Record Number of Faces

If attendance at NAPSLO's Annual Convention was any indicationof the state of the E&S market, it's a good time to be in thebusiness. With about 3,800 people wearing badges at the conventionin San Diego, NAPSLO set another attendance record.

“I've heard people say the attendance is a barometer of themarket,” said Brady Kelley, NAPSLO's executive director. “Judgingfrom all the people here, the market is moving in the rightdirection.”

Why So Quiet?

Jeremy Johnson, CEO of AIG's Lexington Insurance Co. said theindustry has been “relatively quiet,” though notes trade groups arebecoming more active on the issue of the impending sunset of theTerrorism Risk Insurance Program Reauthorization Act (TRIPRA).

Johnson said uncertainty related to the act's reauthorizationhasn't yet had wide effect on policies, but it will “in threemonths or so” when risks come through the portfolio and need to beaddressed despite knowing the fate of the backstop.

AIG has put thought into how this situation will be handled butis not disclosing any plan just yet. Customers and the economy “arepotentially going to suffer if TRIPRA is not reauthorized,” saidJohnson.The federal backstop is set to expire on Dec. 31, 2014.

NAPSLO Executive Director Kelley said the association recentlysent comments on TRIA to the Federal Insurance Office. “Congressneeds to act soon on this,” he told NU. “This has and willaffect more policies soon, as they lapse. The act adds a level ofcertainty for the industry.”

Following Demand

Burns & Wilcox CEO Alan Kaufman said the company's hiring ofDenis Brady as president of Burns & Wilcox Brokerage, anindependent business unit that will be solely dedicated towholesale insurance brokerage, was a response to clientfeedback.

“Our move to be bigger in brokerage was based on demand,” headded. “Our clients wanted us to be involved in a bigger segment ofthe wholesale buy.”

Kaufman said private ownership and financial strength has workedin B&W's favor: “There is a heightened interest now in workingwith financially-secure partners.” He added that there will be someadditional acquisitions of wholesalers—some who are “selling basedon anticipated growth rather than current growth.”

That growth, he said, isn't coming from a traditionally hardpricing market where rate increases are in the low- to mid-singledigits. Rather, it's coming from risks returning to market from thestandard carriers. This is a trend that has continued since atleast last year.

“We're seeing more policies—property & casualty—in thesurplus market due to standard lines retreating from some risks,”he said. “This puts us in a great position to increase policycount.”

Mario Vitale, CEO of Aspen Insurance, along with others stoppedduring the conference, agreed. Standard lines continue to shedrisks traditionally insured in the E&S market.

“Standard lines seemed to have learned some lessons,” saidVitale. “They are staying disciplined and pulling back,” especiallyfrom middle-market surplus risk such as restaurants, forexample.

Vitale added that slight signals of an improving economy arebeing seen. For instance, sales for clients are improving, leadingto more hires. There are more construction starts. Cargo andmanufacturing industries are enjoying an upswing. In April, thecompany opened a marine, energy and construction unit to respond togrowth in these areas.

Advice for the Next Generation

At the NAPSLO Next Generation panel discussion titled “SteppingUp When it Counts,” featured participants Gerald Dupre, senior vicepresident of general property, Torus Insurance; Brenda (Ballard)Austenfeld, executive vice president, property division, Westrope;James Drinkwater, president of the brokerage division at AmWINS;and Scott Culler, president, West region at Markel Corp., fieldedquestions from Next Generation President Yiana Stavrakis and youngparticipants in attendance on selecting a career path,communicating changes in market strategy to clients, and takingadvantage of opportunities provided by retrenchment byprimary-market carriers, among others.

Dupre revealed to the audience that before he entered theinsurance industry in 1977, he was a pre-med major—which at thetime seemed like a fine idea until “I realized I didn't like sickpeople,” he said, adding that he got too emotionally attached topatients.

“I've been in this business for 35 years and I've never beenbored,” he added. “It's been a blast. I'm learning something newevery time I pick up a risk.”

“There's never a dull moment in this business,” said NextGeneration co-chairman Culler, echoing Dupre's sentiment. Heencouraged NAPSLO interns to focus on their technical expertise andlearn the fundamentals of underwriting as the foundation of theirskill set. “Go spend a week with a firm and learn what theirprocess is all about,” he said. “Find mentors in this business whoare committed to making you successful and to your professionaldevelopment.

“Be patient and learn, and the opportunities will come—and theywill come quickly.”

Stein: Let's Get to Work

Republicans are not allowed to blow up the government to get ridof a law, said commentator, writer, actor, and presidential speechwriter Ben Stein.

“Shutting down the government is no way to run a railroad,”Stein declared during his keynote speech during the E.G. LassiterLecture Series on the convention's final day.

“Let's stop being children and walking away from the sandboxwith our toys, not wanting to play anymore,” continued Stein, anoted speechwriter for Presidents Nixon and Ford.

Stein is certainly no fan of Obamacare. He made it a point tocredit the Republican party with first coming up with the idea ofuniversal healthcare in the early 1970s, and went on to say “fewitems have been more sloppily crafted” than President Obama'shealthcare law.

“If you guys presented contracts with whole sections left blank,you wouldn't have those clients for very long,” he said. “[HouseMinority Leader] Nancy Pelosi said we had to pass the law to seewhat's in it. That is not a way to pass legislation.”

Instead of forcing a government shutdown, Republicans should letthe law fail, as he predicts it will, then get the votes to getRepublicans elected. After all, the law “can never be repealed, butit can be revised.”

Other Stein highlights:

• “I rather like President Obama. [Attorney General] Eric Holderis a very different matter.”

• “There's a lot of inequality in wealth. But that's the price wepay for being a free market society.”

• It is unfair that 51 percent of Americans do not pay taxes, andhave “no skin in the game” and Americans are “addicted toentitlements.”

• Stein said a lack of responsibility, a “stupefying materialism,”and a crisis in education are threatening America.

Awards & Recognition

Tom Mulligan, president and CEO of WesternWorld Insurance Group, was presented the Charles A. McAlear/NAPSLOIndustry Award by outgoing NAPSLO President Matt Nichols during theconference's general session. The award honors individuals who havemade significant contributions to the surplus lines industry.

Mulligan has served on the New Jersey Surplus Lines AssociationBoard, the Professional Insurers Wholesalers Association of NewYork and Surplus Lines Advisory Board of the New Jersey PropertyLiability Insurance Guaranty Association. Additionally, he servedon the NAPSLO Board of Directors and has served as Chair of theNAPSLO Legislative Committee and served on the NAPSLO InternshipCommittee.

Other award recipients were:

• Jacqueline Schaendorf, CPCU, Insurance House,Inc., was presented the NAPSLO President's Award, which recognizesNAPSLO committee chairs for outstanding service. Schaendorf washonored for her leadership of the Education Committee in expandingthe association's educational offerings and commitment toprofessional development for members.

• Phillip McCrorie, RSUI, received the W. DanaRoehrig Past President's Award, which recognizes outstandingcontributions of NAPSLO committee volunteers. McCrorie was honoredfor his service to the Investment Subcommittee and its work todevelop a more robust investment strategy for the association's netassets.

• H. Michael Byrne, Drinker, Biddle and ReathLLP, received the Richard M. Bouhan Legislative Advocacy Award, forwhat was described as his intelligent and thoughtful approach toNAPSLO's legislative work and longstanding advocacy in advancingthe legislative interests of the surplus lines industry.

Six NAPSLO interns were recognized during the general sessionfor their work during summer 2013. The group's internship programintroduces students to surplus lines, attracting young talent tothis dynamic specialty segment of the insurance industry. Theprogram offers hands-on experience in surplus lines, and internswork with both carrier and broker members; industry leaders onNAPSLO's Career Awareness & Internship Committee serve asmentors throughout the experience.

The interns recognized for outstanding work were BartStachurski, Temple University; Allison Schlenke, University ofGeorgia; Brad Ketzner, Indiana State University; Alyssa Bouchard,Appalachian State University; Elizabeth Aycox, Troy University; andJake Fratkin, University of Georgia.

The 2012-2013 Associate in Surplus Lines Insurance (ASLI)designees were also recognized during the ASLI Conferment Ceremonyat the general session. The Distinguished Graduate in the 2012-2013class was Ed C. Mitchell, Nautilus International Holding Group.Also recognized for Academic Excellence were Joseph Dahlvig,Admiral Insurance Co.; Chad C. Nice, American Family MutualInsurance Co.; and Yachiyo Takase.

Nearly 2,000 insurance professionals have earned the ASLIdesignation. The program was developed jointly by the DerekHughes/NAPSLO Educational Foundation and The Institutes in1996.

I'd Buy that for a Dollar

Freberg Environmental Insurance caused quite a stir on the finalday of the convention with a full-page ad in the third of threeNAPSLO show dailies produced by NU in collaboration withthe surplus lines association.

By 11 a.m., any of the 1,000 copies of the show daily producedfor Wednesday were hard to come by, as they were eagerly snatchedup by attendees. The reason? The ad contained an actual crispdollar bill attached by a peel-away glue strip.

Inside one of the broker lounges, attendees at one table happilytore into a stack of the mags. “See? I told you we'd make moneywhile we were here,” one was overheard as saying, drawing laughsfrom his colleagues.

Elsewhere in the host hotel, the Manchester Grand Hyatt, theoccasional copy could still be found—minus the bonus buck.