work comp extraterritorial issues - Arizona

Transcription

PRE-SUMMER
EDITION
© Copyright
May / June 2014
Definition of
“Windstorm”
Page 6
New Insurance
Web Domain
Page 17
WORK COMP
EXTRATERRITORIAL
ISSUES
by Maureen Gallagher, CIC, LIC, LCA, CWCP, CRM, CWCA, RPLU, CRIS, CILMA
Summary: Employees who work across state lines raise potentially serious
workers comp issues because of the mishmash of state laws.
As states passed workers compensation laws, each state established its own system.
This resulted in a mishmash of laws, benefits, compensability and eligibility from state to
state. Courts have ruled that a state has the right to apply its own workers
compensation rules and standards to each case. Hence, most states simply don’t care
what other states allow, only what is required under their workers compensation laws.
There is little meaningful cooperation or coordination among states. Challenges for
agents, employers, insurance companies and adjusters include understanding:

When coverage is required in jurisdictions where the employer has operations or
employees working, living or traveling in or through.
 How coverage is provided for various jurisdictions.
 What jurisdictional benefits an employee can collect.
The policy
The two items that reference what states are insured under a workers compensation
policy are 3.A. and 3.C. on the information page. (Federal coverage can only be added
by endorsement.) 3.A. is fairly simple. The insurance agent for the employer instructs
the insurance carrier to list the states where the employer operates when the policy
goes into effect or is renewed. 3.C. is a safety net – at least most of the time. That item
lists states where an employer expects it may have employees traveling to or through
or working in. If an employer begins work in any state listed in 3.C. after the effective
date of the policy, all provisions of the policy apply as though the state were listed in
3.A. Notice must be given “at once” if work begins in any state listed in 3.C., although
“at once” is not defined in the policy. If the employer has work in any state listed in 3.C.
on the effective date of the policy, coverage will not be afforded for that state unless the
carrier is notified within 30 days for an employer.
It should be noted the insurance policy does not determine what law applies at the time
of injury. The law determines what is payable. In addition, note that the workers
compensation policy does not apply to Ohio, North Dakota, Washington and
Wyoming, “monopolistic” states where coverage can only be purchased from the state.
© Copyright
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Although larger employers may self-insure
in Ohio and Washington (but not North
Dakota or Wyoming), no private insurance
carrier can write workers compensation
coverage for an employer.
It would seem the safe bet is to add all states
except monopolistic states to 3.A. However,
most underwriters are unwilling to do this
or even add the ideal wording for 3.C.: “All
states, U.S. territories and possessions
except Washington, Wyoming, North
Dakota, Ohio, Puerto Rico and the U.S.
Virgin Islands and states designated in Item
3.A. of this Information Page.” The reason
for the underwriters’ unwillingness
varies. Common reasons underwriters
provide include:
Licensing issue
The insurer is not licensed in all states. Many
regional insurers are only licensed in a
handful of states while other carriers may
only be licensed in one state…often for
strategic reasons. Carriers frequently assert
it is impossible — and possibly illegal — to
list a state they are not licensed in (even
though policies contain wording whose
Continued on page 3
Independent Insurance Agents and Brokers of Arizona, Inc.’s News & Views May/ June 2014 Edition
Page
MAY 26
 Germanicus of Rome celebrated his
victory over the Germans—17 A.D.
 Fleetwood Mac singer
Stevie Nicks born—1948
MAY 28
 The first black regiment
left Boston to fight in the U.S. Civil War—
1863
 Dr. Susan Terebey
discovered a planet
outside of our solar
system with the use
of photos taken by
the Hubble Space
Telescope—1998
MAY 30
 Joan of Arc was burned at the stake in
Rouen, France, at the age of 19—1431
 Memorial Day was observed widely for
the first time in the U.S.—1868
 Benny Goodman led the first American
jazz band to play in the Soviet Union—
1962
JUNE 2
 All American Indians were granted U.S.
citizenship by the U.S. Congress—1924
 Elizabeth was crowned Queen of England
at Westminster Abbey—1953
 52 year-old Bill Wyman of The Rolling
Stones married 19 year-old model Mandy
Smith. They divorced 2 years later—1989
JUNE 3
 In Italy, Benito Mussolini
granted women the right to
vote—1923
 “Gong Show” TV game show
host Chuck Barris born—
1929
 George Michael’s “I Want
Your Sex” banned by the
BBC—1987

David Bowie's "The Rise
& Fall of Ziggy Stardust
& The Spiders From Mars"
breakthrough album was
released—1972
JUNE 9
 Richard Pryor was severely
burned by a "free-base" cocaine
mixture that exploded. He
was hospitalized for more than
two months—1980
 Actress Natalie Portman born—1981
JUNE 10
 Alcoholic Anonymous was founded by
William G. Wilson and Dr.
Robert Smith—1935
 The youngest pitcher in
major league baseball pitched
his first game. Joe Nuxhall
JUNE 6
was 15 years old (and 10
 The first drive-in movie theater opened in
months and 11 days)—1944
Camden, New Jersey—1933

Actress and model Elizabeth Hurley
 The first helicopter was tested in a
born—1965
building in Berlin, Germany—1936
INSIDE THIS EDITION
States of Confusion: Work Comp Extraterritorial Issues
Big “I” Responds to HHS on Navigators
Virtual University Ask An Expert—What Is A Windstorm?
How To Hire Top Agents
Are ‘Mudslides’ Covered by HO or Flood Policies?
Big “I” Praises House Passage of ACA Employer Mandate
Relief Bill
Hiring Quality Producers
Countdown To Hurricane Season
Director Marks Announces ACA Extended Transitional Policy
Decision
State Farm And a Bad Neighbor
Education
The Art of Packing (and Traveler’s Packs)
Should You Purchase a “.Agency” Domain?
Agent Perspective On Insurance Proposals
Jobs, Health Care and Taxes Discussed By Insurance Leaders
Crime Does Not Pay
Big “I” Virtual University—An Excellent Member Benefit
E&O Spotlight—Locking Up Shop
True Breakdown Coverage
Life & Health—Lone Term Coverage
The Most Important Lessons I’ve Learned About Selling
Cover
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Independent Insurance Agents and Brokers of Arizona, Inc.’s News & Views
Page 2
May/ June 2014 Edition
WORK COMP
EXTRATERRITORIAL
ISSUES
Continued from cover page
clear intent is to allow carriers to pay benefits in states where they
are not licensed).
Underwriting considerations
The insurance carrier may not want to provide insurance in certain
states it considers more challenging from a workers compensation
standpoint or because carriers do not want to write in states where
they have little or no claims adjusting experience, established
provider networks and knowledge of the nuances of the law.
and be subject to the tort system. All other
states require employers to purchase
workers compensation insurance for their
employees or qualify for self-insurance.
Which benefits apply?
If an employer has employees traveling on a
limited basis from their home states, the
headquarters state may have established a
time limit on coverage for out-of-state
injuries. The most common limit is six
months. This may be written into the statute
or may be silent, but over time case law has made determinations.
In other words, if an employee usually worked in Michigan but spent
three months working on assignment in Kentucky and was injured in
Kentucky, the employee would most likely still be eligible for
Michigan benefits. In states with a timeline, an employee working in
another state for more than the designated duration is no longer
entitled to benefits in the home state, but the employee is probably
entitled to the compensation in the state in which he or she is
currently working.
One of the most important factors is that an employee injured
outside of his state of residence may have selection of remedies
(benefits) if he lives in one state and works in another. The Michigan
Underwriters are not claims adjusters and do not always have a full
employee injured in Kentucky may want Kentucky benefits because
understanding of workers compensation's jurisdictional complexity Kentucky has lifetime medical and Michigan does not. Or, an
and the employer's risk (no coverage) and agents' risk (errors and
employee may have been injured on the way to work, and the state
omission claims) for not securing coverage for all states with
where she was injured does not allow for workers compensation in
potential exposure. Agents are often told the employer does not
this circumstance even though this would be a compensable injury in
need coverage in the state in which the agent is requesting coverage the employee’s headquarters state. Perhaps there is a disqualification
— which the home or primary state benefits will pay. However, the in one state because of, for example, an employee’s intoxication that
chance that an employee will be successful in securing another state’s would not be a disqualifier in another state. In addition, the
benefits — even if the employee is only there temporarily — is just
maximum amount of income benefits available to employees varies
too much of a risk.
considerably from state to state.
Underwriters’ lack of awareness or knowledge
Physical location
Piggybacking benefits
Carrier underwriters frequently cite the “physical location” —
actually needing an address — as a roadblock to adding a state to
3.A. The National Council for Compensation Insurance (NCCI) has
rules on this issue. Most states that follow NCCI rules allow entry of
“no business location” — but not all. States that follow NCCI rules
(including the independent bureaus like Texas) will often modify
some rules. Arizona, Kentucky, Montana and Texas do not allow
“no business location.” It is a regulatory reporting issue. Possible
solutions to secure 3.A. coverage include:
Piggybacking occurs when an employee files in one state and then in
another state where he qualifies for additional benefits. What is
allowed in additional payments will depend on the circumstances of
the claim and the states involved. This issue has become particularly
dangerous for employers that have not arranged coverage in other
states because they are unaware there is an exposure there. The
employer then becomes liable for the benefits due in the uninsured
state, including all costs to adjust and defend the claim if litigated.



Providing an entry of “Any Street, Any Town” or “No Specific
Location, Any City” for the state. Many carriers will use this.
Using an employee’s home address in the state if there is an
employee working from home there.
Using the agent/brokers address if they have an office there.
Compliance
Only Texas and New Jersey have workers compensation laws that
are elective. New Jersey employers still, in effect, cannot go without
workers compensation insurance. In Texas, any employer can
“unsubscribe” to the workers compensation system and “go bare”
© Copyright
Typically, if an employee collects benefits in one state and is
successful in perfecting a claim in another state with higher benefits,
the benefits collected in the first state are offset from the second
state’s benefits payment. For example, assume an employee collects
$10,000 from Indiana then files in Illinois, which grants $18,000.
Only the difference between $18,000 and $10,000, or an additional
$8,000, would be paid. Employers with employees in both "wageloss" and "impairment" states face an additional challenge: Employees
could qualify for both states' benefits with no offsets.
Most states don’t care what other states have allowed, only what is
Continued on next page
Page 3
Continued from Page 3
WORK COMP
EXTRATERRITORIAL
ISSUES
required under their laws. If the employee collected under another
state’s law but qualifies in our state for additional benefits, well, so
be it. If an employee has traveled to, through or lived or worked in
another state to create a “substantial” relationship with the state,
there is a very good chance he or she will be granted workers
compensation benefits in that state.
State statutes, case law, common law and tests
State statutes, case law or the common law in a jurisdiction may
influence what benefits an employee may collect. Various criteria
that may apply include:






State of hire
State of residence
State of primary employment
State of pay
State of injury
State in agreement between employer and employee (unique
to Ohio, and only Ohio and Indiana recognize the agreement)
The “WALSH” test is a good guide to questions to ask, in order
of importance:
W
A
L
S
H
Worked - Where did the employee work most of the time?
Accident – Where did the accident occur?
Lived – Where is the employee’s home?
Salaried – Where is the employee getting paid from?
Hired – Where was the contract of hire initiated?
Just about all jurisdictions indicate an employee is entitled to the
benefits of their state if the employee was working principally
localized in the state, was working under a contract of hire made
in the state or was domiciled in the state at the time of the accident.
This is why “worked” and “accident” are given the most weight.
Reciprocity
Several states will reciprocate another state’s extraterritorial
provisions. Each state has its own reciprocal agreements, with as
few as a half-dozen states or as many as 30. For as many states
that cooperate with reciprocity, just as many states will not.
In addition, not all reciprocity agreements address the “claims”
aspect of compliance. In other words, the reciprocity means the
employer does not have to secure “coverage” for an employee
temporarily in another state; however, it does not mean that the
employee could not pursue a claim in that state. If the employer
was relying on the reciprocity provisions of the state law and did
not secure coverage in that other state, the employer may be
without coverage for that state and may also become “noncompliant” with the state and be subject to fines. The employer
(or its agent) has decided to rely on the employee accepting his
home state benefits. If the injured employee goes back to her home
state for benefits, no harm, no foul. However, if the employee
perfects a claim in another state or in some instances simply chooses
to file a claim in that state, then the employer would be considered
a non-complying employer and could be subject to penalties.
© Copyright
Washington does not reciprocate in construction employment unless
there is a reciprocity agreement in place. Washington has these
agreements with Oregon, Idaho, North Dakota, South Dakota,
Montana, Wyoming and Nevada.
Some specifics
Massachusetts, Nevada, New Hampshire New Mexico, New York,
Montana, and Wisconsin require coverage in 3.A.
Kentucky allows no exceptions for family members, temporary, part
time or out-of-state employers performing any work in the state of
Kentucky. Kentucky does not accept the Ohio C110 form.
New York made a significant change in its workers compensation law
[Section 6 of the 2007 Reform Act (A.6163/S.3322)] that affected
employers if they conducted any work in New York or employed
any person whose duties involve activities that took place in New
York. Effective Feb. 1, 2011, the New York board clarified coverage
requirements. Detailed information can be found on the New York
Workers Compensation Board’s website: http://www.wcb.ny.gov/
content/main/onthejob/CoverageSituations/outOfStateEmployers.jsp
Florida, Nevada and Montana require all employers working in the
construction industry to have specific coverage for their state in
3.A. Ohio and Washington require that employers purchase
coverage from the state for all employers working in the
construction industry. Otherwise, Florida, Nevada, Montana, Ohio
and Washington will honor coverage for temporary work from
other jurisdictions. Florida also requires the coverage be written
with a licensed Florida carrier. 3.A. coverage status is required for
any employer having three or more employees in New Mexico and
Wisconsin even on a temporary basis.
The standard workers compensation policy exclusion for bodily
injury occurring outside the U.S., its territories or possessions and
Canada does not apply to bodily injury to a citizen or resident of the
U.S. or Canada who is temporarily outside these countries. State
workers compensation will apply, however, for those employers that
have employees regularly traveling out of the country; the Foreign
Workers Compensation and Employers Liability endorsement should
be added to their workers compensation policy. This endorsement is
used for U.S.-hired employees who are traveling or residing
temporarily outside the U.S. The coverage is limited to 90 days.
For employees out of the country for long periods or permanently,
coverage needs to be arranged under an international policy.
The extraterritorial issues arise because many states — Alabama,
Alaska, California, Connecticut, Delaware, Georgia, Illinois, Indiana,
Page 4
Iowa, Kentucky, Maine, Massachusetts, Michigan, Minnesota,
Missouri, Nebraska, New York, North Carolina, Pennsylvania,
Rhode Island, South Carolina, Tennessee and Wisconsin — permit
concurrent jurisdiction between State and Longshore coverage.
Some states — notably Florida, Louisiana, Maryland, Mississippi,
New Jersey, Texas, Virginia and Washington — do not permit this
concurrent jurisdiction, and Longshore becomes the sole remedy.
In concurrent jurisdictions, the employee can file in both state and
federal court, and the employer must defend both.
Summary






Recognize that having employees who work, live or are
temporarily traveling to or through other states creates
premium and coverage challenges for employers and agents.
Take time to understand the rules of the state where there
is potential exposure.
States requiring coverage in 3.A. for some or all situations tend
to be strict and impose severe penalties for noncompliance. Many carriers are often aware of the challenges
these states present and will work with the agent/employer
and add on an “if any” exposure basis.
Always attempt to secure the broadest coverage possible under
the workers compensation policy, adding to 3.A. as many states
with even minimal exposure. As a fallback, get the state in 3.C.
Obtain coverage for operations in monopolistic states
separately.
Address out-of-state exposures when insured by a state-specific
state fund or regional carrier that only writes in one or a few
states. Remember, the 3.C. wording is designed to pay benefits
— by reimbursing the employer — if the carrier cannot pay
directly to the employee.


Check for employees traveling out of the country and arrange to
expand coverage with the foreign endorsement or through an
international policy.
Check with a marine expert to assess the exposure to the
Longshore Act and whether coverage is required. Longshore is
very employee-friendly.
This article was reprinted with kind permission from the author.
The unabridged white paper on which this article was based can be
found at www.insurancepartnersacademy.com
Author: Maureen Gallagher, CIC, LIC, LCA,
CWCP, CRM, CWCA, RPLU, CRIS, CILMA—
Michigan Managing Director and National Real
Estate and Workers Compensation Brands Leader
in at Neace Lukens, an AssuredPartners company.
Her passion for education inspired her — in 2003
— to establish Insurance Partners Academy,
an educational company, where she serves as Director. Gallagher
previously held the position of President and CEO of Acordia
of Michigan (Wells Fargo), assuming that position after heading
up her own agency, Gallagher Group, Inc., for more than ten years.
A frequent lecturer and presenter, Gallagher is also on the National
teaching faculty for the National Alliance for Insurance Education
and Research. She is a blogger for The Knowledge Alliance and
writes for Resource Magazine. Gallagher is a member of
the American Bar Association and the Society of Trainers
and Educators.
Association supports state consumer protection efforts.
properly regulated and consumers are protected.”
The Independent Insurance Agents & Brokers of America has
submitted official written comments to the U.S. Dept. of Health
and Human Services (HHS) on the recently proposed federal
regulations regarding navigators and similar assisters under the
Affordable Care Act (ACA).
In its officially submitted comments, the Big “I” expresses serious
concerns over many aspects of the proposed rule. The association
sees the draft regulations as chipping away at state authority to
enforce consumer protection laws, and at the same time expanding
the duties of navigators and similar entities.
The HHS draft regulations were released as part of a larger
rule and were written largely in reaction to many states
putting in place their own consumer protection laws and
regulations related to navigators and similar assisters.
Past HHS rules properly allowed states broad authority to
oversee these entities, but the new regulations unjustifiably
reverse course and restrict states regulatory power.
“If the regulations are approved without changes, it will likely prove
to be a dangerous mix for many insurance consumers who could be
harmed by bad advice from an individual operating within one of
these programs and left with no financial recourse,” says Ryan
Young, Big “I” senior director of federal government affairs. “We
will continue to advocate in defense of allowing states to enact and
Enforce consumer protection laws.”
“Since passage of the ACA, the Big ‘I’ has viewed these
programs as having the potential to create serious consumer
protection issues and has favored efforts to ensure navigators
and similar entities will be properly licensed, trained
and overseen,” says Charles Symington, Big “I” senior vice
president for external and government affairs. “Unfortunately,
the recently released draft rule would undo much of the good
work done at the state level to ensure these entities are
The Big “I” comments are available to view at http://
www.independentagent.com/News/PressReleases/SiteAssets/
Pages/2014/GA04222014_HHSACA/IIABA%20HHS%20Comments%
20April%202014.pdf.
© Copyright
Article provided by: Margarita Tapia—Director of
Public Affairs, Independent Insurance Agents and Brokers
of America, Inc.
Page 5
Most named perils property policies cover "windstorm." Note that
this doesn't say "wind," but rather "windSTORM." So the question is,
what constitutes a windstorm? This issue recently arose in an auto
claim, but the peril is the same as that under homeowners and
commercial property policies.
http://www.independentagent.com/Education/
VU/AskanExpert/default.aspx
"We have an insured that reported an auto loss. He is a farmer and his truck was parked at the farm. On that
day we had high winds, but no storms. A bale feeder located on the farm was blown into the side of the truck,
denting the vehicle. The feeder bounced off and the wind grabbed hold of it again and it slid down the side of
the truck, scratching the vehicle and knocking off the mirror. We turned the claim into the insurer as a
comprehensive loss using windstorm as the cause of loss.
"I received a fax from the adjuster denying this claim as a comprehensive loss, saying that it should be paid as a
collision loss for the following reason. The insurer defines a windstorm as 60-70 mph documented wind speeds.
Our investigation of this loss revealed documented wind speeds of up to 30 mph. These speeds do not meet the
insurer's windstorm definition.
"I called the adjuster back on the phone and explained that the ISO form shows that a windstorm is considered
an Other Than Collision loss and that they could not make up their own definition of what a windstorm was to
determine whether to pay a loss under comprehensive or collision. The adjuster was holding her ground and I
have asked for her supervisor to call me back but as of yet have heard nothing. In the meantime I wanted to
get your opinion."
FACULTY RESPONSE
FACULTY RESPONSE
1.
If the insurer has defined the term, why didn't they include it in their
contract? If the policy does not define windstorm with a certain
velocity of wind, the insurer cannot retrospectively add one.
2.
3.
A 30 mile an hour wind won't move a large piece of farm
equipment.
Wind speeds aren't constant over a large area.
Ask the adjuster to determine the wind velocity to move the
equipment.
FACULTY RESPONSE
Dictionary definitions:
 A storm with heavy wind but little or no precipitation.
 A storm with high winds or violent gusts but little or no rain.
 A storm consisting of violent winds.
 A storm marked by high wind with little or no precipitation.
None of these attach a speed to the wind. If the insurer says a
“windstorm” involves winds in excess of 60 mph, why don’t they
simply put that in the policy? The dictionaries say a “windstorm”
is one with winds that are “heavy,” “high,” or “violent.” I’d say if
winds caused damage, they were “heavy,” “high,” or “violent.”
To read more faculty responses, please visit:
http://www.independentagent.com/Education/VU/Insurance/
Personal-Lines/Homeowners/Property-Perils/
FacultyWindstorm.aspx
You will need to be logged under your Big “I” member ID.
If you need assistance, please send an email to [email protected].
© Copyright
FACULTY RESPONSE
Unless the insurance policy has its own contractual definition of
windstorm or a precise definition of collision and other than collision
that is different from the ISO form, I do not see how one can be
made up after a loss. You may find, in coastal areas, that some
residual or excess market policies may define this term, but ISO and
most company forms do not.
FACULTY RESPONSE
If you asked any property adjuster in America if a hurricane was a
“windstorm,” he or she would say “yes.” That’s not even being
argued in all of the Katrina claims. However, if you look at dictionary
definitions of “windstorm,” they most often say it’s a storm “with
little or no precipitation.” Well, we know that hurricanes include
HUGE amounts of precipitation. Therefore, if you look at the
dictionary definitions of “windstorm,” they wouldn’t include
hurricanes and, without special causes of loss (“all risk”) coverage,
named perils policies would provide little or no coverage. Obviously
that’s not the case, so I believe this makes the term
“windstorm” ambiguous. As such, any reasonable
interpretation of the insured should trigger coverage.
Page 6
© Copyright
Page 7
With all the advances in every area of life, you’d think hiring the right
agents would be an exact science at this point. It isn’t. Hiring the right
people is a combination of science and philosophy and you have to
utilize both effectively to hire someone who ultimately “makes it.”
Here are the aspects to “employ” in order to employ the right agents.
Hiring tip #1: Only hire employed winners.
An unemployed agent or salesperson out looking for a job is a major
red flag. Unless someone’s company just blew up, or there is some
other crazy extenuating circumstance, an agent or salesperson
looking for a job should, at the very least, still be employed. That
said, an employed agent out looking for a job is a yellow flag. People
do switch jobs for a variety of perfectly legitimate reasons related to
family or other solid personal reasons, just make sure the reason is
a good one and they can back up the stellar sales skills they claim to
have. In reality, most agents are looking for a job because they can’t
sell and they either got let go, or are about to. Don’t hire someone
else’s problem without A LOT of due diligence.
Hiring tip #2: Only hire within your industry if you
recruited the person.
If you find a stellar agent you want working for you instead of the
competition, great, otherwise avoid your industry like the plague.
Someone within the same industry looking for a job elsewhere
does so because they can’t sell. Again, unless there is an extenuating
circumstance with the company or product, the problem is the
salesperson.
Hiring tip #3: Always be on the lookout for good agents.
Even if you are not hiring right now, build your list of candidates
for when you are. That great salesperson who just sold you your
car, boat, or home alarm system is a good prospect to come work
for you now or at some point in the future. It’s simple, winners win.
A winning salesperson in another industry can learn to sell just as
effectively in your industry. Also, truly great salespeople can make
the transition from products to services and from phone sales to
in-person sales and vice versa.
Hiring tip #4: Hire self-esteem, self-confidence, and the
right attitude.
Lacking any of these three is the number one reason agents fail.
A lack of activity, blaming the economy and other outside
circumstances, and ultimately not doing what needs to be done
every day whether you feel like it or not, all come down to an
issue with one or all of these three. Also, you want someone
with a strong work ethic who is seeking a career instead of a job.
Hiring tip #5: Have a hiring process.
Have several people put their eyes on a potential hire. Meet all their
decision makers such as spouses. Do all your testing, check all
paperwork, cross all your T’s and dot all your I’s. Don’t take
shortcuts, have a process and stick to it like a pilot doing preflight.
© Copyright
Hiring tip #6: Shake up the testing process.
Telling an applicant you are about to hire that they did not get the
job, bringing them to an event with an open bar, playing golf with a
candidate, or visiting them at their home, are some great ways to
find out what people are really like. While you should absolutely use
personality tests, in-office interviews, and other standard, accepted
hiring practices as your foundation, realize that most tests can be
beaten, and most people can put their best mask on temporarily.
To find out what people are really like, move them out of the typical
hiring environment.
Hiring tip #7: Be skeptical of references, especially personal
references.
Anyone can find a brother-in-law, friend they went to college with,
or a third cousin twice removed to say the candidate is the best
thing since the wheel. If they are that good, the wheel never would
have been invented.
Hiring tip #8: Start not with what your company can do for
them…
Be wary of people who lead by asking what the base or draw is and
what benefits they will get.
Hiring tip #9: Candidates should be transparent and
forthcoming.
Yes, applicants should be willing to give you access to all their social
media information, and all their other information for that matter.
That said, you should be able to find enough information on
applicants without having to get social media passwords. It’s just
another good test to see if the applicant may have something to hide.
Also, someone with a very small or no online footprint is an orange
flag. Investigate further.
Hiring tip #10: Have standards and stick to them as if your
life depends upon it…
Because the life of your business does depend upon it. In addition to
hiring standards, you need performance standards and time lines that
are agreed upon. Accountability is extremely important.
Hiring tip #11: Hire slowly and fire quickly.
Do the work and don’t cut corners. A lot of work on the front end
will avoid a lot of pain once you hire the person and they don’t work
out. Also, once you realize you have a duck instead of a swan, and
they are not living up to the standards agreed upon under tip #10,
cut the cord fast.
Hiring tip #12: Provide the right environment.
It doesn’t help to hire the right people if you bring them into an
environment where chronic underperformers, negative people, a
lack of support, and other similar cancers exist.
Author: John Chapin—Award winning speaker, sales
trainer, coach, and co-author of the gold-medal winning
“Sales Encyclopedia”, a comprehensive how-to guide on
selling.
Page 8
We are all aware of the human tragedy involved in the landslide
which buried homes in Darrington, Washington in March 2014.
From the perspective of our industry, the first question is whether
a “landslide” is covered by most homeowner policies. And, since
this may have been more of a “mudslide” than a landslide, is it
possible that coverage could be found under an NFIP flood policy?
If the answer to both questions is “No,” then is this exposure
insurable?
Most homeowners policies exclude any type of earth movement.
Here is the “ISO standard” exclusion:
Earth Movement
Earth Movement means:
a. Earthquake, including land shock waves or tremors before,
during or after a volcanic eruption;
b. Landslide, mudslide or mudflow;
1.
A general and temporary condition of partial or complete
inundation of two or more acres of normally dry land area or of
two or more properties (at least one of which is your property)
from:
a. Overflow of inland or tidal waters;
b. Unusual and rapid accumulation or
runoff of surface waters from any source;
c. Mudflow.
Rob Olson, CPCU, ARM, AAM, ARP, CRIS, MLIS at IRMI points out
that, “’Mudflow’ is defined as ‘a river of liquid and flowing mud on
the surfaces of normally dry land areas, as when earth is carried by a
current of water. Other earth movements, such as landslide, slope
failure, or a saturated soil mass moving by liquidity down a slope, are
not mudflows.’ On the FloodSmart Web site, it says ‘mudflows are
covered by flood insurance; mudslides are not.’”
c. Subsidence or sinkhole; or
So, if this event is not covered by either homeowners or flood
policies, where might coverage be found? One source, typically found
d. Any other earth movement including earth sinking, rising or
in the E&S marketplace, could be DIC-type policies. Tim O’Brien of
shifting.
the Amaden Gay Agencies of NY advises, “I have been advised that
there are nonadmitted solution(s) for the risk of mudslide, which is
This Exclusion A.2. applies regardless of whether any of the above, in excluded by NFIP. Of course, they are carefully underwritten. For
A.2.a. through A.2.d., is caused by an act of nature or is otherwise
example, one market can be found at www.catcoverage.com.”
caused.
The real issue for nonstandard coverages such as landslide or
However, direct loss by fire, explosion or theft resulting from any of mudslide is underwriting. In the case of the Darrington, Washington
the above, in A.2.a. through A.2.d., is covered.
event, the news media has claimed that the unstable condition of the
area that collapsed was known prior to the loss. If so, it’s possible
An NFIP flood policy might cover such an event if it’s considered
that underwriters for coverages of this type would not have issued
“mudflow.” From the NFIP Dwelling policy:
policies due to the risk.
Flood, as used in this flood insurance policy, means:
© Copyright
Author: Bill Wilson—Director, Big “I” Virtual University
at Independent Insurance Agents and Brokers of America.
Page 9
BIG “I” PRAISES HOUSE PASSAGE OF
ACA EMPLOYER MANDATE RELIEF BILL
Bill defines a full-time employee as an individual who works 40 hours per week.
The Big “I” applauds the U.S. House of Representatives for passing
H.R. 2575, the “Save American Workers Act of 2013,” by
Representative Todd Young (Republican—Indiana), in a bipartisan
vote.
H.R. 2575 would change the definition of a full-time employee
(FTE) under the Affordable Care Act (ACA) to an individual who
works 40 hours per week. The legislation targets the employer
mandate provision of the ACA that says “large employers” must
provide coverage to employees.
9.5% of income) coverage of at least a Bronze level plan equivalent
(60% actuarial value) to its employees. While the provision has many
problems, the most glaring concern is that the definition of a FTE is
an individual who works an average of 30 hours per week as
opposed to the traditional 40 hours per week.
“Independent agencies serve many clients who have struggled with
the prospect of complying with the employer mandate, and in
particular the 30 hour per week definition of a full-time employee,”
says Robert Rusbuldt, Big “I” president & CEO. “H.R. 2575 is a
common-sense fix and we applaud the House, particularly
Representative Young, for advancing this bipartisan effort.”
“Implementation of the employer mandate has caused many
businesses to undergo the prospect of great financial strain, or
to contemplate dropping their health care plan altogether,” says
Charles Symington, Big “I” senior vice president for external and
government affairs. “The Big “I” believes H.R. 2575 would provide
much-needed relief for job creators.”
Originally slated to go into effect in 2014 in tandem with the
individual mandate, the employer mandate requires businesses with
50 or more FTEs to provide affordable (premiums no greater than
of America, Inc.
© Copyright
Page 10
A simple and obvious solution to many, likely most,
agencies’ growth issues is to hire a quality producer.
As proven by the 70%-80% failure rate, the solution is
much easier said than done. However, hiring quality
producers is not as hard as it often seems if agencies
follow these rules. By the way, these rules are based on
my clients’ actual, repeatable success. These rules are
not theory based.
HIRING
QUALITY
PRODUCERS
My clients who climb this emotional mountain successfully typically
do so using the same technique: They separate their emotions from
Identify the dead wood. Quality producers do not want to
what is best for the agency. Again, easier said than done and hard to
work with a bunch of retired-in-place producers and owners clipping do on one’s own. A support system is likely required. Asking for help
coupons. Just think about it from their perspective. Can you see a
is actually key to successfully hiring producers. Asking for help is a
really good producer saying, “I can’t wait to get to work to sell lots sign of strength, not a weakness.
of insurance while all my coworkers sit around not making any sales!
What an invigorating place! The competition is energizing! Even
Owners should not be involved in ANY initial interviews.
better, I am making all the sales while the owners rest on their
renewals. I just love making everyone else rich!”
When agencies advertise for producers, they list all the desired
qualities. However, I have never seen an advertisement that lists the
Good producers want to work in agencies where everyone is
most important quality to owners. That quality is the agency owner
pulling their own weight, where other producers are good and
must think the producer is a “good guy” or a “good girl.” That
generate competition. Good producers want to work in an agency
quality is a huge reason so many producers fail. Do you want a
that is growing. Agencies supporting dead wood don’t grow.
Producer that is a “good guy” and can’t sell or a producer that may
or may not be a “good guy” but can sell? Owners have a tendency to
fall in love with every producer they interview, so stay out of it. Let
Create a real sales culture. To create a sales culture, first
just about anyone else do the initial interviews.
eliminate the dead wood. While hiring quality producers is easier
said than done, firing dead wood or invigorating them is even more
Develop and manage. Did you notice that the first four steps
difficult to do for most agency owners. I do not know what else to
write about this point. Firing people is rarely easy but for what it is
do not involve planning or contracts or training or anything else? If
worth, I have never seen a producer fired who did not benefit by the you just follow the first four steps, your odds of successfully hiring a
firing. To the best of my knowledge, they have all found a better job quality producer will increase dramatically.
that fits their personalities better thereby reducing stress and
increasing happiness. I have even seen many return to the agency
If you want to maximize your odds of success, create clear producer
and thank the owner for firing them because they knew they
development and management plans. These are two different plans,
needed to leave but they did not have the inner strength to leave.
and considerable detail is required. If you’ve never done this
previously, these plans are nearly impossible to create on one’s own.
If an agency owner cannot fire deadwood, he or she cannot build a
Hire producer development and training specialists.
true sales culture. Building a sales culture with deadwood producers
is like attempting to build a house with twigs as the foundation. A
Once these five steps are in place, the search can begin. Don’t begin
real sales culture is based on accountability. The producers not only the search first. These are not easy steps. Frankly, most agency
have to make sales, but more importantly, they are held accountable owners are not capable of steps 1, 2, 4, or 5 combined. Many agency
for all the activities that eventually lead to sales. In this manner, the
owners are simply not emotionally capable of taking these steps and
sales culture is built and managed daily rather than just measured
many are not emotionally capable of delegating these steps either.
once a month or more honestly as usually happens, annually. Try it! The pain of delegating the hiring to people who are better equipped
You’ll like it!
to hire successfully is often the most painful part of the solution.
1.
4.
2.
5.
3.
Test. The best test for producers is the SPQ Gold test from
Behavioral Sciences. This test is good on many levels but what has
been interesting to me is the fear and apprehension that flashes
across the face of so many agency owners when I describe the test.
They know they would “fail” the test, which creates an emotional
bind. They have to hire someone that is better than they are at
selling. One of the key secrets to why producers fail 70%-80% of
the time is that a large proportion of agency owners are not good
producers and if someone is not a good producer, they typically do
not like to hire good producers. Good producers are intimidating
and ego busting. Good producers can even be grating.
© Copyright
Delegation feels like abdication of personal responsibilities. Yet
delegation is really leadership. Being a leader, and a leader is the
decision maker who does what is right for the agency rather than
making the emotionally easy answer for the owner, is what really
makes the difference in finding and hiring quality producers.
Author: Chris Burand—Insurance consultant professional
specializing in the property-casualty insurance industry. He is
recognized as a leading consultant for agency valuations, increasing
agency profits and reducing cost of sales. Chris is a nationally
recognized author, and his contributions have appeared in
Rough Notes, The National Underwriter, and A.M. Best.
Page 11
COUNTDOWN
TO
HURRICANE
SEASON
With only a few days remaining until the official start of the 2014 Atlantic hurricane season http://
www.mmsend66.com/link.cfm?r=160983142&sid=40496273&m=4488889&u=IIABA&j=18825850&s=http://
www.fema.gov/2014-atlantic-hurricane-season on June 1, the Federal Emergency Management Agency is urging residents and businesses to
prepare for the risks associated with hurricanes and tropical storms. This includes being prepared for flooding, which is the number one
source of loss associated with hurricanes. Insurance agents should meet with their insureds to review their insurance-including flood
insurance-to ensure they have adequate coverage in the event of a storm.
Typically, there is a 30-day waiting period from date of purchasing flood insurance before the flood policy goes into effect. That means that
now is the best time to buy flood insurance.
Everyone is at risk of flooding. Is your agency ready to offer flood to all your property clients?
Big "I" Flood http://www.independentagent.com/Products/Insurance/Flood/Pages/Home.aspx and Selective https://www.selectiveflood.com/
WebApplications/EDS/SelectiveFlood_PublicSite/Home.aspx are ready to help you get your clients properly covered with flood insurance.
Through an agent-focused quoting platform and superior customer service, Selective can service all of your flood insurance needs quickly
and easily. For more information, please send an e-mail to [email protected], or contact your Selective Flood Territory Manager at
https://www.selectiveflood.com/WebApplications/EDS/SelectiveFlood_PublicSite/Client/pdf/SelectiveFloodTerritoryManagers.pdf.
The Arizona Department of Insurance announced that insurers that renewed existing plans, on or before December
31, 2013, that otherwise would have been modified or canceled under the Affordable Care Act (ACA), may renew
that coverage. “Following our December 2013 announcement allowing insurers to early renew these plans, a
significant number of Arizona policyholders that had the opportunity to keep those policies chose to do so,”
Insurance Director Germaine Marks said.
On November 14, 2013, the Center for Consumer Information and Insurance Oversight (CCIIO) announced a policy
that permitted health insurance issuers to continue to renew plans for individuals and small businesses for plans in
place as of October 1, 2013. CCIIO determined it would not apply nor enforce certain provisions of the ACA to the policies that do not
meet minimum coverage requirements and financial protections under the ACA. On March 5, 2014, CCIO issued a bulletin addressing the
extended transition of these policies and left the decision to the states whether or not to adopt the extension.
Marks said listening to insurers who want to continue offering these plans and to consumers who wish to be able to keep them led to the
Department’s decision. Arizona law, read in conjunction with CCIIO’s bulletin, does not preclude insurers from renewing this group of
policyholders’ coverage. “Ensuring that Arizona’s consumer have choice in the insurance market and encouraging insurers to provide that
choice, when appropriate, is consistent with the Department of Insurance’s mission.”
As before, the Department will not compel any carrier to renew the early renewed policies. Carriers will assist policyholders who choose
not to keep these policies with finding alternative affordable coverage.
Article provided by: Erin Klug—Media contact for the Life & Health Division, Arizona Department of Insurance.
About the Arizona Department of Insurance: The Arizona Department of Insurance, an agency of the State
of Arizona, is responsible for the education and protection of insurance consumers and for oversight of the insurance industry
in the state.
© Copyright
Page 12
Ever wonder what encompasses an “explosion?” How about
exploding cadavers? The coverage question at hand involves a
named peril policy which contains the specified peril of “explosion.”
A decomposing human body “EXPLODED” as a result of gases
which accumulated in the abdomen, resulting in extensive property
damage at a condominium complex. Due to the nature of the
“explosion,” a significant amount of the structure and ALL of the
contents of the condominium next door had to be replaced. State
Farm Insurance Company was dead certain that this loss was not
covered. The policyholder argued that an explosion is an
Explosion, and “damage is damage.” The question not asked in this
instance is would the policy provide “debris removal?”
The Insurance Journal published that the Florida circuit court found
that a condominium owner’s property was not covered for loss
caused by the advanced decomposition since the definition of
“explosion” did NOT include the loss at hand.
The body of the deceased went undiscovered for several weeks, and
was found by maintenance men attempting to locate the source of
an unpleasant odor. By that time, the damage had been done. The
neighbor of the deceased had bodily fluids leak into the walls and
ceiling of her unit. State Farm denied the property claim for an
additional reason. State Farm’s basis of denial was also caused in part
by the insured’s failure to provide a sworn proof of loss. A proof of
loss is required within 60 days from the loss. The two parties initially
had reached a mutual agreement on the amount of the loss for the
dwelling, but not including personal property. However, the
property owner unfortunately failed to provide the necessary sworn
proof of loss.
Once State Farm formally denied the claim, the insured brought suit
in hopes to receive payment for damages to both the building and
her personal property or contents. State Farm took that occasion
to exercise their right to deny the claim based on the argument that
an exploding cadaver was not an “explosion” as intended for use in a
property policy. State Farm won, and ultimately the entire loss was
determined as not covered.
Just when you think you have seen it all – this industry will provide a
loss that makes one truly exercise their brain to determine coverage.
Author: Lanny L. Hair, CIC, ARM, AAI, RPLU—
IIABAZ Executive Vice President
The Academy Publishes 10th Edition of Growth and Performance Standards Study
The National Alliance Research Academy has published its
newly revised 10th edition of Growth and Performance Standards
(GPS). The 2014 edition is written specifically for those who want
to compare their insurance agency to other agencies of a similar
size and location, with respect to income and expense averages,
productivity measures, and balance sheet ratios. This allows them
to discover how the best performing agencies are doing, and gauge
the results of agencies in different size categories. Through the
use of the companion CD, agencies may compare their own
numbers, compute variances, and improve results.
The study is an impressive book at 238 pages, and just a few of
the findings indicate the breadth and depth of the inquiry:





The annual revenue growth rate for participating agencies was
7%.
The account retention rate was 89% for commercial lines and
90% for personal lines.
Pre-tax profit was 9% of total agency revenues.
Revenues per person were $118,000.
Spread, the difference between revenues per person and
compensation per person, was $39,000.
© Copyright

Commission per CSR was $272,000 for
commercial lines and $173,000 for personal lines.
According to William J. Hold, CRM, CISR, Director of The Academy,
“The GPS study represents current agency trends. Much of the
value is in faithfully representing agency response to times of
uncertainty and readjustment. Agencies around the country use the
study to establish benchmarks for their own responses and
progress.”
Readers will find the CD a useful companion for comparing their
own numbers to trends in the industry. Growth and Performance
Standards (GPS) combines 238 pages of precise current data with
practical tools for its use. The price is $75.00. There is also an
eBook version available for $65.00.
The Academy is a non-profit organization funded entirely through
publication sales and affiliation dues, and serves as the research and
development arm of The National Alliance for Insurance
Education & Research. Research grants are made possible
through the annual dues of National Alliance members and
The Academy’s Research Associates. For further information, please
call (800) 633-2165 or visit www.TheNationalAlliance.com.
Page 13
© Copyright
Page 14
Copyright © IIABAZ
EDUCATION
ITEC Registration
Form
 Mr.  Ms.  Mrs. Preferred Name for Badge:_________________
Name: ______________________________________________________
Designations: ________________________Birthdate:________________
Agency/Company: ____________________________________________
Address: ____________________________________________________
City, State, Zip: ______________________________________________
Telephone: (__________) ______________________________________
E-mail address: ______________________________________________
Seminar: __________________________________________________
Date of Seminar: __________________________________
2014 Classes and Dates
Check enclosed for _______________, payable to ITEC
Charge to credit card below:
June 4
June 5
June 11-13
June 19
June 19
June 25
July 9
July 9
July 15
July 22
July 29
July 30
July 31
August 6-8
August 13
August 14
August 20
August 28
September 10
September 17
September 24
September 30
September 30
CISR Dynamics of Services Seminar
CISR Insuring Personal Lines Miscellaneous Seminar
CIC Life & Health Institute
ITEC E&O Risk Management Seminar
CRIS Property Insurance for Contractors Seminar
CISR William T. Hold Personal Lines Seminar
CISR Dynamics of Service Seminar
CISR Elements of Risk Management Seminar
CISR Insuring Personal Automobile Seminar
CRIS Workers Compensation for Contractors
CIC Agency Management Institute
CISR Agency Operations Seminar
CISR Essentials of Life & Health Seminar
ITEC Insurance Ethics Seminar—FREE to members
CISR Insuring Commercial Casualty II Seminar
CISR Insuring Commercial Property Seminar
CISR Insuring Personal Residential Seminar
CISR Insuring Personal Lines Miscellaneous Seminar
ITEC Insurance Ethics Seminar—FREE to members
ITEC Ethical Issues Seminar—FREE to members
Phoenix
Kingman
N. Phoenix
Yuma
Phoenix
Phoenix
Tucson
Phoenix
Lake Havasu
Phoenix
Flagstaff
Phoenix
Tucson
N. Phoenix
Lake Havasu
Phoenix
Glendale
Phoenix
Phoenix
Tucson
Phoenix
Tucson
Tucson
Visa
MasterCard

American Express
Expiration Date of Credit Card:_____________ Security # ___________
Card #: ____________________________________________________
Print Name: _________________________________________________
Card Billing Address: _________________________________________
Cardholder Signature: ________________________________________
Registrations will not be accepted without form of payment.
Cancellation Policy: ITEC/CISR Cancellations received within 7 business
days of a seminar will incur a $25 non-transferable fee. CRIS Cancellations
received within 7 business days of a seminar will incur a $50
non-transferable fee. CIC Cancellations received within 7 business days of
an institute will incur a $105 non- transferable fee.
ADA Policy: We comply with Title III of the American with Disabilities Act
Please let us know in advance of any special needs.
Registration Fees
CISR Seminars — $160.00
CISR William T. Hold Personal or Commercial Seminars — $160.00
CISR Dynamics of Service—- $170.00
CRIS Seminars — $195.00 Members or $220.00 Non-Members
ITEC Supervisory Dynamics—$225.00 Members
E & O Loss Control — FREE to Members or $100.00 Non-Members
CIC Institutes — $395.00
CIC Ruble Graduate Seminar — $420.00
© Copyright
Page 15
Store Pac®
According to the Louis Vuitton web site, in 1852, Napoleon's wife
hired the young Louis Vuitton as personal trunk-maker and packer.
Flash forward a century or so and the famous luggage maker has
published a video on the "Art of Packing" which you can watch here
at: http://www.louisvuitton-histoires.com/en_US/journey-times/theart-of-packing. Besides featuring a pleasant, catchy background tune,
the techniques offered are sound; since watching this I can fit far
more clothes in a suitcase and they arrive less rumpled to boot!
If you're more interested in tips on how to pack in commercial lines
sales, read on to learn more about the Travelers Select Pac products
available on Big "I" Markets.
Business PacSM
Travelers Business Pac is designed for firms providing personal
consumer services, businesses repairing light consumer goods
and those engaged in printing.
A sample of classes that we write in this segment includes Dry
Cleaners, Funeral Parlors, Locksmiths Packaging and Mailing Services.
For a complete listing of eligible classes, please refer to the Select
Product Guide on www.bigimarkets.com.
The Business Pac product provides affordable, broad coverage that
can be tailored and customized to meet individual business needs
including Professional Errors and Omissions. Reassuring, for small
businesses providing local services.
Office PacSM
Travelers Office Pac is designed for a variety of firms providing
medical, legal, financial or other professional services for their
clientele. Some of the more than 40 eligible classes include
Accounting, Auditing, Bookkeeping, Claims Adjusters - Independent,
Consultants, Employment Agencies, Medical Offices, Real Estate
Appraisers, Real Estate Sales - Residential and Tax Preparation
Services.
Popular coverage features include:


General Liability Limits of $2 million per occurrence/
$4 million aggregate are available.
Business Personal Property off Premises coverage is provided,
including while in transit and temporarily away from the
scheduled premises. Physicians and dentists Black Bag coverage
for medical, surgical and dental equipment and supplies away
from described premises is included.
© Copyright
Travelers Store
Pac is designed
specifically for a
wide variety of
retailers primarily
engaged in brick
and mortar
commerce.
A sample of classes
that we write in
the Store segment
include: Air Conditioning, Heating, Antique Stores, Appliances,
Bicycle Shops and Health Stores. But with over 140 classes of
business in our appetite this is just the beginning so please refer to
the Select Product Guide for a complete list.
The Store Pac provides affordable, broad coverages that can be
tailored and customized to meet individual business needs. For
example, did you know your Travelers Select Store clients can
choose Equipment Breakdown coverage and Liability for Damage
to Premises Rented Coverages?
Tech Office PacSM
Travelers Technology Office Pac is designed for firms providing
computer consultation and a variety of technology services for their
clientele. A sample of classes that we write in this segment include
Computer Consultants, Software Developers, Data Processing, and
Website Designers. For a complete listing of eligible classes, please
refer to the Select Product Guide on www.bigimarkets.com.
The Technology Office Pac product provides affordable, broad
coverage that can be tailored and customized to meet individual
business needs. Technology Office clients will have coverage for
business personal property that is off-premises or in transit - perfect
for small businesses who carry out their technology services away
from their office. What's more, our Technology Office endorsement
provides the ability to modify thirty property coverages including
covering virtual office premises. When quoting your next
Technology, Business, Store or Office Pac, don't forget to quote the
Workers' Compensation as well.
The Big "I" Markets Travelers Select program is currently
available to members in all states except AK, FL, HI, LA,
RI & TX.
Page 16
by Steve Anderson
http://techtips.steveanderson.com/
Top-level domains (TLDs) have been used since the very beginning
of the Internet as a way to categorize the different types of websites.
You know these as the extensions used by every website address.
The original top level domains were: .gov for government; .mil for
military; .edu for academic institutions; .net for network operations
centers; .org typically for non-profits but not restricted to this use;
and .com for commercial entities.
Domain name extensions were originally added to help identify the
domains by function or country of origin. Many of the new domain
name extensions will also become recognized over time as an
effective way to categorize organizations by interest or functions.
In 2000, the Internet Corporation for Assigned Names and Numbers
(ICANN) decided to allow seven more TLDs such as .biz, .info,
.name, and .pro.
A historic change in the Internet domain name system is now
underway. 2014 will see the start of the gradual release of almost
1,900 new domain extensions. These new extensions will allow
companies of all types to be able to create generic extensions for
their brand and names such as .shop, .hotel, .eco, .cpa, and so on.
To view the list of all the new TLDs, you can go to Name.com’s
TLD Watchlist at https://www.name.com/account/ntld/watcher.
Two of these new domains your organization might want to pay
some attention to are .agency and .insurance. While the .com
domain has been the standard (the first was assigned in 1985)
with currently over 132 million .com websites in the world, it is
also significantly harder today to find an appropriate website
address using a .com extension.
Here you can see all the new TLDs and also mark the ones you're
interested in so that you can be notified when they become available.
Your existing domain registrar (Network Solutions, GoDaddy, etc.)
may also offer a similar service. As these new domains become
available, you can purchase them for prices similar to those for
your existing domains.
By registering and using one of the new extensions of your
domain name, you will benefit from the following:
I suggest you at least explore the idea of registering your
organization’s name or brand with .agency and/or .insurance. It’s
not a lot of money and you could look back in a few years and be
very glad you claimed this part of the Internet for yourself or
your organization.


Drive more traffic to your website. Registering your
domain name with multiple extensions and pointing them to
your main website can help prospects and customers find
your website.
Protect your brand and online identity. It will prevent
others from registering your domain with a different extension
that attracts customers to their site instead of yours.
© Copyright
Article reprinted with kind permission by its author.
Author: Steve Anderson, CIC—Executive editor of
The Anderson Agency Report, and a National CIC Faculty
member. Steve’s Tech Tips website can be accessed
at http://techtips.steveanderson.com/.
Page 17
BIG “I” PROVIDES HOUSE FINANCIAL SERVICES
COMMITTEE WITH AGENT PERSPECTIVE ON
INSURANCE PROPOSALS
Association submits testimony to subcommittee regarding five legislative proposals.
The Independent Insurance Agents & Brokers of America
recently submitted testimony before the U.S. House of
Representatives Committee on Financial Services
Subcommittee on Housing and Insurance at a hearing
entitled, “Legislative Proposals to Reform Domestic
Insurance Policy.”
”The Big ‘I’ welcomes the opportunity to provide the
independent insurance agent and broker perspective on
important legislative proposals currently circulating on
Capitol Hill,” says Charles Symington, Big “I” senior vice
president for external and government affairs. “The Big ‘I’
is pleased to offer insight on several bills and we look
forward to continuing to work with the committee on
any insurance-related legislation that might subsequently
advance further in the legislative process.”
The Big “I” testimony is available at http://
www.independentagent.com/News/PressReleases/
SiteAssets/Pages/2014/GA05202014_Hearing/IIABA%20Statement%
20for%20the%20Record%20HFSC%20Hearing%205%2020%2014.pdf.
Additional information on the hearing is also available on the
committee’s website at http://financialservices.house.gov/calendar/
eventsingle.aspx?EventID=379858.
of America, Inc.
As you know, Microsoft ceased support for the aging Windows XP
operating system in April and it didn't take long for hackers to create
a bug for Internet Explorer users that will cause you and your
computer a great deal of harm. In short, this means that unless
Microsoft changes their mind about ending support for XP, you
should simply not use Internet Explorer at all.
Everyone is susceptible to IE's vulnerability as it is very easy to
inadvertently click a link allowing an attacker to take complete
control of your computer. This applies to those of us that are
logged in as a user with administrative rights, which is most of us.
For now, Google Chrome is your friend and Mozilla Firefox is your
best friend. Firefox has been reported to be more secure than
Chrome and has not yet issued an expiration date for XP support.
Visit PC World to learn more about the vulnerabilities and options
you have to protect yourself. The web address is: http://
www.pcworld.com/article/2148368/new-internet-explorer-zero-dayputs-web-at-risk-and-xp-isnt-getting-a-fix.html.
Article provided by: Greg Martin—First Computer Rentals,
Scottsdale.
© Copyright
Page 18
REPRESENTATIVE MCMORRIS RODGERS DISCUSSES
JOBS, HEALTH CARE AND TAXES AT BIG “I” LARGE
AGENT/CEO EVENT
Annual gathering brings together insurance industry leaders.
Representative Cathy McMorris Rodgers (Republican—
Washington, pictured right), Chair of the U.S. House of
Representatives Republican Conference and the fourth
ranking leader in the House, recently addressed the
association’s Large Agent/Broker and CEO dinner.
During her keynote address, the Washington Republican
who is the highest ranking Republican woman in Congress
discussed the economy, health care and taxes and how all
three are priorities and related to jobs.
“The best anti-poverty program is a job,” said Rep.
McMorris Rodgers to attendees. The prestigious gathering
of industry leaders, carrier CEOs and some of the largest
agents and brokers from around the country is held annually
during the Big “I” Legislative Conference in Washington,
D.C. She noted that many of the people in the room were
part of the solution and said, “I want to talk to you as
leaders in the country, as job-creators and just express my
gratitude for the roles that you play in your community.”
ways to fix the many problems it has caused through legislative
efforts.
During her address, Rep. McMorris Rodgers also discussed tax
reform. She emphasized that the recent tax reform proposal
released by House Ways & Means Chairman Dave Camp
(Republican—Michigan) was still in draft form, but noted that,
“It’s important that we have a debate over tax reform in America.
We need to address this too costly, too complicated tax code.”
She pointed out that, “three out of four Americans are living
paycheck to paycheck” and shared her vision for her
political party and the House to grow the economy and
create jobs.
Rep. McMorris Rodgers is well-known as a rising star in the
Republican Party and was elected to the House in 2004. In addition
to her leadership role in the House, Rep. McMorris Rodgers serves
on the House Energy and Commerce Committee which has
jurisdiction over many important issues for the independent agency
system, most importantly health care. Prior to being elected to
Congress, she worked for her family’s business and served in the
Washington State Legislature. Rep. McMorris Rodgers was the first
in her family to graduate from college and went on to earn an
executive MBA from the University of Washington.
The Senate has yet to consider many bills passed by the
House that Rep. McMorris Rodgers supports and believes
would create jobs. “We’ve passed over 150 pro-growth
jobs bills,” she said. “Everything from bills on energy, job
training, regulatory reform, health care, innovation and most
of them are still waiting for consideration over in the
Senate.”
“Conference Chair McMorris Rodgers continues to exhibit her
unique leadership skills through her hard work on numerous issues
that directly impact independent insurance agents, brokers and
insurance consumers,” says Charles Symington, Big “I” senior vice
president of external and government affairs. “We are grateful to for
her advocacy for small business, particularly in the health care debate
and tax reform.”
Rep. McMorris Rodgers voted against President Barack
Obama’s Affordable Care Act (ACA), and she stressed that
“one of the biggest impediments to economic growth and
job creation continues to be the President’s health care
law.”
The Large Agent/Broker and CEO dinner is sponsored by the Big “I”
Large Agent and Broker Roundtable, a group which advises the Big
“I” Board of Directors on many important topics. The group has
recently been working on issues such as agent licensing reform,
terrorism risk insurance, and industry workforce recruitment.
“We just marked the four year anniversary of the law and
yet they’re estimating that at the end of ten years, 31 million
Americans will still be without health insurance,” she added.
“At least six million Americans have had their health
insurance plans cancelled. Premiums are doubling in some
parts of the country.” In pointing out that the ACA has
already undergone more than 40 different regulatory
extensions and delays, she stressed that her focus is on
Large agents and brokers from around the country, as well as
regional and national carrier CEOs including many from Rep.
McMorris Rodgers’s home state of Washington, were in attendance
at the event on April 10th, 2014.
© Copyright
of America, Inc.
Page 19
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Page 20
Dogged sleuthing exposed a driver who hit a teen with his car,
drove off, torched the car, and then made a bogus theft claim to
cover up the hit-and-run. High-school student Devaughn Moore was
crossing a street in Amherst, New York, when Kevin Ford hit him
and sped away. He left Moore lying in the street with a severe head
injury. Ford then took his car to a field, set it afire, and called his
insurer to falsely report a theft. The shell of a broken, gray side-view
mirror was left at the hit-and-run scene. Investigators determined it
came from a 2006 Chevy Impala. Police searched the state DMV’s
database and found 500 references to cars that fit that description in
Erie County. Investigators started visiting each address, looking for a
damaged or replaced side mirror. The break came when a licenseplate check at an address revealed the car listed there was reported
stolen the night of the hit-and-run. The burned car was found at an
insurance impound lot. The side-view mirror was missing and right
front fender damaged. Ford admitted all when questioned, and faces
up to 8 years in prison when sentenced July 17. Moore was
hospitalized for 4 weeks and is learning to walk again.
employee to a medical facility. He
lied that he had a “tremendous
amount of pain” around his right
elbow and lower bicep. More
exams found no serious injuries
but Inserra kept complaining he was in so much pain he could not
bend his arm. Yet he kept performing with his Brooklyn-based band
ironically named Cousin Sleaze. Photos show him “repeatedly
moving his arms in a punching motion” and “violently flailing his arm
in an up-and-down motion” on the stage, prosecutors say. The band
hit the road for a tour called “Miles of Mayhem.” Video from
performances in Athens, Georgia, Cocoa Beach, Florida, and
elsewhere shows Inserra fist pumping and thrashing around without
any discomfort. He pleaded guilty in late April and faces up to 14
months in federal prison when sentenced in August.
Married just four days, Michel Escoto bludgeoned his new
bride Wendy Trapaga with a tire iron to collect on a $1-million life
policy. The Miami-area man’s original plan was for he and his
Supermom may not be so super after all, Pierce County,
girlfriend Yolanda Cerillo to drug Wendy and drown her in a Jacuzzi
Washington, prosecutors say. Melinda Sayers was publicly lauded as and make it look like an accidental drug overdose. But she woke up
a heroine after lowering her son down from a bedroom window to in the water and started struggling. Escoto and Cerillo drove the
the ground, then jumping out as fire and thick smoke engulfed her
semi-conscious Wendy to the warehouse district, where he
house. Residents dubbed Sayers as “Supermom.” She even collected bludgeoned and strangled her. Escoto lied that he and Trapaga had
$32,000 in donations through a crowd funding website. But Sayers
argued and she drove away angry – the last time he ever saw her.
set the fire herself and made a false insurance claim, prosecutors say. But a toxicologist said Wendy was too drugged to drive herself.
Investigators found a butane lighter on the couch. Sayers also called Cerillo then came forward to out the scheme in exchange for
911 and said a fire alarm was going off because of a blaze in the living immunity. Cerillo said she waited in a car nearby and did not see
room. But it would have been impossible to see any part of the living Wendy’s killing. But she did see Escoto dump the tire iron in
room from her bedroom, prosecutors allege. Her explanations
Biscayne Bay, where it was later found. Escoto represented himself
allegedly did not match the evidence. The
at trial. The jury took just 2 1/2 hours to convict. He faces automatic
prosecutors’ theory: Her 11-month-old
life without parole when sentenced later in May.
preemie daughter Abigail was scheduled
to come home the next day after nearly a
Michael Caldwell was at a car show when he called his insurer
year in the hospital. Sayers did not want
to report that someone had stolen his Chevy Tahoe. An employee
to care for her. So she lit a candle in the
of the Surgoinsville, Tennessee man’s body shop had called him with
living room and opened a valve in the
the bad news, he said. The vehicle was found
medical oxygen tank set up for her daughter. The fire broke out and burned, in a rural area on property next to
the seemingly heroic escape ensued. Abigail died in the hospital the
crony Brandon Eugene Frost’s family farm.
next day after suffering seizures.
Haulers Insurance paid Caldwell $28,054.
Then a witness came forward and said
Normally U.S. Congressmen relish the limelight but Rep.
Caldwell had offered $1,000 to “get rid of”
Michael Grimm probably wishes the cameras would go away. The
the Tahoe while Caldwell was out of town. The witness declined.
Brooklyn Republican runs a Manhattan fast-food restaurant called
Caldwell finally paid Frost $500 to dump the car. Cell records
Healthalicious. He paid workers in cash, thus lowering his payroll
allegedly show that Frost and Caldwell talked several times just
by hundreds of thousands of dollars to illegally avoid paying full
before and after the incident. That evidence did not help Frost
workers’ comp premiums, feds charged this week. Grimm also
either, after he denied being involved. NICB also said Caldwell had
allegedly kept two sets of books, one reporting his true payroll info made previous claims, including $15,000 for a vehicle he said was
and a false version for his payroll firm, accountant, and others. He
struck by lightning. Frost finally caved in and admitted Caldwell had
faces a slew of other charges including health and tax fraud. Grimm
given him the keys so he could unload the Tahoe, prosecutors allege.
frames the charges as a politically motivated vendetta. He could
They were indicted on insurance-fraud and arson charges.
spend dozens of years in a federal jail if convicted.
To learn more about insurance fraud and simultaneously earn CE
A former New York cop moonlighted as the lead singer for a
credits, visit the BIG ”I” VU Fraud Training Center for on-line
punk rock band while collecting more than $31,000 in workers’
courses, resources and daily news. Here is the link: http://
comp money for a supposedly injured arm. Christopher Inserra said bigivu.learn.com/learncenter.asp?id=178517&sessionid=3he hurt his right arm while taking an injured Port Authority
C4545B89-01C7-4250-924D-0997061E2CAE&page=6.
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Page 21
Foreward by Lanny Hair, CIC, RPLU, ARM, AAI—Executive Vice President, IIAB of Arizona
CAN YOU IMAGINE BUYING A NEW CAR IN ARIZONA
AND NOT USING THE AIR-CONDITIONING?
Because many of you have not yet tried one of the most valuable membership benefits (air-conditioning), you are
unaware of how great the benefit is, and therefore are not taking advantage of this “FREE membership benefit.
I consider the “VIRTUAL UNIVERSITY” provided by our National Associations one of the most valuable resources and membership
benefit. Vast amounts of technical information within the National Association’s “VIRTUAL UNIVERSITY”. This “benefit” is available to
non-members as well, however, a non-member must pay a fee equal to or sometimes in excess of what you pay for membership dues in
both the State and National Associations.
In addition to the enormous bank of information, the Virtual University has a very valuable source of data available via the “ASK THE
EXPERT” service. The Virtual University has some of the most knowledgeable and experienced experts from throughout the nation who
are on constant “stand-by” to address a member’s question regarding coverages, and agency management issues. This is also FREE to the
Association’s membership. The Response time to “questions” is extremely quick, and often times will address issues from different
viewpoints.
Below are a couple of articles from the most recent “VUpoint Newsletter”. To access the complete university you must have a “Log in”
name and “password”. Once you have the “key” to the Virtual University you will have a competitive edge over those who cannot
compete with the advantage of product knowledge. If you need log-in assistance, please send an email to [email protected].
+ P E R S O N AL L I N E S
When Owned Autos Collide...How Many Deductibles?
By: Bill Wilson
An insured backs into his wife's car, damaging both vehicles insured under the same policy. The deductible provision says no deductible
applies if an insured vehicle collides with another vehicle insured by the same carrier. The adjuster says this means an insured under a
different, not the same, policy. Is that what the policy actually says? Interestingly, it depends on which edition of this insurer's policy you
have and where you live.
The link: http://www.mmsend66.com/link.cfm?r=160982994&sid=40132838&m=4424772&u=IIABA&j=18737036&s=http://
www.independentagent.com/Education/VU/Insurance/Personal-Lines/Auto/Physical-Damage/WilsonDeductibles.aspx.
+ C O M M E R C I AL L I N E S
Should CGL Deductibles or SIRS be Disclosed on Certificates of Insurance?
By: Bill Wilson
The ACORD 25 certificate of insurance has fields to show deductibles or self-insured retentions (SIRs) for excess and umbrella policies.
However, there are no specific fields for this information for CGL policies. A recent court case indicates why failure to procure a
"first-dollar" primary CGL policy or disclose an SIR could lead to problems.
The link: http://www.mmsend66.com/link.cfm?r=160982994&sid=40132840&m=4424772&u=IIABA&j=18737036&s=http://
www.independentagent.com/Education/VU/Insurance/Commercial-Lines/CGL/Additional-Insureds/WilsonCGLSIRs.aspx.
© Copyright
Page 22
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Page 23
ERRORS & OMISSIONS
Advise clients on data breach risk management and
cyber liability insurance—and practice what you
preach.
The theft or loss of employee and customer personally
identifiable information is a rising liability for small
and medium size enterprises (SME). Hackers are
increasingly targeting SME’s, knowing these
businesses have a storehouse of personal
information, but are less likely than lager
organizations to secure it.
But what about a very specific type of SME—
independent insurance agencies?
Few organizations possess the breadth of customer
information in their databases and through their
routine correspondence with carriers than an
insurance agency. While agents advise clients on data
breach risk management protocols, and the purchase
of first-party and third-party cyber liability insurance,
the questions is—are they drinking their own
Kool-Aid?
Many agencies indeed are following the same prudent steps they
advise clients. When it comes to the cyber liabilities confronting
small and midsize concerns, insurance agencies by and large are on
top of the issue. “This is one of the major programs that Agents
Council for Technology (ACT) gets involved in,” says Jeffrey Yates,
retired executive director of the Agents Council for Technology at
the Big “I.” “We understood from the beginning that all the other
efficiencies that agencies strive for, such as real-time marketing on
the Internet, would be blown out of the water if there was a
security breach. This is an essential part of what we do.”
Rules and Regulations
ACT assembled a working group of agents to develop best
practices for data security, culminating in a prototype agency
security plan, which is available to all Big “I” members at
www.iiaba.net/act.
Massachusetts has passed the nation’s stiffest data security law. It
applies to any entity interacting with residents in situations where
the exchange of personal data may have occurred. The law states,
“all persons that own, license, store or maintain personal information
about a resident” of Massachusetts are subject to the regulation.
Thus, an agent in California who sells an insurance policy online to
someone in Massachusetts, and in the course of this transaction
receives and stores the person’s identifiable information, is in for a
harsh surprise if this data is stolen or lost.
The organization also has developed with carriers and vendors
user-friendly ways to secure email and websites, and it regularly
sponsors webinars on the subject of agency security.
Apparently, these messages are getting through to agents who
understand business hazards posed by a security leak. 73% of
2,100 SMEs in a survey by Symantec experienced a cyber attack.
Of these, 30% cited the attacks as “somewhat or extremely
effective.”
Just how vulnerable are agencies to a data breach? Of 761 data
breaches investigated by the U.S. Secret Service and Verizon
Communications Inc.’s forensics analysis unit, 482 of them (63%)
occurred at companies with 100 or fewer employees, a metric that
describes many agencies. Don’t expect hackers to give up either.
“As more agencies use mobile devices,” Yates says, “their cyber
risks are proliferating.”
© Copyright
Approximately 46 states currently have laws on the books
regarding the notification of individuals whose personally
identifiable information has been stolen or lost. Aside from
these state data breach laws, agencies also are subject to federal
laws like the Health Insurance Portability and Accountability
Act (HIPAA) and the Gramm-Leach-Bliley Act, each requiring
that specific actions be taken to protect consumers’ non-public
personal information.
How harsh? The regulation (201 CMR 17.00) requires the business,
well in advance of a potential data breach, to assemble a written plan
explaining the steps it is taking to protect personally identifiable
information it stores electronically or on paper. This plan must be
routinely audited. The law further requires that email containing
“personal information” be sent in an encrypted manner.
This would include, for example, personal information submitted by
an agent on a commercial lines application. Moreover, the law
requires that personal information contained on laptops and mobile
devices be encrypted because if the higher risk that these devices
Page 24
will be lost or stolen.
range of different passwords for employees to ensure they perused
only those files specifically related to their work, and policed the
Now if personal is indeed lost, leaked or stolen, potentially serious
flow of information from customers though the agency to carriers.
consequences await. Massachusetts General Law, Chapter 93A,
For instance, when the agency receives a client’s payroll census for
Section 4, authorizes the attorney general to seek injunctive relief,
workers compensation, the employees’ personally identifiable
which may involve a court-imposed $5,000 civil penalty per violation. information is deleted so all that remains is the actual dollar figures
That’s just one person’s personally identifiable information; the
of the claim.
potentially crushing damages in a breach involving hundreds of
affected people give serious pause for consideration.
More recently, the agency implemented a decoder in mobile devices
like smartphones and laptops that secures remote communications
Then, there are the legal defense costs if an action is brought against outside the agency’s firewalls. “The device changes the code every 30
the entity, not to mention the dire risk of reputational harm if the
seconds,” Burnette notes. “Users carry a little fob to get the code of
public becomes aware of the incident. Even a business not specifically the minute; otherwise they can’t log on.”
subject to 201 CMR 17.00 may incur significant defense and
settlement costs, if, for instance, the plaintiff attorney contends
Despite these best practices, Liam Holmes, CEO of MIS Solutions,
that Massachusetts’ personal information security law is effectively
says hackers remain undeterred in their quests. “I just ran a report
the standard of care for safeguarding private data.
last month and there were 32,000 unauthorized attempts to
penetrate the firewall (at Burnette),” he explains. “None of them
Other possible costs include the need to notify affected parties of
got through.”
the breach and provide credit-monitoring services to assess if the
individuals’ bank accounts and credit cards have been violated. In
Some agencies have determined the risk of a data breach requires
cases of a comprehensive breach, the business may need to hire a
internal assistance from IT specialists (ACT advises that all agencies
network security expert to determine the technological causes of
consider the appointment of a data security coordinator to develop
the breach, and a crisis management firm to handle the public
and implement the agency’s security program). At Eustis Insurance
relations fallout.
& Benefits, Keith Oufnac is that person. “Our biggest problem is
security,” says Oufnac, vice president of information technology at
Steven J. Aronson, president of Aronson Insurance, is especially
the New Orleans-based agency.
cognizant of the Massachusetts law, given the agency’s two
locations in Needham and Newton in the state. Aronson
Among the best practices Oufnac has implemented is secure email.
recently was asked by the Big “I” and the Massachusetts
All email is downloaded and filtered by Postini, an email security and
Association of Insurance Agents to assess the law’s impact on
archiving service now owned by Google. The Postini Communicative
the agency system, in order to train agents to ensure effective
messages between business partners, such as an agency and a carrier.
compliance. “There is no need for an agency to research each
“We do this to protect everyone, since everyone is vulnerable to
state’s data privacy laws, since if you just follow the law here
social engineering scams,” says Eufnac.
you will be in pretty good shape,” Aronson says. “It’s the
most onerous one out there.”
Insurance Just In Case
In his own agency, Aronson has made great strides securing his
customers’ and employees’ personally identifiable information.
“Most people forget that technology is not the only way for a
criminal to get at this stuff,” he says. “The first thing I advise is
to lock the windows and doors, and install a central station
burglar alarm. You’d be amazed at how easy it is to steal a server
or a drawer’s worth of files.” He adds, “Of course, this is just
the first step.”
Serious Stuff
Many agents like Stan Burnett take the threat of a data breach
seriously. “We were an early adopter of technology, purchasing
an imaging system that was connected to our servers about 14
years ago,” says Burnette, president of Burnette Insurance
Services in Suwanee, Georgia. “Within a week, the firewall was
hit with thousands of hackings. We were scared to death. Then,
someone hacked into the computers and destroyed our
database - didn’t steal the data, just blew it up. That’s when we
realized we needed help.”
The agency brought in MIS Solutions, a managed services provider
also based in Suwanee. MIS beefed up the firewalls, layered in a
© Copyright
Each of the agencies in this article does something else besides
implement data security and risk management best practices - they
buy cyber liability insurance. “In today’s world, you simply must have
it,” says Eufnac.
“I bought the coverage last year,” Burnette agrees. “Our E&O
carrier offered it as an extension to the policy we had. We’re selling
a lot of network security and privacy coverage to our customers,
and I felt we just had to have it too.” Aronson notes that his E&O
carrier didn’t start offering the coverage until recently, but as soon
as it became available he jumped on it.
ACT warns that E&O carriers aren’t
just giving away the coverage for the
heck of it. “There is now coverage in
many cases for a data breach, but it is
often predicated on the agency having
a written security plan, secure email
and website, and other best practices in play. Risk management first,
and then insurance: good sense for all.
Author: Russ Banham—Independent Agents senior
contributing writer. Article reprinted with kind permission.
Page 25
by Bernard J. Neff, CIC, CPCU
BREAKDOWN
A couple of times each year, I get a message from an agent who is in
the middle of trying to figure out what they should have done in
certain situations that only happen once in a while, but when they do,
it can leave everyone wishing they had done more to provide proper
coverage. I call it “true breakdown coverage.”
As most of you know, our Building and Personal Property coverage
forms, including most of the various BOP forms out there, often do
not provide any help for losses that have to do with certain causes
of loss. I am referring to losses caused by explosions of pressure
vessels, electric arcing, centrifugal force, mechanical breakdown,
and so on. In the old days, we would call the solution to these
perils “Boiler and Machinery” coverage. Today, it is often called
either “Mechanical Breakdown”, or more often, “Equipment
Breakdown.” This coverage is provided by the various carriers in
different ways, sometimes as a separate policy, or an endorsement,
or it might be an “additional coverage” that is built into a policy
(like a high-end BOP or Building or Package form).
What was interesting is that the policy (provided by a very large and
very prestigious insurance carrier) had a sublimit of coverage entitled
“Mechanical Breakdown”, which one would think would come into
play here. But the insuring agreement for the built-in coverage was
also on a “direct physical loss or damage” basis, so the whole
situation was like the dog chasing its tail – we went round and round,
but there was no coverage.
Another loss to a freezer complex occurred a few years ago, when
the freezers just shut down and stopped working. Once again, there
was no manifestation or cause of loss to justify the stoppage – and
the claim was denied. By the time the loss was discovered, the
frozen French fries were no longer completely frozen and the
customer would not accept them for delivery in their food
establishment.
The solution to the problem is really fairly simple – you want “true
mechanical or equipment breakdown” coverage. However, it is
provided, look at the insuring agreement of this special coverage.
Here is the problem. Most of our forms are on a “Special Causes of Remember, it can be a separate policy, an endorsement or a built-in
Loss” basis that has an insuring agreement with language that typically sublimit. If the words “direct physical loss or damage” are there,
says a loss must be caused by “direct physical loss or damage”.
that is fine as long as they are followed by the word “failure” or
Very nice coverage, but it does require some kind of
“malfunction”. The word “failure” is my preference since carriers
manifestation. That means the property burned, was blown up or sometimes use the word “malfunction” later in their forms to
away, sagged, shows signs of smoke damage, was stolen, etc. But
describe property not covered, or property excluded. “Failure” will
what happens if a machine just stops working and there is no
provide coverage when the machine just quits. Your clients will have
outward sign (or manifestation) of damage? For industries that rely
coverage when their machines just stop running, and you do not have
on their machines to make certain products, this can be a devastating to be concerned about manifestations or signs of damage.
loss, and often the client will be told there is no coverage.
In a somewhat related topic, I was asked by a couple of agents what
Let’s take an example of an actual loss. A machine that was mixing
to tell their clients when they are selling off-premises power
and drying a certain product (hermetically sealed in the machine)
interruption. This, too, is provided in a number of ways, but
stopped working before the process was complete. The client
usually is offered by our carriers on a direct and an indirect basis.
suffered the following losses:
Their main question was how to explain to a client why they might
want the indirect as well as the direct coverage.
 Loss to the machine, which had to be replaced ($175,000)
I use a very simple example. The local grocery store suffered a loss
when the power was knocked out by a storm a couple of blocks
 Loss of use of the machine which not only had to be replaced,
away. The loss was to their tomato, the only product they had to
but also had to be tested for several months (Federal
sell. The tomato cost the grocer 50 cents to obtain from their
requirements) ($200,000)
supplier, and this is what they would receive under the direct
coverage – 50 cents. But if the grocer also buys the indirect
 Loss of their customer’s product that was ruined when the
machine quit running prematurely, and for which the insured had coverage which is designed to cover their extra expenses and/or
loss of income from the interruption of power, the grocer could
contractually agreed to be absolutely responsible while the
receive their mark-up price. Let’s say they will offer the tomato at
product was in their care and control ($120,000)
$1.50. The indirect coverage could provide the $1.00 of mark-up.
This is all subject to the limits and other conditions of the coverage,
 Extra Expenses incurred in getting the new machine ordered
of course, but that is a simple way to show why a client might want
and installed as quickly as possible ($15,000)
to consider this coverage.
Needless to say, the client was not very happy when informed by the
Author: Bernard J. Neff, CIC, CPCU—Member of the CIC
adjuster (correctly) that the “direct physical loss or damage”
National Faculty for the National Alliance for Insurance
coverage would not apply to these losses.
Education and Research. He resides in Cottage Grove, MN.
© Copyright
Page 26
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Page 27
Life & Health
Long-Term
Challenge
Long-term care insurance is an intuitive product for clients
who want to protect assets and control their care in
retirement. But independent agents often find that LTCi
proves a very challenging sale.
able to rely on their LTCi policy to meet a financial need.
And many people have accepted rate increases or modified
their policy, lowering the payout but keeping the premium
increase within their budget.
The reasons vary from cost to misconceptions about how
the product works. Recently, substantial class premium
increases have disillusioned many consumers.
In response to marketplace increases, carriers have
introduced more hybrid policies that combine life insurance
and annuities with LTC riders, allowing the policyholder to
Tap the policy in a tax-efficient way. Sales of these products
are expected to increase, and agents should stay tuned to
monitor the evolution for their clients.
In fairness to the carriers, the prolonged, abnormally low
interest rates have made it difficult to generate adequate
investment returns to meet the long-term tail of claims. In
turn, a number of carriers exited the market while others
increase their rates: five out of 10 of the largest LTCi carriers
in 2010 are no longer writing LTCi. Going back a decade,
almost 100 carriers were active in the LTCi marketplace—
but now only about a dozen major carriers are still writing
policies.
A major factor has involved the assumed “lapse” rate, which
has been lower than some carriers expected. Many insurers
predicted that 5–7% of people who bought LTCi would
cancel their policies each year without tapping their benefits.
Instead, actuaries report the annual cancellation rate
has been less than 2%. PricewaterhouseCoopers estimates
initial premiums would have been about 35% higher if
insurers had assumed such a low cancellation rate.
It’s difficult to explain to a client that the carrier assumed
more people would drop their coverage prior to incurring a
claim. That message essentially contradicts the premise of
the needing the coverage—that in the future, clients will be
© Copyright
Because women tend to live longer than men and therefore
file the lion’s share of LTCi claims, many carriers have
increased rates for single women in the last 12 months.
Nationally, premiums for policies for single women will rise
12% in 2014, while rates for single men will decline more
than 14%, according to a recent price index from the
American Association for Long Term Care Insurance (AALTCI).
This year, a 55-year-old single woman will pay an average
of $1,225 annually for the same level of benefits available
to a single man at just $925.
The AALTCI also reports, however, that 70–80% of LTCi
policies are bought by couples, whose rates will only increase 3%.
For more, please visit http://www.iamagazine.com/magazine/
read/2014/04/01/long-term-challenge#sthash.hkuvVl6y.dpuf.
LIFE-HEALTH
Author: Dave Evans—Certified Financial Planner
and Contributing Editor for Independent Agents
Magazine. Reprinted with kind permission.
Page 28
Filing Fee for Non-Profit Military
Mutual Aid Associations
This Regulatory Bulletin determines the filing fee for non-profit
military mutual aid associations. Arizona’s 51st Legislature, First
Regular Session, enacted SB1234 exemption; insurance
regulation (Ch. 181), with a September 13, 2013 effective date.
The bill included certain defined associations or orders in the list
of entities exempt from Title 20 regulation.
The law amended ARS §20-861 by defining “association or order”
as “any association or order that is a non-profit military mutual aid
association, whose members are officers or enlisted, regular or
reserve, active, retired or honorably discharged members of the
armed forces or sea services of the United States, and whose
principal purpose is to provide life insurance and annuities to its
members and their dependents or beneficiaries.” The law also
amended ARS §20-893 to set forth certain criteria for non-profit
military mutual aid associations including required filings, and it
authorizes the director of insurance to determine an appropriate
filing fee. ARS §20-893(B)(1).
The filing fee for the §20-893(B) filings shall be $300.00, effective
immediately.
Please direct any questions related to this Regulatory Bulletin to
Cary Cook at (602) 364-3999 or [email protected].
This regulatory bulletin issued by: Germaine
L. Marks, Director for the Arizona Department
of Insurance.
About the Arizona Department of Insurance:
The Arizona Department of Insurance, an agency of
the State of Arizona, is responsible for the
education and protection of insurance
consumers and for oversight of the
insurance industry in the state.
Take another look at the RLI Personal Umbrella and Home
Business Insurance Policies!
See how you can write more business with an admitted, secure,
A+ rated carrier
A smart choice for your customer
Today's legal environment calls for extra protection for almost all
your clients. Ask every new and current customer about Personal
Umbrella and Home Business Insurance coverage.
The RLI Personal Umbrella Policy...
Financial stability and responsible underwriting are the foundations
of this program that has been consistently available for over 25
years.
· Up to $5 million in additional insurance
· $1 million Excess UM/UIM available
· Expanded underwriting – more acceptability
· No underlying carrier information
required
· Immediate availability & very
affordable
© Copyright
The RLI Home Business Insurance Policy...
Homeowner's policies, even with home business endorsements,
don't adequately cover home businesses. They need RLI's Home
Business Insurance.
· True BOP coverage for home businesses
· Full year of coverage – includes events, fairs & shows
· Coverage applies on and off premises
· Very low premiums
A smart choice for your agency
By making customers aware of these important extra layers of
protection, you won't have to answer the E & O question –
"If extra coverage was available, why didn't you offer it to your
client before this accident?"
Page 29
Lessons I’ve
Learned
About Selling
After 26+ years as a successful salesperson,
here is what I know to be true about sales.
by John Chapin
Lesson #1: If you’re looking for 9 to 5 and safety and
security, sales is not for you.
Sales really is the hardest high paying work or the easiest low paying
work. Top salespeople are extremely hard workers, they get in early,
stay late, and most work the weekends. While it’s true that
well-established salespeople sometimes cut back a bit on their hours
and weekends, when needed, they are still able to call upon a great
work ethic and put in the extra hours. Top salespeople go above
and beyond, they answer their phones off-hours, and they are
always ready to respond at a moment’s notice.
Lesson #4: You need to have a burning desire to succeed.
Successful salespeople know what they want for themselves and their
families, they have a plan to get there, and they will either win or die
trying. They do not allow for anything other than success. You can
see it in their eyes, hear it in their voice, and sense it in the way they
carry themselves. There is an overwhelming confidence that they will
achieve the outcome they desire and they do so time after time. Top
salespeople know that you can have it all and you don’t have to sell
your soul to get it, but you do occasionally have to go through hell.
Lesson #5: You are the parent of an 18 year old… and the
18 year old is you.
In addition to putting in extra hours, working outside of “normal”
Any parent of an 18 year old knows how tough it can be to get them
hours, and working extremely hard, top salespeople are able to take to do some things. Well, when it comes to sales, you are your own
the ups and downs of a sales career. They are experts at overcoming 18 year old. Top salespeople are self-starters and have the
adversity and pros at controlling their emotions. They realize that
self-discipline to govern themselves and get themselves to do what
sales is not for the feeble or faint-of-heart. They know you need to
must be done every day. They realize that in sales you are self
keep your mental edge at all times and you must learn to use
employed and that if you make the sales, you’ll stick around, if you
everything to your advantage.
don’t make the sales, you’ll be gone. The bottom line is: if you need
someone standing over you to make sure you are doing what you
Lesson #2: Successful salespeople always find a way to
have to do, you’re in the wrong business. Top salespeople have the
succeed.
drive and motivation to push themselves extremely hard even when
Have you ever noticed that the most successful salespeople are
they’re all alone.
always successful regardless of how bad the economy, the market,
or anything else seems to be? Have you also noticed that
Lesson #6: You always
unsuccessful and mediocre salespeople are always, at best, average
have to be learning and
no matter how good things are? 90% of your brain, the
improving.
subconscious, is super creative. Successful salespeople use the
Top salespeople know that
creative brain to come up with resourceful ways to increase
you can never know it all.
business, get through hurdles, and overall, become more successful.
There are always new
Unsuccessful and mediocre salespeople use the creative brain to find
techniques, new technology,
ways to look busy, waste time, and otherwise avoid the hard work
and new ideas that are being
necessary for success. They clean their desk, do paperwork in the
created every day. Top
middle of the day, or schedule doctor appointments and other
salespeople stay up on changes
personal items during prime calling times. This is the same theory
in the industry, keep abreast
behind why the rich get richer and the poor get poorer.
of the latest sales ideas, and
constantly look for ways to stay positive and motivated. They are
Lesson #3: Sales success or failure comes down to you.
always looking for ways to develop themselves personally and
This ties in with #2. Successful salespeople know that if you do the
professionally. Top salespeople get that there is no neutral or
proper amount of the right activities during the day, you will be
standing still, you’re either getting better and moving forward, or
successful, if you don’t, you won’t. This of course assumes that you
losing your edge and moving backward. They know that school is
have a decent product and work for a reputable company. If that is
never out and there is always more to be learned.
the case, and you still fail, you have no one to blame but yourself.
It’s not the economy, your upbringing, or the bad break you got
Author: John Chapin—Award winning speaker, sales
15 years ago. Many others have had it much worse than you and
trainer, coach, and co-author of the gold-medal winning
have been successful; the top salespeople understand that you
“Sales Encyclopedia”, a comprehensive how-to guide on
and you alone are responsible for your success or lack thereof.
selling.
© Copyright
Page 30
© Copyright
Page 31
The Premier Property and Casualty Trade Association
INDEPENDENT
INSURANCE
AGENTS AND
BROKERS OF
ARIZONA, INC.
333 East Flower Street
Phoenix, Arizona 85012
Phone: 602-956-1851
Toll: 800-627-3356
Fax: 602-468-1392
Email: [email protected]
We’re on the Web
www.iiabaz.com
IIAB of Arizona staff
Lanny L. Hair, CIC, AAI, ARM, RPLU
Executive Vice President
Joni R. Fairbrother, CIC, RPLU
E&O Department Administrator
IAS Assistant Vice President
Terri S. Edwards, CIC, CISR
IIABAZ Assistant Vice President
Ray A. Garcia, CISR
Education Coordinator
News & Views Editor
Don’t forget to join us on Facebook at
CƕKN{RRR|A<>@=J J F|>J H Independent Agents and Brokers of Arizona
2828 North 36th Street
Phoenix, Arizona 85008
Michael E. Radcliffe, CISR
E&O Department Administrative
Assistant
Mona L. Enriquez
E&O Department Administrative
Assistant
Kathy M. Johnson
Bookkeeper
Jonathan J. Calendreli
Education Coordinator Assistant
Affix Mailing label here
© Copyright
Page 32

work comp extraterritorial issues - Arizona

Transcription

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