARCH 2019 8
AGENT PROVOCATEUR
the cannabis supply chain. In addition to violating the Controlled gap and broad demand for various insurance products and
Substances Act (CSA), doing business with any part of the services for their businesses.
cannabis industry can run afoul of several federal laws such Regardless of one’s personal views on the legalization
as the Banking Secrecy Act/Anti-Money Laundering Law, question, it is unquestionable that the cannabis industry presents
and the Racketeer Influenced and Corrupt Organizations Act. an enormous potential market for insurance coverages.
For example, banks and insurers providing services to Already a $9 billion industry by 2017, it is projected to
enterprises involved in the cannabis industry could find themselves grow to more than $20 billion by 2020 with canna-businesses
held criminally liable or civilly liable for allegedly causing accounting for more than 280,000 jobs in agriculture,
harm to others by aiding the operation of the business. manufacturing, management, administration and retail
Writers of homeowners’, auto, commercial property, workers’ operations.
compensation, and many other lines of insurance have faced But until and unless the fundamental legal conflicts surrounding
difficult questions about their role and relationship with such cannabis are resolved, it is unlikely we will see the insurance
cannabis business entities as growers, manufacturers, retailers industry rushing to insure cultivators, manufacturers, users or
and consumers. Sometimes, this relationship has been others across the supply chain.
unknown to the insurer. In these cases, insurance companies
that do not have a policy of reimbursing the cost of medical PUSHING POLICY FORWARD
marijuana or that just became aware of the presence of cannabis Last June, Sens. Cory Gardner (R-Colo.), and Elizabeth Warren
at a home or commercial property have been taken to court (D-Mass.) introduced legislation that would amend the existing
over their denial of claims for lost, damaged, stolen, or CSA to say it no longer applies to those following state,
“non-covered” medical cannabis. territory or tribal laws relating to the manufacture, production,
possession, distribution, dispensation, administration or delivery
EVOLVING LEGAL PRECEDENT of marijuana. In essence, the Strengthening the Tenth Amendment
Depending on the state and presiding judge, the courts Through Entrusting States Act, or the STATES Act, intends to
have been unpredictable in their decisions, sometimes protect states’ marijuana laws from federal preemption via
favoring the insurance provider and other times favoring the the CSA.
claimant. In most cases, insurance companies have argued No discussion of a potential market for insurers is meant to
that the CSA preempts state laws that permit medical marijuana downplay the other questions and externalities for the industry
or adult use. Other courts in some instances have ruled that that accompany legalization of marijuana. Among the many
the state law is the controlling statute. examples, the lack of a reliable impairment test for marijuana
Consider another potential issue in which stakeholders could prevent law enforcement from identifying impaired
along the cannabis supply chain cannot find coverage in the drivers. This also creates a serious issue with determining
private market and resort to the state’s residual market mechanism, whether or someone is “high” on the job, which could lead
which in many cases is an assigned risk pool. If a company to broader safety concerns for employers, employees and
is required to offer coverage to a “cannabusiness” through a the general public.
residual market mechanism, this will put the company between Even if no other states passed legalization laws and
the proverbial rock and hard place, facing a serious and the industry stopped growing—a dubious proposition
fundamental conflict between state and federal laws. indeed—it is clear property & casualty insurers need to
Even insurance companies interested in offering coverage understand how they will potentially interact with the
to the various entities along the cannabis supply chain must cannabis industry. As NAMIC outlined in the release of
contend with a complicated legal landscape. It follows that its public policy issue analysis titled “Cannabis: From
many continue to eye the proliferation of a legalized marijuana Criminality to Commercial Enterprise: Understanding the
industry with caution, hesitation, confusion and skepticism. Intersection With Property/ Casualty Insurance,” it is
It comes as no surprise, then, that there are few admitted equally important that lawmakers at the local, state, and
property & casualty insurers writing coverage in the cannabis federal levels also understand the potential issues. At the
space. Although some growers, processors, retailers, very least, robust safe harbors from any legal liability
recreational/medical users, and other key players across the under controlled substances-related law should be created
cannabis supply chain have found surplus or captives lines if insurers are compelled to participate in any way with
of insurance, they have continued to highlight an insurance the cannabis industry. e
T H E T O R C H | M ARCH 2019 9AGENT OF CHANGE
SOURCE: Agency Revolution, January 22, 2019 | Reprinted with sincere thanks.
by Julie Kelly
H
ow many times have we wished for a crystal ball LOOKING INTO THE CRYSTAL BALL
so we could see what the future holds for us? And As for the future? “Change is coming,” promises Williams.
similarly, how many times have we looked back “You’ve got to be prepared for it. This is an industry that for the
with regret, chastising ourselves for failing to notice most part, has been unchanged for the last couple hundred years.”
the moment when our world began to change? “I think the changes are vast,” he adds. “They’re
In a recent episode of the Connected Insurance Podcast, happening slowly enough that people aren’t noticing it, but
our own Michael Jans chatted with Greg Williams, the CEO the changes are going to be fast if you look at the next three,
and President of Acrisure, to glimpse the future of the retail four, five, and certainly 10 years. Over the next five years, I
insurance agent and broker through his eyes—and it’s a think we’re going to trade differently and what the marketplace
vision worthy of attention. looks like will be different as well.”
Williams is a notable insurance industry leader whose
company, Acrisure, is the 9th largest agency in the United SURPRISE! IT’S NOT INSURETECH
States. Majority-owned by its management team, it is one of Surely, Williams refers to the elephant in the corner known as
the most profitable firms in its peer group, and it has grown InsureTech? Won’t all our industry’s technological streamlining
at a staggering rate of 80%, primarily due to mergers and ultimately hijack the agent/client relationship and irrevocably
acquisitions—110 in 2018 and 92 in 2017. It has almost change consumer behavior? Isn’t insurance ultimately going
1.5 billion in revenue and will celebrate its 14th year of to become a commodity product delivered via smartphone
operations in 2019. within the next 10 years?
T H E T O R C H | M ARCH 2019 10AGENT OF CHANGE
Not necessarily. While Williams does see the need for “The whole point to the value chain and compression that
agents to differentiate themselves to combat the increasing will happen there and having information, the data as well
commoditization of the insurance sector, he’s quick to point as markets, is that what it does, it just broadens the scope
out that agents and brokers have “what everyone wants”, of what’s available in terms of the universe of opportunities
namely, the client relationship. for a client, what’s available to them that they may not know
“If you look at InsureTech, there’s a lot of companies that about if they’re on an online portal for a certain carrier or a
are in that chain that are looking to leapfrog others and get certain technology company.”
closer to, frankly, the thing that we as a retail broker are looking
at. We have the client relationships, so everyone’s trying to GOING TO GROWTH
get closer to that client relationship. InsureTech investment is At Acrisure, Williams has anticipated value chain compression,
the way that they’re doing that or attempting to do it.” and for the last few years, the company has developed
However, Williams believes that while some of the agency proprietary technology to harness data—and the mining of
business will fall to InsureTech, particularly in personal lines, vast amounts of information.
the ultimate value creation element of the client/agent rela- “Based on an in-depth, granular, analytical view of our
tionship will not be replicated by software. “We’re bringing business, understanding where in the marketplace could
solutions and information to clients that they’re just not going we take that premium and those clients, and make sure that
to get through an online portal and going to some website they’re getting the maximum amount of value for their insurance
that says, ‘Here’s your buying options’.” spend, is what it’s all about. Representing our clients in the
In particular, Williams is bullish on small- to middle-market most robust, deeply thoughtful way that we can, is really the goal.
commercial business clients—and not just in terms of his “We’re now better equipped to really take the client and
company’s own profitability, though the majority of Acrisure’s understand the needs in terms of the insurance spend and
business does focus on SME clients, the predominant group where those dollars can and what those dollars can purchase
in the US marketplace. in terms of coverage, in terms of everything else. We’re now
Williams’ prediction for the future is that that small- and in a place to really maximize that spend in terms of the value
medium-sized enterprises will be impacted the most by options that it’s getting in the marketplace and the representation it
they’ve not had previously and that their spend on insurance has in the marketplace.”
will be maximized like never before.
“The clients, ultimately, are the winners in that advance- THE GOLDEN NUGGET
ment and that improvement.” Where Williams foresees slow but vast change creeping
over the insurance industry is where agents and brokers will be
MORE DATA, MORE VALUE able to place business, based on the ability to comprehensively
Williams foresees that InsureTech will continue to drive value evaluate and balance a myriad of factors, from data that’s
chain compression, which in turn will increase the range of made available by technological advances and value chain
opportunities for clients because ultimately, agents and compression.
companies who have prepared well will have more data, “If you’ve got some size and scale and data, the information
more information, and be able to use it to more optimally about your clients and the premium and workplace and the
service their clients’ needs. lines of business and all of the various components, exposure
“If you look at the marketplace, there’s a lot of discussion in or loss data, et cetera, all the things that are going to be
the world around value chain and value chain compression. important, that are important to the end of the chain.
If you look at the retail client is paying us, the retail broker “When I say the end of the chain, the insurance and
in terms of premiums or they’re placing premiums with us. reinsurance companies, and the capital markets, that’s the
We turn around and place those premiums with wholesalers, information and that’s the gold nugget, if you will, of the things
MGAs, MGUs, insurance companies and the like. Insurance that they’re looking for. If you have it, you’ll have opportunities to
companies are turning around and taking some of that risk place business with markets that you otherwise would not.”
and laying off some of that risk to reinsurance companies so In other words, the future holds great promise for agents
reinsurance broker. Then, ultimately, there’s the underwriting and brokers because the markets will embrace them, and the
capital, the capital markets that are underpinning the entire way they will be able to represent their clients’ needs and
industry. offerings.
T H E T O R C H | M ARCH 2019 11AGENT OF CHANGE
“If you dislike change, you’re going to
dislike irrelevance even more”
The words are attributed to General Eric Shinseki, a retired United States Army general and Vietnam War veteran who
served as the United States Secretary of Veterans Affairs, and they summarize Williams’ advice to agents and brokers.
“If you’re positioned for change and understand that it’s coming, you’re in a great place,” he advises.
“If you’re smart and thoughtful about how you take that relationship and align yourself with the right people, the right resourc-
es, the right technologies, etcetera, I think you’d be prepared to be successful for a long, long, long time.”
“It’s those that stick their head in the sand and say, “Look, the world’s going to stay the same, it’s not going to change,” and so
forth. Those are the folks that are going to probably struggle as you think about five and 10 years from now. I think the world
is going to change enough that you won’t have the luxury of doing that.” e
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T H E T O R C H | M ARCH 2019 12INDUSTRY INSIDER
SELF-DRIVING CARS MAY ONE DAY KILL
AUTO INSURANCE AS WE KNOW IT
An entrepreneur has launched a firm specializing in insurance
for vehicles with automated-driving modes.
SOURCE: Propertycasualty360.com, February 19, 2019 | Reprinted with sincere thanks.
by Paul Tullis
D
an Peate, a venture capitalist and entrepreneur in A sophisticated array of lidar, radar and cameras is
Southern California, was thinking of buying a Tesla expected to be more adept at detecting trouble than our mortal
Model X a few years ago—until he called his eyes and ears. And computers never get drunk, check Tinder
insurance company and found out how much his or fall asleep at the wheel.
premiums would rise.
“They quoted me $10,000 a year,” Peate recalled. INSURANCE FOR VEHICLES WITH
For all the concern over accidents involving driverless cars, AUTOMATED-DRIVING MODES
including Tesla’s troubles with its limited self-driving “Autopilot” Peate, 40, previously started a company called Hixme, a
mode, it’s easy to forget one of the supposed virtues of provider of group health insurance. Now, he wanted to
autonomous vehicles: they will make the roads safer. launch a new firm specializing in insurance for vehicles with
T H E T O R C H | M ARCH 2019 13INDUSTRY INSIDER
automated-driving modes (and eventually fully-autonomous of the loss, declining premium revenues will eventually
cars). His experience with the insurer of his old-fashioned, outpace gains.
non-driverless car only confirmed the need.
When underwriters and actuaries price insurance on a GOOD NEWS: PLENTY OF TIME
new type of risk, Peate said, they charge more because they The good news for the industry is that it has time. Stevens
don’t have enough data. With so few Model X’s on the road, estimates that by 2035 there will be only 23 million autonomous
its safety record was, at best, opaque. But Tesla and other vehicles on American roads—less than 10% of today’s total.
carmakers collect reams of data on their vehicles’ operation And as of now the technology required for autonomous features
in order to improve automation. is extremely expensive to repair, meaning premiums will
Peate said he realized “we can get large amounts of data initially rise as more cars featuring them roll off dealers’ lots.
across entire fleets and be able to underwrite without having to “When you think of all these sensors and calibration, a
wait for years of data” from accidents after they’ve happened. little fender-bender could be a much more costly proposition,”
It also enables an insurer to cut premiums for drivers the said David Ross Keith, an assistant professor of system dynam-
more they engage autonomous driving. ics at the Massachusetts Institute of Technology.
“It’s foreseeable that insurance is a much less consumer-
AVINEW WILL MONITOR DRIVERS’ USE OF facing industry in the future,” Keith said.
AUTONOMOUS FEATURES As automation reaches Levels 4 and 5—fully autonomous
On Jan. 30, Peate announced the creation of Avinew, capability with the option for a human driver to take over,
with $5 million in seed funding led by Los Angeles’ Cross- and fully autonomous with no human involvement, respectively—
cut Ventures. Its insurance product will monitor drivers’ insurance is going to change dramatically.
use of autonomous features on cars made by companies
including Tesla, Nissan, Ford and Cadillac, determining DRIVER WON’T BE THE RISKY PART
discounts based on how the feature is used. Avinew has That’s because the driver won’t be the risky part. “Liability
agreements with most manufacturers, and is working to tie is likely to migrate from the individual to the manufacturer
up the rest, Peate said, allowing it to access driving data and the licensers of the software that drives the AV,” said
once a customer gives it permission. Rodney Parker, an associate professor of operations manage-
Deloitte, in its 2019 insurance outlook report, saw this ment at Indiana University. Accenture’s report agreed. That
coming. “The rise of connectivity…has generated a massive means insurers will be selling more policies to companies and
amount of real-time data and turned the insurer’s relationship fewer to drivers: carmakers and suppliers of communications sys-
with policyholders from static and transactional to dynamic tems, software, and sensors are going to be on the hook for
and interactive.” Avinew said it expects to be writing policies the failure of their products, rather than drivers paying for not
later this year in select states. checking their blind spot.
The transition points to a larger, existential crisis for the More broadly, the nature of risk itself is going to change,
multibillion dollar car insurance industry. If nobody’s driving, said Hyejin Youn, a professor at Northwestern University.
why do we need auto insurance? Premiums—and company With human drivers, “uncertainty is randomness, and random
revenues—are based on a driver’s likelihood of being in an chances follow a normal distribution.” If the risk is in faulty
accident and actual crash rates. With more than 90% of software or sensors, it becomes “more systematic.”
accidents caused by human error, taking the driver out of the Nationwide is one insurance company that’s started thinking
equation is going to mean big changes for insurers. about this problem. Drivers today are rated based on factors
“This comes up in every strategic conversation,” said including sex, age and driving history. “If we’re getting data
Michelle Krause, senior managing director in Accenture’s from the vehicle, that rating changes dramatically and gets
insurance client service group. The major carriers “are very very complex,” said Teresa Scharn, associate vice president
focused on understanding the technology behind [automation] of product development.
and what opportunities are available for them.”
Krause’s group, with research from the Stevens Institute BIG DATA & ANALYTICS
of Technology in New Jersey, published a report in 2017 Insurers are already in the data management business, of
forecasting trouble for insurers as automation becomes more course, but “it’s getting to be an even bigger muscle that we
widespread. Premiums could drop by 12.5% of the total market have to flex.” Like Nationwide, Allstate is aggressively hiring
by 2035, the authors found, and while new insurance product experts in big data and analytics, according to its president
lines centered on autonomous vehicles will offset some of service businesses, Don Civgin.
T H E T O R C H | M ARCH 2019 14INDUSTRY INSIDER
Determining who’s at fault when something goes wrong could get thorny in this new world.
• If the lidar goes on the blink, is that the carmaker’s fault or the supplier of the lidar?
• What if the driver failed to get the latest firmware update—so now it’s his fault?
• If a Cadillac with Super Cruise loses its internet connection, is that on GM or Verizon?
• What if the car gets hacked and is redirected to a thief’s lot?
• What if municipal infrastructure managing traffic flow loses its data?
“As a society we’ll have to figure out who’s liable for these different things and that will determine who’s required to
insure against what risks,” MIT’s Keith said. Youn of Northwestern sees it as a “public policy problem, best addressed in
government.”
OPPORTUNITIES FOR LEGACY INSURANCE COMPANIES QUICKEST TO ADAPT
Yet these are all opportunities for the legacy insurance companies quickest to adapt—as well as startups like Avinew.
Policies that protect products will become more widespread, while mobility as a service, Keith said, will mean we’ll want to
“insure our safety as a passenger” as well. Without a driver, there’s no driver to insure.
Nationwide thinks the smoothest road ahead will be one on which insurers and automakers each have a hand on the wheel.
“We’re working to build deeper relationships with car manufacturers,” Scharn said.
Perhaps that means mergers on the horizon between insurers and automakers? Krause of Accenture said “those conversa-
tions are going on as we speak.” e
T H E T O R C H | M ARCH 2019 15CITIZENS UPDATE
UPDATED
AGENT
OF RECORD
TRANSFER
FORMS
Citizens has updated the Personal Lines and Commercial Lines Agent of Record Transfer Forms to provide information about
commissions for transferred policies. The following statement has been included on both forms:
… commissions are paid to the agency that is assigned to the policy on the renewal date. Commissions will not be prorated for
policies that are transferred midterm. Premium-bearing changes processed after the transfer will result in positive or negative
commissions for the new agency.
Agents should begin using the updated forms immediately. Citizens will stop accepting the old forms beginning June 1, 2019.
The updated forms are available on the Agents site by selecting myAgency Agency Forms Transfer.
RESOURCES
For more information, log in to the Agents site, and from the website’s top menu, select Search Search Frequently
Asked Questions (FAQs). Enter agent of record transfer into the search field.
Appointed agents can submit questions to Citizens by logging in to the Agents website and choosing the Contact Us link on
the top of the website. Citizens should respond within three business days.
Appointed agents can submit questions to Citizens by logging in to the Agents website and choosing the Contact Us link on
the top of the website. Citizens should respond within three business days.
T H E T O R C H | M ARCH 2019 16IN THE NEWS
Florida Insurance Commissioner David Altmaier Elected as Vice President
of the National Association of Insurance Commissioners
TALLAHASSEE, Fla. – Tuesday, February 5, 2019, Florida Insurance Commissioner David Altmaier issued the following statement
after being elected to serve as Vice President of the National Association of Insurance Commissioners (NAIC). Commissioner
Altmaier will continue to serve as Florida’s Insurance Commissioner and his role with the NAIC is effective immediately.
READ MORE...
Commissioner David Altmaier: Addressing AOB Crisis Must Remain A Top
Priority
TALLAHASSEE, Fla. – Monday, February 11, 2019, Insurance Commissioner David Altmaier issued the following statement fol-
lowing today’s Senate Banking and Insurance Committee’s meeting...
READ MORE...
T H E T O R C H | M ARCH 2019 17IN THE NEWS
T H E T O R C H | M ARCH 2019 18FEATURED
MEMBER
BENEFIT
LAAIA
Welcomes Our Newest Members!
NATIONAL
ICW Group Insurance Company
Sirianna Insurance Group
BROWARD
Florida First Insurance of Broward
T H E T O R C H | M ARCH 2019 19You can also read
