Joseph Petrelli: An Intellectual and Diligent Insurance Professional

Joseph Petrelli, ACAS, ASA, MAAA (MBA) is the President and Co-Founder of Demotech. The second-largest rating service in the United States by unique client count, specializing in evaluating the financial stability of regional and specialty insurers.

He holds a Bachelor of Science in Actuarial Science from The College of Insurance (now part of St. John’s University) and a Master in Business Administration from The Ohio State University.

A recognized expert in financial analysis and solvency management issues in the insurance industry, Joe’s insight, and innovation have resulted in many firsts within the P&C and Title industries, including a model for assigning Financial Stability Ratings® (FSRs) based on balance sheet strength and financial integrity and the execution of a business model, not solely on size, the development and utilization of a Management Audit Process a decade in advance of today’s emphasis on enterprise risk management, and ongoing analysis to evaluate assigned FSRs relative to insurer survival rates, and the development of a procedure to review and rate start-up insurance companies, which saved Florida’s residential property insurance marketplace.

The Moment that Sparked him to Become an Actuary

As a younger student and into high school, Joseph had strong mathematical skills. He did some research on insurance and actuarial science in the late 1960s and applied to The College of Insurance. And that’s where his career started.

An Excerpt from Joe’s Professional Pursuits

He is a regular speaker and presenter at industry conferences on the topic of risk management, compliance, regulatory reporting, and actuarial and financial analysis. Joe has a strong passion for education and professional
development, actively supporting trade associations, and contributing to industry journals. Best’s Review once called him a frequent contributor.

In addition to being a member in good standing of the Casualty Actuarial Society, Joe is also a member of the American Academy of Actuaries, and the Society of Actuaries. Over a decade ago, he was the Founder and Incorporator of Buckeye Actuarial Continuing Education, an affiliate of the Casualty Actuarial Society founded to bring continuing education opportunities to the more than 100 actuaries located in Ohio.

Joe has been actively engaged in the Property & Casualty insurance industry since entering The College of Insurance in 1969, beginning his career at the Insurance Services Office (ISO), and then holding positions at Agway Insurance Company, Nationwide Mutual Insurance Company, and as a consulting actuary before founding Demotech in 1985.

Before initiating The Demotech Difference, a quarterly publication sharing the opinions of subject matter experts on issues impacting insurance, Joe had been a thought leader on issues affecting the insurance industry. His articles were published in insurance publications including Insurance Journal, (then) John Liner Organization, (then), National Underwriters (now PropertyCasualty360), and Business Insurance. As noted previously, he has been a frequent contributor to Best’s Review.

About Demotech

Demotech, Inc. is a financial analysis company focused on the insurance industry. It is the first to review and rate-independent, regional, and specialty insurers in the property and casualty insurance sector. It was also the first to review and rate Title underwriters, self-funded public entity liability insurance pools, health maintenance organizations, and preferred provider organizations. More recently, it applied its financial analysis expertise and thought leadership outside of the insurance sector, and became the first to review and rate health care sharing ministries.

A Team of Credentialed Experienced Personnel

Joe directs an experienced and highly qualified team that works closely with clients to ensure their long-term solvency through the review and issuance of FSRs.

Sharon Romano Petrelli, CPCU, AIAF, CCP, ARC is a Co-Founder. Sharon and Joseph have been there since day one in 1985. Barry J. Koestler, II, CFA, Chief Ratings Officer, has been for over twenty–six years. Robert M. Warren, CPCU, CPA (Inactive) has been for sixteen years, as has Douglas A. Powell and Paul D. Osborne. Similarly, Thomas A. Bowser, IT Manager has been there for twenty years. Victoria M. Dimond, Office and Facilities Manager has been with us for over thirty years. W. Burke Coleman, Chief Regulatory and Compliance Counsel recently returned to Demotech’s employ in 2019.

Since 2015, the editor-in-chief of The Demotech Difference, Barbara Albert, with assistance from Darren Carlson, Graphic Designer, connects with more than 22,000 insurance and finance professionals when they produce a quarterly issue of The Demotech Difference.

A Client-Centric Management

Demotech’s clients are insurers who are unrated or under-rated by legacy rating agencies. The organization understands how and why smaller insurers need and use reinsurance to execute their business models.

We speak to the “quality and quantity of reinsurance.” The quality of reinsurance is our description of the caliber of the reinsurance companies providing the protection. The quantity of reinsurance refers to how well the reinsurance purchased by the carriers complements their business model.

Against the Structural Monopoly

Any entity involved in insurer ratings will face a structural monopoly in the form of the A. M. Best Ratings Company. To offset the structural monopoly, Demotech has secured accreditations and acceptances that assist carriers compete in the marketplace.

Demotech competes by being true to its initial mission statement; “Demotech, Inc. will become the leading provider of innovative solutions to financial analysis issues by focusing our resources on niches presenting the opportunity for corporate growth.” The organization is privately held. They were bootstrapping before “bootstrapping” was a word.

Institutional memory and a passion for assisting regional and specialty insurers not only unites the employees of Demotech, it also runs through its corporate veins.

A Day in the Life of Joseph

Joseph’s typical workday consists of about ten hours. He spends about 3 or 4 hours a day educating third parties as to the efficacy of FSRs and the other 6 or 7 hours marketing Demotech’s services, assisting clients, and enhancing the brand.

Best Fifty Cents Book

In 1969, Reader’s Digest published a hard copybook. It listed all the majors offered in New York State by college
and the colleges in New York State by the majors that they offered. This book got Joseph interested in actuarial science. This book may have been the best fifty cents my mother ever spent. Joseph’s favorite quote is “It is hard to beat a man who never gives up.” by Babe Ruth.

Achieving Honorable Milestones

Over the past several years, Demotech has received numerous awards. These include multiple nominations for Intelligent Insurer Global Award – Best Rating Agency. It earned the ACQ Global Awards US – Niche Financial Analysis Provider of the Year (Insurance) for the last eight years.

It has also earned the Corporate LiveWire – Innovation & Excellence Award – Excellence in Financial Analysis – the USA as well as the UK Corporate Excellence Award – Best Evaluator of US Regional and Specialty Insurers & Sustained Excellence in Insurer Financial Analysis. It has successfully won Gamechanger of the Year (Financial Analysis) to Joseph Petrelli and Sharon Romano for the last eight years.

Uplifting Women Entrepreneurs into the Business World

From its inception, Demotech has been a female business enterprise. Sharon Romano Petrelli has successfully been integrated into the company. She has been actively involved in the insurance industry for over thirty-five years. Her insurance activities include serving on a Board of the Society of CPCUs, being an active associate member of the (then) Association of Insurance Compliance Professionals, and service on the board of an insurance company.

A Viewpoint about maintaining Balance in the Insurance Vertical

Ironically, more balanced industry utilization must come from the purchasers of insurance, not the carriers. I say this because users tend to view smaller insurers as less financially stable than the brand-name icons. This misperception is due to the lack of familiarity with the independent and regional insurer’s utilization of reinsurance and their focus on niches.

Looking forward to a Noteworthy Future

Demotech continues to add clients regularly. More importantly, all clients tend to have a long-term association with the firm. It aims to build ideal professional relationships with its client base.

Also, it looks forward to continuing to bring innovation, thought leadership, and an entrepreneurial spirit to the financial analysis of the insurance industry, while continuing to be serious about solvency.