‘Scene’ & Heard at NAPSLO’s Annual Convention

Record Number of Faces

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

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

Why So Quiet?

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

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

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

NAPSLO Executive Director Kelley said the association recently sent comments on TRIA to the Federal Insurance Office. “Congress needs to act soon on this,” he told NU. “This has and will affect more policies soon, as they lapse. The act adds a level of certainty for the industry.”

Following Demand

Burns & Wilcox CEO Alan Kaufman said the company's hiring of Denis Brady as president of Burns & Wilcox Brokerage, an independent business unit that will be solely dedicated to wholesale insurance brokerage, was a response to client feedback.

“Our move to be bigger in brokerage was based on demand,” he added. “Our clients wanted us to be involved in a bigger segment of the wholesale buy.”

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

That growth, he said, isn't coming from a traditionally hard pricing market where rate increases are in the low- to mid-single digits. Rather, it's coming from risks returning to market from the standard carriers. This is a trend that has continued since at least last year.

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

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

“Standard lines seemed to have learned some lessons,” said Vitale. “They are staying disciplined and pulling back,” especially from middle-market surplus risk such as restaurants, for example.

Vitale added that slight signals of an improving economy are being seen. For instance, sales for clients are improving, leading to more hires. There are more construction starts. Cargo and manufacturing industries are enjoying an upswing. In April, the company opened a marine, energy and construction unit to respond to growth in these areas.

Advice for the Next Generation

At the NAPSLO Next Generation panel discussion titled “Stepping Up When it Counts,” featured participants Gerald Dupre, senior vice president 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., fielded questions from Next Generation President Yiana Stavrakis and young participants in attendance on selecting a career path, communicating changes in market strategy to clients, and taking advantage of opportunities provided by retrenchment by primary-market carriers, among others.

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

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

“There's never a dull moment in this business,” said Next Generation co-chairman Culler, echoing Dupre's sentiment. He encouraged NAPSLO interns to focus on their technical expertise and learn the fundamentals of underwriting as the foundation of their skill set. “Go spend a week with a firm and learn what their process is all about,” he said. “Find mentors in this business who are committed to making you successful and to your professional development.

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

Stein: Let's Get to Work

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

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

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

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

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

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

Other Stein highlights:

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

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

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

• 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 Western World Insurance Group, was presented the Charles A. McAlear/NAPSLO Industry Award by outgoing NAPSLO President Matt Nichols during the conference's general session. The award honors individuals who have made significant contributions to the surplus lines industry.

Mulligan has served on the New Jersey Surplus Lines Association Board, the Professional Insurers Wholesalers Association of New York and Surplus Lines Advisory Board of the New Jersey Property Liability Insurance Guaranty Association. Additionally, he served on the NAPSLO Board of Directors and has served as Chair of the NAPSLO Legislative Committee and served on the NAPSLO Internship Committee.

Other award recipients were:

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

• Phillip McCrorie, RSUI, received the W. Dana Roehrig Past President's Award, which recognizes outstanding contributions of NAPSLO committee volunteers. McCrorie was honored for his service to the Investment Subcommittee and its work to develop a more robust investment strategy for the association's net assets.

• H. Michael Byrne, Drinker, Biddle and Reath LLP, received the Richard M. Bouhan Legislative Advocacy Award, for what was described as his intelligent and thoughtful approach to NAPSLO's legislative work and longstanding advocacy in advancing the legislative interests of the surplus lines industry.

Six NAPSLO interns were recognized during the general session for their work during summer 2013. The group's internship program introduces students to surplus lines, attracting young talent to this dynamic specialty segment of the insurance industry. The program offers hands-on experience in surplus lines, and interns work with both carrier and broker members; industry leaders on NAPSLO's Career Awareness & Internship Committee serve as mentors throughout the experience.

The interns recognized for outstanding work were Bart Stachurski, Temple University; Allison Schlenke, University of Georgia; Brad Ketzner, Indiana State University; Alyssa Bouchard, Appalachian State University; Elizabeth Aycox, Troy University; and Jake Fratkin, University of Georgia.

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

Nearly 2,000 insurance professionals have earned the ASLI designation. The program was developed jointly by the Derek Hughes/NAPSLO Educational Foundation and The Institutes in 1996.

I'd Buy that for a Dollar

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

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

Inside one of the broker lounges, attendees at one table happily tore into a stack of the mags. “See? I told you we'd make money while we were here,” one was overheard as saying, drawing laughs from his colleagues.

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