First Quarter 2019
With first quarter of 2019 nearly finished, we’re in the thick of some great things happening across the company. To date, we’re already more than $9 million ahead of our top line plan, thanks in large part to our strong new business results and extremely high retention. I want to take a moment to say, thank you for your partnership and entrusting us with your business. Together, we achieved great success in 2018, here’s a quick look back.
In 2018, our UH family pledged more than $33,500 (which was matched by our enterprise) to charitable organizations in the communities where we work and live during our annual Caring and Sharing Community Campaign. In addition to raising thousands of dollars in donations and gifts, the team volunteered hundreds of hours to a variety of causes throughout the year. Our Community Relations Committee directed another $37,500 in sponsorships and donations. This commitment to give back in big and small ways makes a difference in the lives of those we’re fortunate enough to help serve and in our employees’ lives as well.
Another way United Heartland made a difference last year was through dedication to new and existing relationships with our customers — your effort really set us up for success. Our retention of 86.8% and new business result tells the story. In fact, 2018 was our second-best new business year ever, at nearly $70 million, bested only by 2017’s record-breaking results. We closed the year with $331 million in direct written premium, exceeding our goal by nearly $7 million, and our combined ratio of 88.4% was an outstanding achievement as well. A growing top line means nothing without a healthy bottom line!
We’re truly off to a hot start, as I mentioned above, through the end of February. We’re already $9.3 million ahead of our top line plan. Other big wins include:
- 96% retention rate in January (holy smokes!); through February we’re right around 94%.
- $5 million head of our new business plan — let’s work together to keep up this momentum!
- Year to date, 72% of our new business has a mod over 1.00.
We can’t thank you enough for all that you do to make this a mutually beneficial partnership. Without the relationships we have with you, our trusted agents, none of this would be possible and for that we are truly grateful.
Please continue reading to learn about new marketing materials available, exciting expansion news, our 2018 agency of the year and so much more.
Vice President, Field Operations
We continue to target high mod distressed business looking for insurance solutions for their current loss problems. In these cases, we deploy our aggressive claims and loss control model and have proven success making an impact. We know that if an account comes to UH with a mod over a 1.25 and stays with us for at least four years, we make a 30% impact (on average) to that experience mod!
We’ve taken this new research and have begun revamping our mod marketing series. Take a look at some of the completed materials for you to use this year.
We continue to expand our footprint, pursuing workers’ compensation business in Pennsylvania, Maryland, Washington D.C. and Louisiana. This development reflects our willingness to pursue profitable business where we see strong opportunities. It also reaffirms our belief that there is an appetite everywhere for the high-touch, customer service-focused approach to workers’ compensation we excel at. This expansion follows UH’s entry into Florida in 2013, Texas in 2015, Oklahoma and South Dakota in 2017 and Connecticut last year.
We are eager to identify qualified customers and partner with agents who share a focus on our six key business segments and our commitment to customer service. We are confident our value proposition and commitment to controlling our customers’ total cost of risk will be attractive to prospective customers. Our Charlotte region will be responsible for the growth and expansion of Maryland and Washington D.C., Kansas City region for Louisiana and Milwaukee region for Pennsylvania.
You can read the full press release about this exciting endeavor here.
United Heartland and Accident Fund Insurance Company of America proudly recognize Arthur J. Gallagher as 2018 Agency of the Year, the first time both AF Group brands have recognized the same agency with this prestigious honor.
“We are excited to have been selected by both Accident Fund and United Heartland as their respective Agencies of the Year,” said Mark Stachura, Gallagher Great Lakes/Midwest regional vice president. “This award is a testament to our partnership with Accident Fund and United Heartland and underscores the hard work and dedication each team provides our mutual clients to reduce their total cost of risk. In 2018, we partnered to utilize our SmartMarket program to revolutionize the way we do business together. Through this program, we deepened our existing office relationships and expanded our geographic footprint in an efficient and mutually beneficial manner. SmartMarket was really the catalyst to the outstanding results that led to this honor.”
“We have developed a great partnership with the Great Lakes/Midwest region of Gallagher over the years,” said Steve Cooper, president of United Heartland. “Gallagher and United Heartland share a similar philosophy regarding customer service. Their high-touch service model is consistent with United Heartland’s strong customer focus, which allows us both to maintain an incredibly high standard with our mutual customers.”
Read the full press release, here.
Milwaukee Regional Director Tracy Bain says building and fostering meaningful relationships with their agents and policyholders helped the team take charge, resulting in a hugely successful year. A few notable numbers for 2018 include:
- Achieved 92% retention for the second year in a row
- Wrote $15.6 million in new business
- Experienced growth in all states, exceeding their book of business by 10%
- Successfully wrote 51% of all quoted business
- Maintained profitability with a 31% policy year loss ratio
Supporting our agents
Bain and her team are committed to helping agent partners find success in the marketplace, as well as on a professional level. They’ve done this through:
- Agency, Loss Control and Claim advisory councils: The advisory councils allow advocates in the region to collaborate and offer constructive feedback for improving the experience for customers.
- Training: From business segment-specific training, job shadowing and new producer training, education is an ongoing priority for the UH team.
- Retention: Mid-term reviews for larger accounts have been key to boosting retention rates for the Milwaukee region and agent partners.
- Pulse checks: Underwriters regularly check in with our clients to ensure we’re delivering first-class customer service at every point of contact.
- Sales contests: Each month, underwriter sales results are posted throughout the UH office, which helps drive comradery and friendly competition.
Showcasing our team
Tracy and Dave Schaschwary, UH regional manager of business development, congratulate the Milwaukee region for on an outstanding 2018. They send a special kudos to Jodi Jukkala for earning first place for new business written within all of UH, as well as Bob Schneider who was on Jodi’s heals throughout the year.
We asked Jodi and Bob about their success in 2018, and here’s what they had to say:
Senior Business Development Specialist Jodi Jukkala
Coupled with excellent leadership, the UH culture of supporting one another and working together across all departments and with our agent partners has been a huge contributor to my success.
I believe activities such as our annual written premium sales goals and team meetings to help manage submission flow and hit ratios with our agency partners helped contribute to my success in 2018.
I believe in truly understanding the needs and expectations of our customers. I try to go above and beyond with the service I provide, and I always strive to treat others the way I want to be treated. My agents have helped me get off to a good start in 2019 by writing $1.3 million in new business within the first few days of the year. I am excited for 2019 and have set my goals to exceed last year’s numbers!
Senior Business Development Consultant Bob Schneider
Regarding my success, I can sum it up in one word — teamwork! Okay, there are few other words too — let me explain.
I wouldn’t be able to write any business if not for the talent of our dedicated agent partners, Claims and Loss Control teams. They are the frontline individuals who build trust and positive company rapport as they help our insureds and maintain important relationships.
When I meet with our agent/broker partners, we work together to review their current book in detail and discuss specific accounts they’d like to work on — this type of collaboration is so important. Additionally, I try to keep up with local business news to learn about prospects who have a solid company history, are displaying steady growth, are working to innovative and are well known within the community.
And last, but not least, I have found that expressing genuine care about accomplishing goals together and just being yourself (don’t pretend!) is the best way to solidify relationships. So far, 2019 is shaping up to be another successful year. Together with my agent partners, we wrote $1.1 million in new business in early January alone. I have a feeling this is the start of something good!
Tracy and Dave attribute their 2018 success to the hard work and dedication of their Milwaukee team and agent partners. “The outstanding year-end results have yet again provided a springboard for us to kick off 2019 on the right foot. We’ve already written more than $3 million in new business in just the first few days of 2019. Our underwriters are hungry to hit their goals and we’re projecting 99% retention for the month. We are excited to see what 2019 has in store for the entire UH team” said Dave.
UH’s profit-sharing program offers you, our valued agent partners, increased flexibility and improves the potential reward when you write more profitable business with us. Our plan rewards high-performing agencies and offers potential payouts up to 18%.
What are the program benefits?
- The three-year structure will help agencies maintain profit-sharing eligibility on a consistent basis rather than miss out due to an off year with weak results.
- Higher payouts for superior performance will range from 0.5% to 18%.
- 20% growth bonus for those agencies with current year written premium growth greater than 10% and a maximum of one year adjusted loss ratio of 45%.
- New in 2019: Allocated loss adjustment expenses are no longer included in calculations, meaning there is even more opportunity for profit sharing this year!
What would the pay-out look like?
A high-performing agency wrote $10 million in 2016, $13 million in 2017 and writes $14 million for 2018. The adjusted loss ratios over those years were 40%, 41% and 39% respectively. Assuming they met all the requirements and based on these numbers alone, here’s the calculation:
- 3-year written premium: $37,000,000
- 3-year average adjusted loss ratio: 40%
- 3-year adjusted earned premium: $34,000,000
- Profit sharing percentage (Tier 8): 5.4%
- No growth bonus
- $34,000,000 (adj. earned premium) x 5.4% (tier) = $1,836,000
- Divided by 3 years = $612,000 in profit sharing!
What are the eligibility requirements?
- Three in-force policies during the current year
- $750,000 in written premium
- $500,000 loss limit per claim
- One- and two-year contracted agencies eligible
- Note: Accounts written on large-deductible or retrospective rating plans are not eligible.
We encourage you to review our 2019 profit sharing program handout which includes the above information, as well as calculation grids for three-, two- and one-year agencies so you can see what your potential reward may be for 2019.
Contact your business development consultant with any questions and to see how you can identify strategies to take advantage of our new profit sharing program for years to come!
With billions of dollars lost each year to insurance fraud, our team of former law enforcement, safety and claims professionals partner with our Claims team to investigate and expose potential fraud. The Investigative Services Unit (ISU) is committed to identifying, mitigating and eliminating fraudulent behavior, and protecting AF Group against economic loss by conducting timely and quality investigations.
AF Group’s ISU has several types of investigators with specific skill sets. This integrated team of experts allows for cross-functional investigations, and unique and comprehensive perspectives during every investigation.
To learn more, click here to access our NEW brochure, which highlights the services our ISU provides in an effort to protect employees, employers and our customers’ bottom line.
The insurance industry has started initial lobbying efforts in Washington to extend the terrorism risk insurance program, which expires at the end of 2020. The program was created after the attacks on Sept. 11, 2001, when carriers suffered excessive losses and eventually highly populated commercial areas across the Nation were unable to secure coverage. In an effort to maintain market stability, AF Group will work with Congressional leaders over the next 18 months in support of a timely renewal.
The Florida Legislature is considering two bills, SB 1636 and HB 1399, that address workers’ compensation. SB 1636, proposes reasonable fixes for the Florida Supreme Court’s adverse decisions a few years ago that invalidated both the statutory contingent attorney fee provision (Castellanos) and the 104-week limitation on temporary total disability (Westphal). The Senate proposal seems the preferable approach as an overall reform vehicle, although H.B. 1399 does have one favorable provision that is lacking in S.B. 1636, as it would tie outpatient hospital reimbursement to Medicare, in lieu of the current charge-based approach. We anticipate some form of merged compromise to occur between the Senate and House proposals.
SB 854 would require carriers to provide injured workers with medical cannabis, which would be characterized as “medicine”; and require compensability even where an accident is solely caused by medical cannabis, if it was administered or taken in accordance with a physician’s written certification and instructions. In general, the industry opposes mandatory marijuana reimbursement under workers’ compensation system, based on both the federal illegality of cannabis and the lack of sufficient objective medical evidence of its efficacy in treating workplace injuries. We are aware that some insurers want the discretion to recommend or treat with marijuana when it appears in a case to be a suitable alternative to opioids. The bill now awaits consideration by the House Economic Matters Committee.
The industry is closely monitoring Senate Bill 567, which establishes various presumptions for hospital employees. According to the proposal infectious diseases, cancer, musculoskeletal injuries, post-traumatic stress disorder, and respiratory diseases; would be presumed work related injuries for hospital employees. The future of this initiative is unclear at this time.
As previously communicated, enacted Senate Bill 1737, requires carriers to send employer and agency premium increase notifications on all Illinois policies issued or renewed on or after January 1, 2019 that have premium in excess of 5% of the rate recommendation filed with the Department. The industry had previously been misadvised this provision applied to all Jan. 1, 2020 new business. AF Group has invested in system changes and created new processes/procedures in an effort to ensure compliance and timely communication with all stakeholders when notification are required.
The South Carolina Workers’ Compensation Commission approved the 2019 Medical Services Provider Manual (MSPM) with changes taking effect April 1, 2019. The summary of the changes can be found at the following link: https://wcc.sc.gov/sites/default/files/Documents/Main/Insurance_and_Medical_Services/Medical_Services_Division/Medical_Fee_Schedules/2019%20MSPM%20%20Changes%203.21.pdf.