How Many Claims Does it Take to Make Someone Want the Coverage?

It's always a delicate dance helping a client see the value in an insurance product.

It's even harder if that product is protecting something someone thinks will never happen.

Not to mention, most people buy insurance and hope they never use it.

That's why claims activity is an easy way to validate the real-world application of different coverages.

Dillon Behr, Executive Lines Producer at RPS, talks about the rising claims Management Liability coverage is seeing and why businesses should pay more attention to it.

Joey Giangola: Mr. Dillon Behr, how are you doing today, sir?

Dillon Behr: Not too bad. How are you today, Joey?

Joey Giangola: I'm doing all right. It's getting to be that time of year. I want to know, is there something that, for whatever reason, it doesn't necessarily have to be a big reason, but is there anything that you've ever just, for whatever reason, cannot seem to purchase successfully?

Dillon Behr: Cannot purchase successfully?

Joey Giangola: Yeah. Like an item or a thing that you've tried to buy multiple times maybe, without any really luck, or just something that you really wanted and you just, for whatever reason, you couldn't make it happen.

Dillon Behr: That's a tough one. I can't think of anything that I've wanted.

Joey Giangola: I don't know about you, Dillon, but maybe it's just me, but for whatever reason, I can't seem to purchase soap dispensers with any regularity. I've bought maybe 10 of them over the course of my life, and they just never work. You've never had that luck with a product where you just buy it and then it just doesn't work or does the thing that you want to? No, just me?

Dillon Behr: Maybe just you, I'm not sure. I'm sure there's something and it's just not coming to my mind.

Joey Giangola: Maybe. Yeah. I mean, you live a much more successful life, maybe that's what it is.

Dillon Behr: Maybe that's the case. Actually, you know what it is? My wife makes me read all these reviews before I buy anything. I can't buy anything without checking Consumer Reports anymore. Maybe that's the problem.

Joey Giangola: She makes you read reviews?

Dillon Behr: Maybe that's the fix, actually, for you. Just read Consumer Reports and then buy whatever is recommended. And then you'll have what everybody else in America has.

Joey Giangola: Well listen, I'm not above or beneath the reading review. I certainly enjoy a good review myself, but I just don't think they have them for soap dispensers. That's all. I would like to reliably go walk into a-

Dillon Behr: You'd be surprised.

Joey Giangola: You think so? [crosstalk 00:01:43].

Dillon Behr: Consumer Reports does pretty much everything.

Joey Giangola: Yeah. I mean, I guess if five to 10 bucks, I don't really care. Whatever, I just go with the ones in the bottle now. That's my solution, Dillon, is I just say, "Forget it. I don't have a nice looking soap dispenser. I'm going to be a little harsh on the environment, but I've tried. I've tried really hard and there's nothing I can do about it."

Dillon Behr: It's all you can do, Joey.

Joey Giangola: I'll try reading Consumer Reports, I guess that's the one thing I haven't done. But speaking of kind of reading into things, knowing what's going on, Dillon, what is happening in your sort of world of insurance right now as we're kind of gearing up towards the end of the year?

Dillon Behr: Yeah. So as you know, I'm focused on management liability, so D&O, EPL, fiduciary, crime, E&O, and cyber. And it is crazy. The D&O marketplace and employment practices liability right now as premiums are going through the roof, retentions are up, we're seeing anywhere from 25, 50, a hundred percent increases on D&O policies and cyber. We're starting to see a lot of increases as well, affirming market there as well.

Joey Giangola: Yeah. And that's something that is not necessarily normal for this sort of space. I mean, what has changed in your sort of conversations that you're having with clients, with your agents to have with their clients in terms of, "Hey, this is the things that you really need to get across why this is happening and how they can really be prepared?"

Dillon Behr: Now granted, I've only been in the business for six years, but my understanding from talking with more senior people on my team is that for about a couple of decades now, we've had pretty much suppress rates, even given a couple of downturns, we have not seen in a hard market in a really long time for D&O. And carriers were seem to be generally under pricing, trying to get market share. And the claims are coming in, obviously, more than they're writing, and we're seeing carriers drop off left and right, and very few coming online right now. Most of them are pulling back and obviously COVID-19 has exacerbated all of the problems. So anybody that was already having trouble with their book on management liability is having even more so because of the expected claims relating to employment practice claims and other shareholder claims with D&O.

Joey Giangola: Yeah. Yeah. So what do you think that does for the conversations where agents that maybe aren't pushing management liability as hard with their clients... Obviously, this is maybe more validation for its need, obviously. So do you think maybe that's something that businesses will start to sort of wake up to a little bit and say, "Well, maybe these coverages are something we need to pay more attention to?"

Dillon Behr: Yeah. I think we're going to start seeing more claims, especially on the EPL side. So some of the smaller businesses that maybe have not purchased this before are going to run into claims, and then they're going to be like, "Oh wow. I maybe should've bought insurance when my agent suggested it."

Joey Giangola: What do you think that conversation then should really start to look like from that perspective of agents that need to be bringing it to their clients more? How do they start offering that in a way that sort of makes sense, given the times? Like you said, it's not the easiest conversation to have. Is there a way to sort of validate that a little bit more as to maybe why now is the time to possibly consider at least one or two extra lines of coverage?

Dillon Behr: Yeah. I think specifically, if you're looking at, we can say, EPL, if you're not carrying that before, there's a reason that carriers are pulling out right now of EPL, and it's because they are expecting claims. So if the carriers are expecting claims, then you as an insured probably should as well. So if you can find that carrier that will write a new policy... There are actually several carriers that are not writing new EPL policies for companies that have not purchased it in the past. So they're doing renewals, but they're not writing new business if you've never had it before. So that should be an indicator number one. And then two, if you just think about all of the potential layoffs that you may or may not have to deal with, all of the work from home issues and how that exacerbates all sorts of potential issues in the workplace, we're just running into more scenarios where you might end up with an employment practice claim.

Joey Giangola: Yeah. And it's definitely one where the employee that would be laid off, they're becoming more educated as to just the things that can happen, right? So the more they are sort of seeing what other people are doing, then that's going to, I would imagine, lead to somewhat of a increased awareness to those claims potentially happening. Or am I kind of going out on a limb on that one.

Dillon Behr: No, I think that's definitely true. You've got the combination of a lot of courts are being more employee friendly as opposed to employer friendly, as well as just more information available to the employees of what types of claims that they can make, whether it's a wrongful firing, harassment, whatever it may be. There's just more data out there. And I think that some people do worry that there is a sort of a generational difference where people seem to feel that maybe they're more entitled if they get fired that they've been wronged, and they'll at least look for some sort of reason to blame somebody else for it. I don't want to generalize that, but I think that that is a trend.

Joey Giangola: Well, it's one of those genies that isn't really going to go back in the bottle all that easily, I guess.

Dillon Behr: Right. That's absolutely true.

Joey Giangola: Yeah. Maybe that's part of the conversation, right? To where that was, again, back to the generations, right? "Oh, we just put our head down and worked and if we got fired, we went and got a new job, right? Sort of thing. And it was our fault or whatever the reasons, right? And maybe that's why I wasn't maybe part of the conversation is because it's just a different mindset, or we're dealing with an age where, again, people are maybe aware of more options. Have you seen that be a conversation starter for any agents in terms of actually kind of getting their foot in the door and having sort of a realization [inaudible 00:08:15]?

Dillon Behr: Yeah. I think a lot of the smaller agents that I work with, if they're not already offering EPL, that is a good conversation starter there. The vast majority, I think, are at least offering EPL, whether or not they're proficient in selling it is another question. So that's where I can kind of come in and help with claim examples and talk about these sorts of changes that we're seeing in the marketplace.

Joey Giangola: All right, Dillon, then give me... I don't know if you have this on the top of your head, but give me the best sort of EPL line that you kind of throw out there to agents? What's the thing that you go to, to really make things click?

Dillon Behr: For me, it's really about the, you can control what you do with your employees, but you can't control what your employees do with each other, or what a person walking through the door might say to your receptionist or something like that, which is a third party claim. So there's a lot of things that you can control, but there are too many things that you can't control that really require this insurance to be in place. I mean, you don't have to look far to find somebody that is under some sort of protected class and you're probably hiring a bunch of them anyway. If you're not, then you're probably violating some sort of practice anyway. So there are just way too many ways for a claim to come about in EPL that you can't afford not to have that coverage.

Joey Giangola: Yeah. That makes sense. I want to shift gears a little bit. And one of the things that I do find very interesting talking about coverages that have proven to be more important or vital during this time. But another thing is also the way that insurance is actually bought and transacted as well. And I know you deal a lot with agencies, we'll say in the non-traditional sense that are kind of looking to distribute insurance a little bit different. What do you think is kind of happening in that space? What have you seen across the sort of time period as well as to what's really benefited, I guess, all sides of the party? I mean, what are your thoughts in general in the, we'll say the insuretech in this of it all?

Dillon Behr: Yeah. That's interesting that you bring that up. I see a lot of changes in the, you can call them insuretech. But all the way from the carrier, through the wholesaler and down to the retail side. Some of it are data changes, how do we use our data better so that we can make more informed decisions on underwriting or targeting our customers? Some of it is distribution. We see a lot of platforms where you can rate, quote and bind. And then we're seeing more and more retailers jump into the online distribution space where they're not even... Traditionally, you think of insurance as very relationship driven business. You're sitting down, having coffee or drinks and going out golfing. In the days of old, when people had time to golf, you'd go out golfing to meet your clients and win them over, and that's how you won the relationship.

And it's starting to become much more transactional. And we have these online insurance brokerages, they're going out there and they're just using search engine optimization and search engine marketing to get all of their leads. And they're growing very, very quickly by being very effective with search engine optimization. And they've gotten really good at taking their own data. So let's say you bind a policy for, I don't know, you write a hairdresser or something like that, you do general liability policy for a hairdresser. Well, that goes into your feedback loop and you start advertising and marketing on search engines for more of those types of policies. And then you get more submissions and then you buy more policies and it goes into this cycle where you just keep getting more of the same types of policies.

So it's interesting, if you get really good at that you can actually build a big book of a certain type of business that way. And I think the appetite for people to buy insurance online has really changed a lot in the last five years or so. It's become more commonplace to see that. And you're even seeing larger companies at least try that route. They may end up going with a more traditional brokerage in the end, but they're at least testing the waters on that.

Joey Giangola: Yeah. It's always an interesting sort of mixture, sort of that race to what's the perfect balance of that insurance buying experience, right? And I guess maybe what do you see from that perspective that might better serve, we'll call them the traditional retail agent, right? The traditional agencies. Because it's not so much all flashy technology all the time. There's, I think, a handful of things that can be just sort of concepts that can be kind of passed over the fence, I guess if you will. Is there anything that stands out to you of where some of the real opportunities lie to kind of enhance that?

Dillon Behr: Yeah. I think certainly the larger accounts are still going to be handled by a relationship most likely. And I think to differentiate yourself in that retail space, you have to have that online distribution, but you also have to have that personal touch, especially when it comes to renewal time. Because if you've never established a relationship with that insured, it makes it really easy for them to shop their policy next year at another insurance agent that's online, right? So it's one thing to go out there and take a policy one year, but if you can't retain it the next year, it almost doesn't do you a whole lot of good as a retailer, depending on how much you spent to get that lead in the first place, right? Insurance is all about renewals. If you can't retain them, then you're not going to make it.

Joey Giangola: All right, Dillon, you brought up one of my favorite topics. So let's dive into this a little bit. So let's talk renewals then. So I mean, what do you like... Because again, I think you're a hundred percent, right? If you don't spend the time to at least engage or develop that relationship in some way during that initial 12 months, you're going to have an uphill battle. I mean, what do you like to see out of relationship? What do you think when you're looking to kind of keep somebody close, when you're trying to keep a policy renewed, what are some of the things that you like to make sure happens to give yourself a better shot?

Dillon Behr: Well, number one, I think building the relationship on the front end. One of the value adds that I like to have is training my retailers on whatever coverage that we're offering. Whether it be cyber or EPL, kind of talking about how that policy might offer something different. And then how that, with all the claims experience that we have at RPS, we have the ability to kind of talk about how each carrier has responded to claims for us in the past. So giving that sort of data really demonstrates your knowledge of the space as well as it helps you build that relationship on a more personal level with that retailer.

And then I think it's communication. If you only have that one touch point every year, it's hard to call that a relationship. So getting out there as a wholesaler, I'm getting out there trying to get more submissions, because that gives me more touch points with that retailer throughout the year. Constant communication with them as far as being on time with renewal solicitations, 90 days out, whatever's appropriate. And talking to them about... I always send out a state of the marketplace when it comes to cyber and EPL because they're changing so often. And if you can communicate, whether a retailer communicating to your insurance or a wholesaler communicating to your retailer, if you can communicate that you understand what's going on in this marketplace and that you're going to help them when the changes come, you're going to have a leg up on your competition. Oftentimes you'll find that if you're willing to do that sort of work, your competition is going to be lazier that you.

Joey Giangola: Yeah. Definitely a huge fan of that. Like you said, the state of the market just sort of, "Hey listen, this is something that you can come to expect from me." What kind of response do you generally get sort of doing that for yourself in terms of just, like you said, putting it out there like, "Hey, this is everything that's happening this year that you need to be aware of. Because I've got your back, I'm in your corner." All that fun stuff. I think maybe people also too, sometimes, underestimate the response that could potentially come from putting the upfront work and some of that stuff. Maybe what are some of the responses? What are some of the feedback did you get that has even surprised you over the years?

Dillon Behr: It's a numbers game, right? So if you put it out to a hundred people, maybe only three people will respond. But maybe 10 or 20 of the people actually cared and read it. Yeah. If I send out a state of the market on cyber today, definitely 50% of the people are not even going to open the email or read it, "Oh, another one of these," right? But a lot of people will, and it's always been so surprising to me, not only do they respond and say, "Thank you for this information, it's really useful." But oftentimes I will get a response to that specific email, six months, 18 months, three years later to that one specific email link, so they had archived it and saved it for some special customer. And then it just reminded them, or they were just reminded of it whenever some customer came in that needed that. And I'm always blown away by some of these really old responses that I get to emails that are no longer archived in my inbox, and somebody is responding to it.

Joey Giangola: Listen Dillon, from the marketing side of things, I'd gladly take you a 50% open rate any day of the week. [crosstalk 00:18:11].

Dillon Behr: Yeah. I was probably being a little generous with it. I don't want to deter people.

Joey Giangola: I was going to say, man, I mean getting 50%, that's pretty solid in the world of marketing. So I wouldn't beat yourself up too much on that. I think those are all very interesting and valid points too, and it's something that... I guess maybe let me ask you this, it's not something that's necessarily earned the first time that you send it out either too, it's something that I would think that you do it one year, they see it, great. The second year, a little bit more, and the third... So the more persistent you are with that to say, "Listen, I'm in this for the long haul." Did you maybe see any sort of accumulating effects in that regard?

Dillon Behr: Yeah. I think that is certainly the case. The first time you see something from anybody and you're like, "What is spam?" Right? You see it a couple more times, especially if you've done a few policies together, and we've had a couple conversations, you realize that I actually know what I'm talking about, and maybe you're more willing to... I also think early on in my career here, I sent information out too often. Although, a lot of it was cyber and there were a lot of changes happening at that time. So I sent stuff out maybe too often. I think the marketplace has grown a lot in the last five years, so it's more making sure that you have good information as opposed to just blasting them with things that everybody else is saying too, if you can provide some analysis that you've done or something unique that not everybody else has.

Joey Giangola: I don't really know what the answer to this would be, Dillon, but I'm going to give this a shot anyways. Let's just say you had to draw a line down between sort of that advanced technology approach to sort of getting a deal done, and then on the other side you had that relationship sort of base. What's your sort of philosophy? Where are you drawing that line? How many squiggles do you have? What are some of the key elements of zigging and zagging on that?

Dillon Behr: On the retail side, I think you can still be very successful without any advanced technology, but I think it's becoming more and more difficult. That line is starting to move further to one side or the other. So I think if you spend... I'm just making up something right now on the fly, 20% of your effort to generating leads online, as opposed to the calls that you did before, you're probably not going to have as high of a return rate. Just kind of like the email thing, if I make five phone calls, most likely somebody is going to talk to me. One out of those five, right?

But if I send five emails requesting an application or something, the odds are low that I'm going to get one of those, I might have to send a hundred emails, right? But you can send a lot more emails in five minutes than you can do phone calls, right? So as long as you are good with your data and you're responsive to what comes in, I think you can be successful with either approach. But I do believe that you have to build that relationship at some point.

Joey Giangola: All right, Dillon. I got three more questions for you, sir. And first, very simply, what is one thing that you hope you never forget?

Dillon Behr: Let's see. So I was injured pretty badly in my time in Afghanistan, and spent some time out at Walter Reed Military Hospital, and pretty much died on the operating table there. So I hope that I never forget to take the relationships that I have for granted because life can potentially be very short and taken away from me pretty quickly. So yeah. Hope I never forget to take any relationships for granted. Or [crosstalk 00:22:13].

Joey Giangola: I think you won the award, Dillon, for the most real answer possible that anything else that anybody else has ever said doesn't really count. So congratulations. I don't know if that's worth it or not, but you at least have that. On the other side of that, Dillon, what's one thing that you still have yet to learn?

Dillon Behr: What have I yet to learn? Well, my daughter is only 21 months, so I'm sure I have a lot left to learn as far as parenting goes. Yeah. Go with that.

Joey Giangola: I can support you on that, Dillon. And so yes, that's probably very true. Last question to you, sir. If I were to hand you a magic wand of sorts for you to reshape, redraw, really do anything you want to insurance to make it just a little bit better. What's that thing? Where's it going? And what are you doing?

Dillon Behr: I think incorporation of big data in the whole process. Everything from underwriting to distribution to getting to know your customers. I think there's so much data out there that a lot of people are trying to figure out how to really use it and put it together. I don't know. Maybe we have to go use the magic wand to organize all that data so that you can actually make sense of it. I think it's something that we're going to see change in the future, but if I could make it happen right now, I think it would be a lot easier for everybody to just kind of have a better understanding of all the data that they're sitting on.

Joey Giangola: All right, Dillon. This has been fantastic. I'm going to leave it right there, sir.

Dillon Behr: Awesome. Great talking to you, Joey. Thanks.