1. 2017 Industry Trends and Challenges

2. Commercial Property

3. Market Share Report Commercial Multi Peril
Year
TX Premium
(millions)
TX Loss Ratio
US Loss Ratio
2016
$2,662.6
87.1%
50.9%
2015
$2,674.3
48.1%
45.4%
2014
$2,601.8
50.0%
49.2%
$180 million profit but losses in last two quarters
TRIA Renewal
Written Premium Growth: -0.43%

4. Red is 4” hail, Yellow is 2” hail, Orange is 3” hail

5. Unscheduled Building Property – Tenants PolicyCP
Covers Building Glass With a Limit
Covers All Other Property With a Limit
Other Property Includes Fixtures and Permanently Installed Machinery & Equipment
ACV or Replacement Cost

6. Business Auto

7. Market Share Report Business Auto
Year
TX Premium
(millions)
TX Loss Ratio
US Loss Ratio
2016
$3,111.0
78.4%
69.1%
2015
$2,983.0
70.7%
65.9%
2014
$2,785.6
66.0%
64.1%
Written Premium Growth: 4.3%

8. Business Auto Prepare Your Customers for Rate Increases
Underwriting May Become More Restrictive
Understand the Full Impact of Driver Exclusions
Consider Leveraging Other Lines at Renewal

9. Workers Compensation

10. Market Share Report Workers Compensation
Year
TX Premium
(millions)
TX Loss Ratio
US Loss Ratio
2016
$2,364.9
40.1%
54.2%
2015
$2,741.9
44.2%
58.5%
2014
$2,843.8
46.2%
60.5%
Up only 6% Through September of 2014
Written Premium Growth: %

11. Workers Comp Rates California 3.48 Connecticut 2.87 New Jersey 2.82
New York
Alaska
36. Texas

12. Lost Costs Declining 2017 2016 2015 Air Conditioning 1.68 1.89 2.09
Carpentry NOC
2.94
3.17
3.54
Lawn Maintenance
1.44
1.51
1.73
Oil or Gas Well Servicing
4.39
4.65
5.04
Store Retail NOC
.81
.85
1.07
-15.5%
-10.4%

13. Other Market Indicators

14. Surplus Lines – 2016 Fire & Allied Lines up 2.36%
General Liability down .67%
Multi-Peril down 1.87%
Commercial Auto Liability up 40.25%
Premium Exceeded $5 billion
Overall Growth 7.15%

15. Surplus Lines – 8/31/2017 Fire & Allied Lines up 12.36%
General Liability up 5.51%
Multi-Peril up 14.33%
Commercial Auto Liability up 56.95%

16. Personal Lines

17. Market Share Report Homeowners
Year
TX Premium
(millions)
TX Loss Ratio
US Loss Ratio
2016
$8,474.8
87.0%
52.6%
2015
$7,994.1
53.3%
50.2%
2014
$7,860.7
46.2%
49.6%
23% increase in two years
$911 million underwriting profit through September 2015

18. Red is 4” hail, Yellow is 2” hail, Orange is 3” hail

19. 2017 Factors No Major Hailstorms Harvey Wind Claims - $3 Billion
Most Property Claims Will Involve TWIA and NFIP - $11 Billion
Serve as a Reminder to Companies About Texas Weather

20. Trends
Rate Increases
Indications As High as 20% But Most Companies Taking Less than 10%
Surplus Lines HO up 21% through August
ACV Roof Options

22. Personal auto

23. Market Share Report Personal Auto
Year
TX Premium
(millions)
TX Loss Ratio
US Loss Ratio
2016
$19,180.8
79.8%
72.0%
2015
$17,512.5
72.1%
68.7%
2014
$16,314.5
65.6%
66.0%
Underwriting Profit of $379 million through September – 2%
Written Premium Growth: 9.5%

24. Harvey Much Larger Personal Auto event for Insurance Carriers
ICT estimates Auto 160,000 claims filed as of 9/12.
Damage estimates from $2.5 billion to $5 billion

26. Legislative Issues

27. Surplus Lines Freedom HB 1559
Creates Industrial Insured Exemption similar to Exempt Commercial Purchaser but smaller risks
Eligible for Surplus Lines if Premium in Last 12 Months is $25,000 or employs 25 full time employees and Insured Retains a Qualified Risk Manager
“Qualified Risk Manager” employed or retained

28. Notice of Coverage Change SB 417
Personal Lines Issue
Notification Must Be Given to Agents and Consumers of Policy Changes Prior to Renewal
Notification Must Be in Plain Language
Companies No Longer Have to Send Non-Renewal Notice For Policy Change

29. TWIA Reciprocity HB 3018
Louisiana Wind Pool Did Not Allow Access By Texas Agents
Gives TWIA the Authority to Do the Same for Any State that Restricts Access By Texas Agents
Known as the “Don’t Mess With Texas Agents”
bill

30. Property Loss Litigation HB 1774
Primarily HO Issue but Impacts Commercial
10,000 Lawsuits Filed After 2012 Hail Storm in Hidalgo County
In the Valley, 30% of All Claims Involved an Attorney
Most Filed Without Notice to Insurer Alleging Additional or Hidden Damage

31. Legislative Change
Requires 60 Day Written Notice to Carrier Prior to Filing Suit
Insurer Has Right to Inspect After Notice
Company Can Choose to Defend Adjuster and Agent
80/20 Approach to Fees

32. Hurricane Harvey Update
IIAT Dealing With Misinformation
HB 1774 – TTLA rumor regarding filing claims
Change applies to “actions” after 9/1/17
FEMA Rumors
Required “denial letter” before filing for FEMA assistance or filing claim with NFIP
Lack of Flood Coverage
Estimate is that only 15% of homes in Houston have Flood Coverage

33. Hurricane Harvey Update
Adjuster Turnover
Hurricane Irma in Fla.
Florida windpool paying more than TWIA
IIAT Support
Financial support for Victoria and Rockport
IIABA Foundation efforts for IIAT members and employees

34. 2017 Best Practices Benchmarks
< $1,250,000 Revenues

35. Growth Organic Growth: 4.4% Retention: 93% New Business Growth: 12%
Revenue per Account: CL: $918

36. Productivity Revenue per Employee: $118,214
Revenue per CL staff: $247,767
Revenue per PL staff: $206,196
Revenue per L/H staff: $40,813
Revenue per employee: Best measure of agency productivity when comparing. As you break down into departments, comparisons are less meaningful
Spread: Provides a measure of how well employee talent is being leveraged.
Overhead Cost: Decrease or stable over time means you are gaining economies of scale
Servicing Cost: An increase over time means that servicing costs are rising at a faster pace than revenues

37. Balance Sheet Trust ratio: 2.63 Average collection period: 16 days
Receivables/payables ratio: 50.8%
Trust ratio: If less than 1.0, you’re spending carrier premiums
Receivables ratio: If above 1.0, you’re advancing funds
Current ratio: Liquidity necessary to meet short-term liabilities
Working capital: Measures your ability to meet daily cash expenses
Average Policy Cost: Helps you determine how small is too small

38. PEER TO PEER WITH BEERS 4:30
Next UP
PEER TO PEER WITH BEERS 4:30