This is part two of our look back at what made waves in the insurance channel during 2014. This time around, we look at what hot headlines graced the pages of
Insurance Business from May to August.
May
Brokerage to eliminate, relocate 3,500 employees 02/05/2014
After missing profit estimates in Q1 2014, one broker giant announced it will be relocating 16 per cent of its workforce.
Willis Group Holdings announced it will eliminate and relocate some 3,500 workers after its second consecutive first quarter of missed profits. The moves are expected to affect 16 per cent of Willis’ international workforce of 21,700.
According to CEO Dominic Casserley, employees in “support roles” will be moved to lower-cost locations like Mumbai and Nashville, Tenn. The moves, which were originally announced in July 2013, are expected to save the company roughly $420 million through 2017 and $300 million each year following.
Horwath demands auto cuts now 14/05/2014
New Democrat Leader Andrea Horwath accused the minority Liberal government of siding with the insurance companies during a campaign stop in east-end Toronto, saying insurance companies have cut payouts by billions of dollars over the past several years but motorists have seen little benefit by way of lower premiums.
“The Liberals are more interested in keeping the insurance companies happy than they are in bringing down rates for drivers,” said Horwath. “People are not seeing a significant reduction in their auto insurance rates. Some people are seeing their rates go up.”
Gallagher acquires top-five broker 20/05/2014
A Canadian brokerage employing more than 650 people across Canada has just signed over 87 per cent of its equity interests to Arthur J.
Gallagher & Co.
Noraxis Capital Corporation – a top-five Canadian insurance broker – provides retail commercial, personal and employee benefits insurance products and services. The company generated nearly $125 million in revenue for the year ended December 31, 2013, and operates out of 23 offices across Alberta, Manitoba, New Brunswick, Nova Scotia and Ontario. (continued.)
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June
FAIR takes aim at FSCO 03/06/2014
The Fair Association of Victims for Accident Insurance Reform has taken aim at the Financial Services Commission of Ontario’s 2014 Draft Statement of Priorities, describing it as a "Christmas wish list" for insurance companies.
“Where is the protection talked about in this statement? Why are tens of thousands of Ontario’s accident victims lining up for hearings when they’ve been wrongfully denied the benefits they paid for in a time of need?” says Rhona DesRoches, chair of FAIR, in an open letter to Philip Howell, CEO and superintendent of financial services for FSCO. “Over and over the changes to our coverage read like a Christmas wish list for the
Insurance Bureau of Canada.”
CEO makes a shocking departure 11/06/2014
One CEO caught his board of directors and the industry off guard when he announced his departure in June.
Hartford Financial Services Group Inc. announced that current Chairman, President and CEO Liam E. McGee will be stepping down from his many roles after Hartford’s next annual shareholders meeting due to “recent health issues.”
McGee previously underwent surgery to remove a small brain tumor in January 2013, which was successful.
Man repays insurer $150,000… in quarters 16/06/2014
Roger Herrin, a retired foot surgeon, was left reeling over a court ruling mandating that he repay $500,000 of insurance money he received after the loss of his son in a car accident.
The southern Illinois man decided to convey this exasperation through unconventional means: by repaying $150,000 of that sum in what he describes as a “heavy as hell” amount of quarters – 7,500 pounds worth, to be exact.
“I just wanted to draw attention to what went on here,” Herrin told the Associated Press. “I really wanted to do it in pennies.” (continued.)
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July
Cold calling debate heats up again 05/07/2014
Is cold calling effective, or is it dead? The debate that started back in January heated up right along with the weather. Here is what one broker had to say:
“To be successful at sales you need to connect with people. How sales people connect differs from sales person to sales person,” wrote Tim, who stirred up the conversation once again on the original article, ‘
Cold calling is dead, consultant tells brokers.' “Social medial is one way to connect, cold calling is another way to connect, as is playing golf, going to trade shows and doing mailers.”
It was Andrew Jenkins, vice president of strategy for ArCompany, who told those brokers gathered for the Crystal Ball conference back in January that “agents who used social media had a greater sales buy of 20 per cent and 84 per cent of B2B decision-makers are looking for referrals. You compare that to cold calling, which is only effective 3 per cent of the time. Those are the changing dynamics of the industry.”
ICBC letter didn’t taint jury pool: judge 15/07/2014
The B.C. Supreme Court ruled that a letter sent out by the ICBC to its policyholders did not taint a jury pool, stating that the trial judge would be able to deal with any suggestion of bias.
The ruling came after the provincial auto insurer had sent out a letter blaming increased insurance rates on ‘rising injury costs,’ amid concerns that the jury pool had been tainted in the case of Yates v. Lee, in which the plaintiff had been injured in a 1998 collision.
According to the BC Injury Law and ICBC Claims Blog website, the judge ruled to allow a jury trial for the following three reasons:
“(a) the court is asked to find that ICBC’s communication to its policy holders through the renewal notices constitutes prejudicial pre-trial misconduct in the absence of an adequate evidentiary foundation;
“(b) to grant the relief sought would skirt the challenge for cause process by having the court make a determination of juror partiality without requiring the plaintiff to satisfy both branches of the well-established test for juror partiality, and without any inquiry to determine whether particular members of the juror pool selected for this case could not serve impartially; and
“(c) another decision-maker, the trial judge, has all the powers necessary to ensure trial fairness.”
Who are the Top 5 highest-paid insurance execs? 22/07/2014
Soon-to-be
AIG Chief Executive Officer Peter Hancock made news that he would be receiving a raise - $10.2 million US. But who else is bringing in the big bucks in insurance?
- Jay Fishman, Chairman and CEO of Travelers
Base Salary: $1 million
Total Compensation: $ 18,087,994
- Evan Greenberg, Chairman, president and CEO of Ace Ltd
Base Salary: $1,200,000
Total Compensation: $17,785,347
- Liam McGee, Chairman and CEO of Hartford Financial Services Group Inc.
Base Salary: $1,100,000
Total Compensation: $17,670,315
- John D. Finnegan, CEO of Chubb
Base Salary: $1,330,000
Total Compensation: $16,840,000
- Robert Benmosche, President and CEO of AIG
Base Salary: $2,269,231
Total Compensation: $14,834,562 (continued.)
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August
Defeat for the channel before 2034? 02/08/2014
In the article ‘Carriers are thrashing brokers in client turf wars,’ one reader agreed that limiting brokers to contracted insurers or wholesalers may signify the extinction of the industry as we know it today.
“You're right. Our system is archaic. Our partners, our contracted insurers, have access to data we brokers have to submit to issue or renew a contract,” wrote Paul C. Armstrong. “We have no influence on what is done with the information to assist in rating or anything else. The insurer is in charge.”
In fact, Armstrong predicted the demise of brokers within two decades.
“Limiting a broker to place business with only contracted insurers or wholesalers will defeat us and probably sooner than 2034,” he wrote, “unless some action is taken immediately between the broker force and the designated government body.”
Industry giant loses battle to cancer 18/08/2014
The former head of a major insurer has lost his battle with cancer at the age of 68.
James Schiro, who headed
Zurich Insurance between 2002 and 2009, was most recently a lead director at Goldman Sachs Group – a position he left in July to undergo treatment for multiple myeloma – a type of blood cancer.
Goldman expressed its sympathy for Schiro’s friends and family.
“We are greatly saddened by the passing on August 13 of our former lead director, James Schiro,” the bank stated via Twitter. “Our thoughts are with his wife and children.”
The silver bullet for Ontario auto insurance 20/08/2014
There isn’t one silver bullet needed to cure Ontario’s ailing auto insurance system, but several; and right now the chambers are empty, says the president of one of the province’s largest auto insurers.
“Fighting fraud is important, but I don’t think it gets us to the 15 per cent,” says George Kalopsis, the president and chief operating officer at
Echelon Insurance, referring to the government’s mandate for Ontario auto insurers to reduce auto insurance premiums 15 per cent by 2015. “You can reduce costs for insurers by streamlining the filing process, and develop a clear and sustainable definition of catastrophic impairment. There is no one silver bullet. They are all important, but unfortunately, we’re missing some of those bullets in our gun right now.”
Tomorrow: Recent history – a review of newsmakers from September to the month of December
