A Strong Economy and Insurance Industry Starts with Young Children Adam McDonough President & CEO, Lockton Insuranc

1. A Strong Economy and Insurance Industry Starts with Young Children Adam McDonough President & CEO, Lockton Insurance Brokers of San Francisco Chairman, Insurance Industry Charitable Foundation, Western Division

2. Insurance Industry Charitable Foundation Mission: To help communities and enrich lives by combining the collective strengths of the industry to provide grants, volunteer service and leadership. • Focus Areas: • Child Abuse Prevention, Education and Awareness • Disaster Preparedness & Response • Health and Human Services • Specialized Education & Literacy programs

3. Today’s Topic. How do we enhance our industry’s reputation, build and extend our legislative allies and look out for our customers and the health of our industry at the same time?

4. When our industry talks to policy makers we… • Fight to protect our interests • Work to support the sustainability of our industry • Have to play both offense and defense • Depend on strong allies • Try to make as few enemies as possible

5. How do you create more friends and build allies that can strengthen the effectiveness of your legislative efforts?

6. By finding issues that leverage our industry’s strengths and that have broad appeal and clear benefits. • As an Industry we… • use science and data to make smart business decisions • must understand economics and investment • have to understand risk analysis and risk mitigation • depend on strong communities for customers and growth • look out for people’s safety and well-being

7. These three numbers summarize the case I’m going to make for our industry to invest its reputation behind economically and scientifically sound early childhood policies. 25 million 75 % 10

8. The skills of our workforce directly impacts The competitiveness of our economy and country. • The Society for Human Resource Management says “America’s workforce is not readyfor today’s increasingly competitive global economy.” We have a looming talent shortage.

9. We know that there are workforce changes coming. Smart insurance companies are planning for this now. • By 2018, all but the youngest baby boomers will be of retirement age. In short, about 76 million boomers will soon retire and only about 51 million people are in line to replace them – a 25 million worker gap.

10. We are not taking full advantage of our workforce’s potential. • Of all 39 million young adults in the U.S. aged 17 to 24, the Pentagon reports that 75 percent (29 million) cannot qualify to join the U.S. military.

11. We know our industry needs highly skilled workers, so do other industries. And that need is growing. • According to a recent Georgetown University study, 63 percent of workers will need to have at least some post-secondary education in order to qualify for U.S. jobs by 2018. And only 19 states are on track to meet that benchmark.

12. America’s skill advantage is falling which weakens our industry’s ability to attract the workers we’ll need. • US is ranked 6th in residents between 25 and 64 years old with associates degrees or better. • When you look at people 55-64 we are in 4th place. • When you look at people aged 25-34 we rank 12th.

13. So what do we do?

14. A top policy recommendation of many economists and organizations is to invest in Pre-K and other proven early childhood policies. • According to the College Board, we must “Provide a program of voluntary preschool education, universally available • to children from low-income families such that all children at or below 200 percent of the official poverty line have a chance to enter school ready to learn.”

15. A diverse group of organizations that represent a lot of different interest groups support this approach • Federal Reserve Economists • The National Association of Manufacturers • The US Chamber of Commerce • Chamber’s of Commerce across the Country • Business Roundtable’s across the Country • Nobel Prize Winning Economists • Teacher’s Organizations • Education Reform Groups • Political leaders from both major parties • And many more…

16. Why the interest? • Science • Economics • Research

17. Neuroscience shows us that the earliest years are significant brain development years. A child’s brain reaches 90% of its adult weight by 3 years old …and is developing 700 neural synapses every second

18. Economics shows that early investments produce up to a 10:1 Return on Investment. • …yet spending on early years is half or less of what we spend in later years of school.

19. Abecedarian (0-5 early care and parenting support) Quality Pre-K improves school achievement…which produce more qualified workers for our industry. .

20. Studies show that Pre-K leads to higher incomes which produces more customers for our industry.

21. Research shows that Pre-K helps reduce crime which mitigates risk for society. The intensive Perry Preschool program demonstrated crime savings of over $11 per public dollar spent on pre-k.  Chicago Child-Parent Center model (similar to many state pre-k programs) finds returns of $2-$5 per dollar invested in later crime savings.

22. Studies show that smart early interventions can lower child abuse. Evidence-based home visiting programs have demonstrated fiscal returns of up to $5.70 per dollar invested, produce a 48 percent reduction in child abuse, and at age 15, children have shown a 59 percent reduction in arrests.

23. Data demonstrates that smart preventive measures lower health costs. Protecting children’s teeth with water fluoridation can return $38 for every dollar invested and sealant programs reduce health costs and prevent 60% of cavities.

24. Concerned that these are “touchy-feely” issues; not a big or important part of the economy? Think Again! • The prenatal to age-18 portion of the Youth Human Capital sector is about 10%percent of GDP • The prenatal to age-5 portion is nearly 3% of GDP • Over half the U.S. population is involved in raising and educating children and providing the goods and services they need – 195 million Americans

25. The most important skills developed in high quality early childhood programs directly impact our workforce. • Its the self-management skills (persistence, patience, teamwork, motivation, self-control) that maximizes a person’s lifetime achievement.

26. So how do we enhance our industry’s reputation, build and extend our legislative allies and look out for our customers and the health of our industry at the same time?

27. We make quality early education policies an industry priority. • We know the economics of these program pay-off for society • We know the risk mitigation benefits of these programs pay-off (reduced crime and health costs) • We know risk mitigation policies should be Insurance Industry priorities • And we know that we can build new allies in the legislatures by working with them on these issues.

28. Our Industry can make a difference -- nationally, there is a wide variation in 4-Year-Olds in State Preschool

29. Join The Partnership for America’s Economic Success • A Coalition: Business leaders protecting economic competitiveness through smart early childhood investments. • Taking Action: Research (Over 25 reports and briefs), conferences (state and national summits, and exclusive business events), trainings, and technical assistance. • Getting Results: Successfully saving and expanding smart early childhood investments from Oregon to Alabama

30. What can we do? I’m glad you asked… • Get Involved -- Sign-up for the Partnership for America’s Success at www.partnershipforsuccess.org • Join the Insurance Industry Charitable Foundation http://www.iicf.org/ • Encourage your members to get involved in early childhood issues: • Join state task forces/commissions • Host events • Support smart policies

31. National Organizations Are Working To Improve Early Education The George Gund Foundation

32. One More Time.. 25 million worker gap 75 % failure rate 10:1 ROI

33. For More Information: Sara Watson – Director Rob Krupicka – Business Partnerships* Elaine Weiss – Research Jeff Woolston – Administrative Support *rkrupicka@pewtrusts.org – 202-540-6373 Pew Center On The States 901 E Street NW, 10th Floor Washington, DC 20004 (202) 552-2000 info@PartnershipforSuccess.org www.PartnershipforSuccess.org