The influence and impact of our area’s insurance industry adds up to more than you think.
Today, most people accept that many forms of insurance are necessities, but until disaster strikes, we may not think much about it. But the impact of the insurance industry in our area extends far beyond premiums and brings much more than the peace of mind its policies provide.
“There are many jobs created by our industry,” said Charlie Harris, Executive Vice President at Starke Agency, Inc. His company has 30 employees, but as a whole, the industry accounts for thousands of jobs in and around Montgomery. “And I don’t know if people think about it, but you can’t have economic development without insurance. Banks don’t loan money without it.”
Alabama Insurance Commissioner Jim Ridling agreed. “There is not a structure built or an automobile sold in this state without insurance,” he said. “It is an essential piece of business getting done and our economy running.” Since the primary mission of the Alabama Insurance Commission that Ridling heads is to monitor insurance companies, he has a good understanding of how and why the industry matters here. As does Tommy Coshatt, Executive Vice President of Operations at Montgomery-based Alfa Insurance, one of the city’s oldest and largest companies that employs approximately 1,000 people in the River Region. “From a purely economic standpoint, our footprint here is significant,” he said. “Our annual impact is $1.4 billion in this area; that impacts a lot of lives.”
PUTTING A PREMIUM ON PHILANTHROPY
Despite this impressive figure, Coshatt believes that Alfa actually contributes to its community in an even larger way. “We strive to be there when people need us most,” he said. “I can’t quantify the emotional stability we can give families in the aftermath of something tragic.”
Of course, that’s an insurance company’s primary job. But Alfa and other local companies go several steps farther too. “We are so proud of our Alfa Cares initiative, which was recently recognized by the National Farm Bureau as being the top program of its kind in the country,” he said. Through Alfa Cares, the company has raised more than $400,000 for the American Cancer Society since 2015, and last year, raised more than $120,000 for Children’s Hospital. “And we don’t just write checks,” Coshatt said. “We get our employees engaged with the community by giving them a paid day off to volunteer with a cause or non-profit they care about.”
Sonya Berryman, Senior Vice President Insurance Services at Palomar Insurance Corporation, a local independent insurance agency focused on commercial and personal insurance, touted her company’s similar efforts. “We encourage our employees to impact their community; it’s where we live too,” she said. “We provide one paid day of leave for our employees each year to volunteer with whatever their passion is.” Palomar is also heavily involved with the Joy to Life Foundation, a local breast cancer non-profit, signing up a large company team to participate in its major fundraiser, the Walk of Life, every year.
Berryman pointed to another way companies like Palomar benefit Montgomery. “As an independent agency, we are always bringing insurance company representatives to Montgomery,” she said. “They stay in our hotels, eat at our restaurants, and we get to show off our city.”
Two fixtures in Montgomery’s insurance industry are also two of the city’s biggest champions, serving as vocal advocates for both the business community and the overall community.
Charles Jinright, CEO of the Jinright Group, a benefits brokerage, stressed how and why insurance agents in particular play positive roles in Montgomery. “You see a lot of insurance agencies, of all sizes and particularly small ones, all across the city and region getting very involved,” he said. “They sponsor youth sports teams, participate in fundraisers and join civic clubs,” he said. “It’s good for their business, having their names attached to those things, but it goes beyond that. And all those actions collectively make a big difference here. You see a lot of insurance industry folks in leadership roles too. That’s important.” Jinright is a prime example, serving on the Montgomery City Council for 23 years. He’s currently the Council President, an office he’s held for 15 years.
Barrie Harmon of Harmon Dennis Bradshaw also believes his industry colleagues bring a lot more than just their business to the area. “In our company, we feel we have an obligation to be community partners and to give back because a majority of our client base is here,” he said. “I think the industry as a whole as well shows its commitment to be active corporate citizens.” And he doesn’t just talk: He walks the walk too. Both personally and professionally, Harmon supports multiple arts organizations and other charitable causes in the city.
Like everything else, the insurance industry is facing nearly constant evolution in response to multiple changes, many occurring at a lightning pace. “Risks keep changing, and we [the industry] have to adapt to provide the needed insurance products,” said Charlie Harris, Executive Vice President at Starke Agency, Inc. “Take cyber liability. That wasn’t even a thing 15 years ago.”
Society’s youngest adults are driving many of the new trends. “We see that many millennials don’t want the whole relationship aspect of an insurance agent,” said State Farm agent Willie Durham. “They just want to go to the website, get the information and get the policy. They don’t feel they need to know me. That could change as they get older though.”
Harris believes it will and that there will always be a demand for personal customer service. “Insurance is still a very people-oriented industry. I’ve been hearing since the mid-1990s that the internet would change that, and while I think younger generations especially look at insurance options online, most people still, at least in our area, want someone to talk to and want that personal interaction.”
As Harris pointed out, the internet gives consumers access to a wealth of information that has ramped up comparison shopping, and Tommy Coshatt, Executive Vice President of Operations at Montgomery-based Alfa Insurance, elaborated on that thought. “Competition for customers has intensified, and it’s not just large national companies we’re pitted against,” he said. “Thanks to technology, we’re seeing startups disrupting the traditional insurance model; that is putting some pressure on us. And that’s pushing us to work smarter.”
But some things stay the same. “We have to be innovative to meet today’s customers’ needs but also stay true to our mission and provide that personalized service,” Coshatt said. “Some people initially want no human inter-action, but when there is a problem, you want a person to talk to.”
NEW FOR 2018
Changes in insurance laws and regulations are ensuring consumers have clearer pictures and lower costs when it comes to protecting property and other valuables.
One mandate effective at the beginning of 2018 requires companies offering HOME INSURANCE POLICIES to separate out what EACH PIECE OF COVERAGE COSTS.
Cyber threats are driving new insurance legislation too. The Alabama Legislature passed a law to require companies that handle and store sensitive personal information to BE MORE ACCOUNTABLE FOR SECURING THAT DATA and for quickly and clearly informing customers when there is a breach. “Companies have an obligation to protect that information,” said Sonya Berryman, Senior Vice President Insurance Services at Palomar Insurance Corporation. “How they have handled responding to breaches in the past has been a bit lax, so look for more legislation on that from the federal level too.”
“Insurance is still A VERY PEOPLE-ORIENTED INDUSTRY. I’ve been hearing since the mid-1990s that the internet would change that, and while I think younger generations especially look at insurance options online, most PEOPLE STILL, AT LEAST IN OUR AREA, WANT SOMEONE TO TALK TO and want a personal interaction.” -CHARLIE HARRIS, EXECUTIVE VICE PRESIDENT AT STARKE AGENCY, INC.
THE NUMBERS GAME
THE ALABAMA INSURANCE COMMISSION COLLECTED $342 MILLION IN TOTAL PREMIUM TAX IN FY2017, MAKING IT THE LARGEST CONTRIBUTOR TO THE STATE’S GENERAL FUND BUDGET.
IN 2016 (LATEST YEAR AVAILABLE), $20.7 BILLION IN INSURANCE PREMIUMS WERE WRITTEN IN ALABAMA.
THERE ARE 25,785 REGISTERED INSURANCE AGENTS IN ALABAMA, AND THEY ONLY MAKE UP A PORTION OF THE PEOPLE EMPLOYED IN THE OVERALL INSURANCE INDUSTRY.
According to our industry sources, for better and for worse, technology’s endless march forward is affecting the insurance industry in several key ways.
Things like email, digital signatures, company apps and more are making the industry faster and more efficient, and these changes save money for companies and consumers. “Email alone has revolutionized how we interact with our clients,” said Sonya Berryman, Senior Vice President Insurance Services at Palomar Insurance Corporation. They also give customers options. “My customers can come to my office, call in or click through an app to reach me,” said Willie Durham, a State Farm agent. “That means I can take care of clients out of my area, like kids going off to college.”
The ability to gather and analyze mass quantities of information quickly is helping insurance companies better predict losses and adapt products and prices accordingly.
Smart phones have led to a “distracted driving” epidemic. “It’s a big issue for insurance companies and for clients,” said Charlie Harris, Executive Vice President at Starke Agency, Inc. “We are working with business clients to help put policies in place for their sales staff and drivers to protect them from risk.”
Today’s cars are moving computers. “They are full of advanced tech and that means costly parts, so we’ve seen repair expenses shoot up in our claims,” Tommy Coshatt, Executive Vice President of Operations at Alfa Insurance, said.
The peer-to-peer transactions becoming commonplace with companies like Uber and Airbnb can be problematic. “Folks using their own vehicles operating as a cab is impacting the industry because it changes the type of insurance they should have,” said Durham. “They have to get a special endorsement from their auto insurance, and there is an additional charge. And if you don’t tell your insurance company, there is an accident, it might not be covered. The same goes for renting out your house with Airbnb or VRBO. People need to be aware of that.”
Self-driving cars are going to rock the insurance industry. “They are still years away, but they’re coming,” said Charlie Harris, Executive Vice President at Starke Agency, Inc.
HOW TECH CAN HELP
State Farm Insurance agent Willie Durham pointed out one way technology can come to the aid of the insurance industry and its customers. “Alabama is a mandatory liability insurance state for cars, and that happening helped the industry some,” he said. “But there’s some tweaking that still needs to be done.
If you visit Durham and buy car insurance, you get a card that day that says you are insured – and have paid for that insurance – for six months. But you can never make another payment, and you still have the card for five more months, even though, since you stopped paying, you’re not actually insured. “My customers are getting hit by a car, the driver has an insurance card but doesn’t have insurance. But the police see that card, so they are processing the accident and all leaving the scene without giving the uninsured driver a ticket,” Durham said.
And the other driver has a false expectation that the insurance of the driver who was at fault will pay to fix their car. “But in these cases, it’s my customers’ insurance that has to pay, so it causes frustration,” Durham says. “Technology could be used in the enforcement of the law so the police would be able to tell, real time, if an insurance policy is current.
NEWS TO KNOW
Insurance is a heavily regulated industry, but the employee benefits segment even more so. And, it is constantly changing and evolving. Mike Hicks, President at Alliance Insurance, shared a few thoughts on some of the latest changes and trends that Montgomery employers should be aware of.
“One trend worth expounding upon is that most employers have now realized that keeping good employees is worth the expense of offering employee benefits. Yet, just offering benefits is not enough. It takes the right mix of benefits, the proper and frequent communication of those benefits, and an easily understood and used enrollment process so employees know why each benefit is being offered and how that benefit will address risks inherent for that particular employee or their family. Happy and secure employees make happy and secure companies.
One particularly appealing ‘new’ regulation effective for tax years 2018 and 2019 is a tax credit of up to 25 percent of applicable paid wages for employers who offer ‘paid family and medical leave’ pursuant to the Family Medical Leave Act. Since 1993, qualifying employees have been able to take up to 12 work weeks off for qualifying medical and family reasons, but now, dependent upon their employer, they may be able to receive pay during these absences, and that's exciting news for many employees.”
2017 was the most expensive year on record for natural disasters, with $306 BILLION IN DAMAGE REPORTED. The industry is reacting in a few different ways. “We may see some costs go up, but many companies are also incentivizing consumers to take steps to lessen some of these risks,” said Alfa Insurance’s Tommy Coshatt. The Alabama Insurance Commission is doing exactly that, offering grants to help people make their houses and structures more resistant to wind damage. The program, called Strengthen Alabama Homes, was initially aimed at primarily coastal communities, but it should soon go statewide. That’s good news for the River Region, an area often in the path of hurricanes moving north and tornadoes. LEARN MORE ONLINE AT STRENGTHENALABAMAHOMES.COM
The recent large number of sexual harassment and hostile work environment reports at all kinds of companies and businesses both large and small is rubbing off on the insurance industry as Sonya Berryman, Senior Vice President Insurance Services at Palomar Insurance Corporation, explained. “In response to the #metoo movement, I think we’re going to see some strengthening of employee liability policies, and as an offshoot, we’ll also see more businesses holding more civil training courses for employees,” she said.
Charlie Harris, Executive Vice President at Starke Agency, Inc., echoed Berryman. “All the sexual harassment allegations are getting businesses’ attention, and part of our job, in addition to getting a business owner the right policy, is to provide resources to help them mitigate their risk, so there’s a push for education on what right practices in the workplace are.”
And while this issue facing mainly females is disturbing, Berryman sees some bright light. “In our industry, we are now seeing more women move into sales positions, and that is exciting,” she said. “Historically, it was men selling the policies, and women servicing them, but we now have some ladies out there selling very successfully and also rising to principals at agencies as well as owning them.”