September 2014 - Associated Risk Managers

AN
Message from
the Chairman
IN THIS ISSUE
Priscilla Hottle
ARMNEWS
Your New Board of Directors 2014–2016..... 2
Fall 2014 Regional Meetings.................... 3
Save the Dates! ARM National
Conference............................................... 3
New Executive Directors........................... 4
ARM Regional Reports.............................. 6
Greetings Team NEBA Supporters............. 9
ARM of Ohio Launches New Cyber
Insurance Training Site........................... 10
Benefits of a Micro Captive..................... 11
Cyber Protection: Protecting Your
Healthcare Customers............................. 12
Protection Against Government Audit.... 13
Give Careful Consideration to the
Wholesaler You Use................................ 14
It seems that we are all busier than ever, in our agencies, in our community activities and with
our families. Within ARM, the same is true. Your ARM National Board is busy working hard on
your behalf. We are meeting in Itasca, IL the end of October for our Fall 2014 Board Meeting. If
you have anything on your mind or suggestions for our organization, please don’t hesitate to
reach out to any of our National Board members.
What have we been busy working on?
ARM Video – take a look at our new ARM video and share it with all members of your Agency
team. Share it with your carriers too! It’s a great explanation of who we are, what we represent
and why we are STRONG as MANY. POWERFUL as ONE. VIEW VIDEO
ARMI Agency – we are extremely proud to announce the formation of ARMI Agency and
welcome Dan Gleason as our President. We have formed the agency to develop new programs
and consolidate business opportunities where it’s a win-win for our agency members and our
carrier partners. In order to accomplish our vast goals which will enable you to differentiate
your agency, we continue to need data and information. PLEASE respond when we call out for
data. It’s completely confidential and used solely for the purpose of developing opportunities
for you. Stay tuned for exciting developments!
ARM FICO – we are so fortunate to own our own finance company and partner with AFCO
Premium Finance who provides us with outstanding service as well as competitive terms for
our customers. In addition doing business with ARM FICO guarantees extra revenue to you! Last
year ARM members financed $59 Million in annual premiums. ARM FICO generated $674,000
back to the ARM network. That excludes our portion of the $98,000 in late fees generated. Use
this facility...YOU OWN IT!
ARM Partners/Gallagher relationship – our partnership
with Arthur J. Gallagher & Co./RPS continues to be a
success story. Just take a look at what our ARM members
write throughout the nationwide RPS offices and you’ll
see everything from GL/Property, Pollution Liability,
Products Liability, Inland Marine, Auto Fleets, E&O, Cyber
Liability, Workers Compensation and Excess policies just
to name a few. Our members placed nearly $50,000,000 in
annual premium through RPS in 2013 and earned in excess of
$600,000 in bonus dollars. Within RPS you will find expertise in
virtually every coverage area and terrific insurance professionals wanting to help
you write business. If you need direction to an appropriate RPS office or product
professional, give Scott Spangler, our ARM Executive Director a call and he will be happy to
help. 630-285-4324, or email Scott at: [email protected].
For those that were present at our Alexandria National Conference – don’t forget to turn in
those poker chips for an extra 2% commission on anything written new with RPS!
ARM 2015 Annual Conference – mark your calendar for April 28 – May 1, 2015, NASHVILLE.
Join us for great seminars, wonderful product information, outstanding networking with
carriers and underwriters and camaraderie with your fellow ARM members!
Strong as Many. Powerful as One. That’s the ARM difference!
No. 25 Sept. 2014
www.armiweb.com
Respectfully,
Priscilla Hottle
Your New Board of Directors 2014–2016
CHAIRMAN, REGION 2
The new ARMI Board of Directors for the 2014-2016 term
was elected at the ARMI Shareholders meeting at the ARM
National Conference in Alexandria, VA earlier this year.
Priscilla Hottle has moved up the ranks as Chairman of
ARMI with Greg Easley serving as Vice Chairman. Brenda
Case was honored for her contributions over the past four
years as Chairman and Vice Chairman, and will continue on
the Board as Immediate Past Chairman as well as serve on
several committees.
Priscilla Hottle
Hottle and Associates
Warrenton, VA
There are 2 new additions to the Board of
Directors.
Russ Davies, Managing Partner of Andres, O’Neil & Lowe
Insurance Agency in Bryan, Ohio. Russ is a graduate of
Manchester University of Fort Wayne, Indiana. Member of
Chief Executive Boards - Detroit, Bryan Area Chamber of
Commerce, Kiwanis Club of Bryan/named 2009 Kiwanian
of the Year, Williams County YMCA, Association of Risk
Managers, Independent Insurance Agents, Professional
Insurance Agents.
VICE CHAIRMAN, REGION 3
Greg Easley
RMD Patti Ins. and
Financial Services
Richmond, IN
Matt Metzger, CIC, CSRM — Secretary/Treasurer at MBAH
Insurance of Lafayette, Indiana.
Attended Central Catholic High School and St. Joseph
College, in Rensselaer, IN . Currently has completed the CIC
and CSRM designations and is working on completing the
CPCU designation. Graduate of National Alliance Producer
School. Served on Boys & Girls Club Board of Directors,
Indiana BIG I Convention Committee, Greater Lafayette
Commerce Small Business Development Committee,
United Way campaign committee, American Red Cross
HEROES committee. Also, he is very active in many youth
sports programs with his four children.
IMMEDIATE PAST
CHAIRMAN, REGION 4
Brenda Case
Lowry-Dunham,
Case & Vivien Group
Slidell, LA
SECRETARY, REGION 1
Mary Pursell
Abbate Insurance Associates
New Haven, CT
TREASURER, REGION 2
Richard Simmons
ARM of Virginia
Falls Church, VA
REGION 3
Russ Davies
Andres, O’Neil & Lowe
Insurance Agency
Bryan, OH
REGION 4
(Rep for State Execs)
Dan Gleason
ARM South
Madison, MS
REGION 3
Matt Metzger
MBAH Insurance
Lafayette, IN
REGION 5
Jon Moon
Moon-Baker Agency
Ada, OK
REGION 3
Gary Semmer
Esser Hayes
Insurance Group, Inc.
Naperville, IL
REGION 5
John Sullivan
Sullivan Insurance Agency
Ardmore, OK
REGION 4
Albert Betz
Betz, Rosetti &
Associates, Inc.
Gulfport, MS
2
Save the Dates!
ARMnference
o
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l
a
n
o
i
t
a
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April 29 & 30, 2015
Loews Vanderbilt Hotel
NASHVILLE
Fall 2014 Regional Meetings
OCTOBER NOVEMBER DECEMBER
8................ARM of New Jersey
6................ARM of NC
2/3.............ARM of Ohio
9................ARM of Connecticut
6................ARM of Illinois*
4................ARM of Georgia
16...............ARM of Georgia
12...............ARM of New Jersey
10...............ARM of New Jersey
16...............ARM of Virginia
13...............ARM of Connecticut
11...............ARM of Connecticut
22/23.......ARM National Board
20...............ARM of Georgia**
11...............ARM of Indiana
23...............ARM of Indiana
*Board meeting only
28/29.......ARM of Mid America
**Conference call
3
New Executive Directors
Meet Craig Payan: ARM of Illinois
“This is not a retirement position for me.”
Craig Payan, newly appointed Executive Director of ARM
Illinois, is not one to take his job lightly. Payan, a veteran
of the insurance industry, is no stranger to hard work.
He’s served as Chairman of ARM International, and as Vice
Chairman and Director. Throughout it all, Payan has been
active in leadership roles within ARM of Illinois in the past,
including serving as both President and Vice President.
Now he brings that same attention to detail to his role
as executive director. In the job since July 1, Payan has
identified some of his primary goals. One is raising agent
awareness of ARM. “As much as we collectively as a group
identify at the state level, there are pockets of opportunity
even within Illinois, where members don’t truly understand
what ARM can do for them.”
It’s not a new problem. Payan remembers that same lack
of awareness even when he was a state president years
ago. It’s a message that reverberates through the state
group even today. “That’s one of the things I’ve heard from
agents; they may be active and focused on one program of
the ARM stable of opportunities, but they really don’t know
about the others.”
CRAIG PAYAN
866-503-0500
[email protected]
Long term, Payan hopes to build the ARM brand, which he
says starts with the membership. “ARM’s role will always be
secondary in nature. Agents are going to have contracts
with their standard markets. Beyond that, I’d like to build
the brand of ARM to be the second thought that comes to
mind if something doesn’t fit or has been denied.”
Payan hopes to bring his multi-level experience of ARM to
work on achieving that goal. “If I can enlighten them and
give them a better awareness of what ARM National is and
what it can do for them, then I think they’re a leg up on
most of the competition.”
His other goal for the region – to add a product or program
to expand the current offerings and further enhance
opportunities for ARM agents. He wants to give agents a
better perspective and connection to the national group
and membership. “The focus is always to try and find
products and programs that every ARM agent can access
and use.”
It’s building the Illinois brand with carriers, too, he says,
“so we don’t necessarily have to approach them, but they
would recognize the value of ARM and come to us when
they want an easy way to geographically cover the state.”
Still, he holds no idealistic notions of all ARM agents
needing the same things. “The needs of a small agency in
the southern part of the state are a lot different than those
of a larger agency in the Chicago metropolitan area. But I
hope to build a base that offers a commonality that you’ll
benefit from by being a member of ARM.”
Not that they don’t already have superb offerings. Payan
says the strength of ARM Illinois is evident in the Prairie
State Insurance Cooperative (PSIC) that handles school
district business, co-produced with Arthur J. Gallagher &
Co. In fact, this year’s renewal period added eleven new
school districts, bringing the total participating districts to
155.
Thirdly, Payan hopes to build consumer awareness. That’s
a pretty tall order, he says, but he sees promise within
the school district program. That program, he says, has
generated a better brand recognition for ARM of Illinois
“because those are the agents they’re dealing with to
purchase the insurance.”
4
New Executive Directors
Meet Cindy Sprole: ARM Mid America
Cindy Sprole started in insurance by mistake.
During the late 1980s, she landed a job in an Iowa-based
bank agency that sold insurance. She would sell auto
insurance that would supplement the auto loans she was
writing. Soon, she went to work for a large independent
insurance agency, where she quickly became involved
in a merger and focused her energies on workflows,
automation and human resources. When the agency was
asked to help form the Iowa Applied Users Group, Sprole
jumped on board. Eventually, she served as president for
a few years.
After spending several years working for the Agency in
Iowa and completing her degree, she accepted an offer
as Director of Operations for a Reno, NV-based agency.
There, she was involved in all facets of Agency operations.
A marriage and her desire to get closer to home moved her
yet again, this time to Oklahoma. That’s when Sprole was
offered the job of executive director of ARM Mid America
earlier this year.
CINDY SPROLE
800-887-9605
[email protected]
It was her first contact with ARM, and she’s enamored. “This
group of agents is very dedicated to the success of ARM
and they’re all working together to make it work, which
is profitable for them. It’s a good network of agents that
are doing the right thing. They’re very committed to each
other and to making the process work.”
Long term, Sprole sees significant change on the insurance
horizon. “We have an aging owner population. The
transition to the next generation is going to be interesting.
They’re a more automated, process-driven generation.
They are going to want more automated processes.
With a strong background in managing agencies, sales
forces, staffing and automation, Sprole says she brings a
different perspective to the executive director role, which
has been held by Janet Rogers. “I have strong agency
experience and understand the challenges agents face
not just from a market standpoint but from a staffing and
systems standpoint.”
“We’re the slowest industry to change,” she adds. “What
everyone else has been doing for 10 to 15 years, we’re just
now getting to.” Along those lines, Sprole intends to be a
resource to facilitate the change and make the transition
easier for the members.
She’s also hoping to bring more awareness to her region,
and to the western part of the country, on ARM’s offerings.
“I really see the benefits [of ARM] for the small agencies.”
Sprole will take over on January 1, 2015. Until then, she’s
transitioning by putting systems in place and shadowing
Rogers. Her immediate goals are up to the constituency; it’s
their choice regarding “what they want to use me for” she
says.
5
ARM Regional Reports
ARM of Illinois
ARM of Indiana
Craig Payan
Matt Metzger
Member agents met for our summer meeting on August
27 and 28 at the Mariner’s Village Resort on Lake Carlyle.
Following the Wednesday board meeting, members,
spouses, and company and vendor partners convened for a
cocktail party at Wheelhouse Grille. The Thursday members
meeting included presentations from several partner
companies and ARMFico. An information exchange session
gave agents the chance to share ideas.
We recently celebrated 44 years of existence with our
annual summer outing. This year’s event was hosted by
ARM of Indiana member MBAH Insurance in Lafayette. The
outing consisted of an afternoon of golf, followed by dinner
and drinks. Multiple carrier partners were in attendance.
We welcome Sycamore Insurance Associates LLC back
into the ARM Indiana family. Sycamore, a locally owned
independent agency located in Terre Haute, was one
of the founding members of our region in 1969. In fact,
ARM Indiana was the first ARM group, with ARM National
establishing in 1970. Indiana president Scot Wolf said,
“Sycamore was one of the founding members of ARM of
Indiana and it is simply outstanding that they have rejoined
our group this year.”
The Prairie State Insurance Cooperative (PSIC) reported that
11 school districts were added to the program at renewal
on July 1, bringing the total to 155 school districts and total
premiums and fees over $12 million.
After lunch, many attendees enjoyed cruising Lake Carlyle
while others hit the links at Governors Run Golf Course.
Brent Jones of West Insurance Agency recorded his first
career hole-in-one on the Par 3 No. 12 hole!
In other regional news, Beauchamp McSpadden/Morrison
Galliher, an agency that’s been in business for over 140
years, will now operate under a new name - INGUARD™.
(www.INGUARD.com) INGUARD will provide world-class
insurance and risk management solutions, plus online
information, education, and management tools.
Special thanks to Dan and Carol Imming, Imming Insurance
Agency for serving as the perfect hosts, and thanks also to
sponsors American Modern Group, Iroquois Group and
RPS.
ARM of Maryland
Ross Chilcoat
ARM of Maryland welcomes two new members to the
organization. Georgetown Insurance Service joined ARM
June 18th and Avon Dixon Agency LLC joined July 2nd.
Georgetown is located in Silver Spring, MD and Avon Dixon
is located in Easton, MD. This brings us to our current total
of 11 members. Welcome to our newest members!
REGIONAL
REPORTS
This year’s annual fall meeting of ARM MD took place
September 25, 2014 at Hayfields Country Club in
Cockeysville, MD. We heard from representatives from AJG,
RPS, AFCO, Iroquois, and Payce Payroll. Our afternoon golf
plans were rained out by Mother Nature!
6
ARM Regional Reports
ARM of Mid America
ARM of Northeast
Janet Rogers
John McLaughlin
We’re pleased to announce that two Kansas agents, Al
Shank Insurance and Newkirk, Dennis & Buckles formed The
Bison Group. The new agency also includes Tyner Insurance
Group, Fee Insurance Group, and Renn & Company. This will
bring additional market access for new agencies and more
exposure for ARM in Kansas.
ARM Northeast agents are enjoying the summer months in
the Great Northeast!
Our ARM Northeast Regional meeting was held at the
Mohegan Sun Resort and Casino September 16 and 17,
2014 in Connecticut. The Regional meeting gave our
agents an opportunity to network with each other and to
meet with our partners at the various insurance companies
and brokers we do business with.
In other news, Oklahoma member Joe West Company has
been acquired by INSURICA, along with Lon T. Jackson
Agency and McMasters Insurance Counselors/Keystone
Insurance Agency. Effective January 1, 2015, the new entity
will operate as INSURICA Insurance Management Network
of Tulsa LLC.
Our group is benefiting from RPS expansion into the
Northeast. Several new RPS offices have products and
services that are being utilized by our agents. We look
forward to another successful year with ARM Partners.
This year’s annual Regional Meeting will be held at the Hard
Rock Casino in Tulsa October 28 & 29. This will be the first
opportunity for some of the members of Mid America to
meet our new Executive Director, Cindy Sprole.
ARM of North Carolina
ARM of Ohio
Dick Simmons
Terry Quested
ARM NC’s fall meeting will be held November 6, 2014 at the
Carolina Country Club in Raleigh.
Our Summer Meeting featured a market trade show,
directors board meeting, and the Weaver-McFadden
Memorial Golf Tournament. With new faces, including
ARM Agents, agency principles and trading partners, it was
an opportunity to create new relationships and become
familiar with ARM resources. Also, the board discussed
strategic options in the evolving agency group market.
We are actively seeking new members for ARM NC. Each
member has been asked to bring a prospective member to
the November 6th meeting, which will be held in Raleigh.
Current ARM NC president Van Webb was in attendance at
the national annual meeting. Van also sat in on the ARM
VA/DC meeting.
REGIONAL
REPORTS
Member Portsmouth Insurance, led by long-time member
and former ARM Ohio Chairman, C. B. Herrmann, completed
a merger with Berndt & Murfin Insurance Agency, both of
Portsmouth, Ohio. ARM heartily welcomes agency principal
Dan Cassidy and his team to the ARM network.
We’re pleased to have rolled out Cyber Insurance Training
cyRM designation education. The course, available online, is
described in detail in this newsletter. For more information,
contact Terry Quested – [email protected].
Congratulations to member John Nave, who completed
his 100+ mile bike trek in support of Cancer Research for
The James Hospital, Columbus. Read his tales from the road
here http://armofohionews.blogspot.com/
Also, congratulations to Michael Sarno, Webb Insurance
Agency, Lima, for winning the Weaver-McFadden Memorial
Golf Championship for 2014!
7
ARM Regional Reports
ARM South
ARM of Virginia
Danny Gleason
Dick Simmons
Recently, we added two new members to our fold. Al Betz
and John Rosetti bought the Gulfport, MS operations of
Wellington Associates, Inc. and formed Betz-Rosetti and
Associates, Inc. Albert is very active in ARM. He currently is
on the ARM National Board of Directors and is chairman of
the Marketing Committee. He also serves as the Secretary
of ARM South.
Our Annual Shareholders Meeting for ARM VA/DC was held
in conjunction with the ARM National annual conference
in Alexandria, VA this year and was very successful. Nine
out of our eleven members attended, and we heard from
Dave McGurn, Chairman of RPS. One of our members said
that hearing McGurn was alone worth the registration fee.
Most of our members had never attended a national ARM
conference and came away with newfound appreciation
for ARM.
Sterling Foster opened a new agency: Silver Bridge
Holdings, LLC, also in Gulfport, MS. His father, Calvin Foster,
was instrumental in starting ARM of Mississippi and was
one of the first officers of ARM of ArkLaMiss, Inc. A warm
welcome to these agencies and their staff!
We welcome our newest member, Denise Lloyd, of DK
Lloyd & Associates into our ranks. Lloyd’s membership has
expanded our presence into the District of Columbia.
Our Fall meeting will be held on October 16th at the Boar’s
Head Inn in Charlottesville.
In other news, M&F Bank was purchased and merged
into the operations of Renesant Bank headquartered in
Tupelo. More details to follow. Also, we are working hard
to bring opportunities to the group by helping develop
ARMI Agency, which will enhance and strengthen our
organization.
Congratulations to our corporate Secretary, Scott Strickler,
of Robins Insurance, who was highlighted in the July
edition of Virginia Business Magazine, talking on the need
for Cyber Liability coverage. Click on this link to read the
article: http://www.virginiabusiness.com/news/article/stilla-hard-sell
REGIONAL
REPORTS
SCOTT STRICKLER
(Photo by Rick DeBerry)
8
Greetings Team NEBA Supporters
I would like to give a huge THANK-YOU! to all of the ARM
agents, RPS and AJG friends for your support of my 100-mile
bike ride in Pelotonia 2014 on August 11 and becoming
a part of Team NEBA (Nave’s Excellent Bike Adventure).
So far we have raised $3,205 for cancer research at The
James Cancer Research Center at Ohio State which is a
new Team NEBA record! Club BWC-Note in honor of Bob
Weaver, (which is you folks reading this) was responsible for
$1,900 of that. As of the day of the event, the 7,200 riders
had raised over $12 million and when final fund raising
numbers are released after the October 10 deadline, they
expect to break the record of $19 million that was set last
year.
The ride itself was really uneventful which is always a good
thing when two wheels and myself are involved. We hit
the starting chute and made the left turn on High Street
at Columbus Commons at 7:19 AM and crossed the finish
line 100.18 miles later at Kenyon College in Gambier, OH at
1:34 PM. The 6:15 time with three water stops at miles 44,
62 and 84 was also a new record for Team NEBA. We had no
wrecks, no flats and (best of all) no cramps! The bike is now
resting comfortably, collecting dust in the garage, for the
next 8 months.
Thank you so much for all of your support!
John Nave
9
ARM of Ohio Launches
New Cyber Insurance Training Site
Associated Risk Managers (ARM) of Ohio is pleased to
introduce their Online Academy featuring the newly
developed Cyber Insurance Training Course. This
professional education program delivers cyber insurance
and risk management knowledge for commercial agents.
Offering the cyRM (cyber risk management) designation,
the Cyber Insurance Training Academy is the first of its kind
online. The insurance course is specifically designed for
agents serving commercial insurance customers.
“In the space of just the last dozen years, technology has
transformed how we communicate and transact business,
reliance on technology has created new perils and
insurance products are changing just as fast to respond,”
says Quested. “Agents who understand cyber risks and
can educate customers on ways to protect themselves will
have a strong competitive advantage over the uninformed.
In today’s market where many things compete for the
consumer’s attention and dollar, proficiency with valueadded services like cyber risk management can tip the
scales in an agent’s favor.”
The program was developed in conjunction with leading
knowledge experts from the insurance and cyber security
industries, along with professional business educators. Terry
Quested, executive director of ARM Ohio, says the course
is being made available to colleges with insurance, risk
management, or business management curriculum, and
it is now available to all licensed insurance agents via the
online portal. “Graduates of the program receive the cyRM
designation; it demonstrates proficiency in understanding
and mitigating cyber and IT perils,” says Quested.
Inga Goddijn, executive vice president and insurance
practice lead at Risk Based Security, took part in the launch,
and was impressed with the depth of the course material,
and in particular, the application tutorial. “Having that
ability to talk with customers about why the questions
are being asked not only helps the producer get more
comfortable with the underwriting process but can also
be used to help clients get some perspective on minimum
security practices. That’s excellent insight for a producer to
have.”
The course is a primer introducing agents to cyber
exposures, risk identification, risk measurement, risk
mitigation, indemnity options, and additional services.
For more information on the cyRM designation
and Cyber Insurance Training Academy, visit
www.cyberinsurancetraining.com, or contactTerryQuested
at 800-336-2228, or e-mail: [email protected]
In addition to cyRM designation education, the Academy
also provides resources for developing sales processes
to educate customers, and helps agents attain skills
that demonstrate added value to the risk management
functions in a company.
10
Benefits of a Micro Captive
Good news for ARM agents looking for ways to add value
and service to larger clients; agents can now help their
clients cover large, hard-to-place, or uninsurable risks
through a privately held captive insurance company, often
referred to as a micro captive or enterprise risk captive.
a micro captive, and we help the company get a captive
program in place. We then manage it for them.”
Who It Fits
Brady says not all companies will fit within the requirements.
In order for the program to be economically feasible, the
business should have at least $30 million in annual gross
revenue, $200,000 in annual P&C expense, or $100,000 in
annual self-insured loss. According to Brady, some of the
industries that can benefit include:
A micro captive is an entity created for a company to
provide insurance to itself and affiliates. A business with a
strong balance sheet can start its own insurance subsidiary
to cover risks that aren’t covered by traditional means.
Micro captives can help cover clients with the following
circumstances:
• Real Estate Developers/Builders
• Uninsurable risk that the marketplace doesn’t want
to address that could create a substantial loss to the
insured;
• Manufacturers
• Professional Services Firms
• Greater control over managing claims for risks insured
by the captive;
• Franchisees
• Restaurant/Hotel Chains
• Transfer loss reserve funds on business’s balance sheet
to the insurance subsidiary;
• Physicians/Groups
• Uninsured management liability risks like E&O, D&O, and
cyber risk;
For those companies forming their own micro captive, the
benefits are apparent. Brady says ideal clients he’s worked
with include a Gulf coast company that had a 5-10 percent
wind deductible exposure. “We’ve also formed one for a
business interruption exposure due to flood, and we’ve
handled legal expense reimbursement-type exposures, as
well.”
• Warranty/extended warranty service contracts exposure;
• Medical stop loss risk of employer provided employee
benefits;
• Large deductibles (e.g., $25k or more) in any property/
casualty line;
He adds that it’s a matter of getting a company to see it from
a dollar perspective. “On a big loss where there is a large
wind deductible, the question from a risk management
standpoint comes back to the insured and asks how much
more sales will you have to do to generate the dollars
needed to pay for this unexpected loss? Can your balance
sheet handle it? Wouldn’t it have been smarter to identify
and quantify these types of risks early on, and then buy this
insurance from your related insurance company?”
• Workers compensation program with over $100,000 in
retained losses; or
• Larger exposures if the captive is able to build up
reserves over time.
How It Works
Finding the Right Client
Kevin Brady, vice president at Artex Risk Solutions, a
division of Arthur J. Gallagher & Co., says Artex has ample
expertise in putting together micro captives for clients. A
micro captive, he says, allows a business to pay premiums
into its own single parent captive. “From a risk management
approach, micro captives cover uninsured risks or those
risks that can’t be insured, even risks that companies would
rather not insure, such as deductibles, accounts receivable,
and legal expense reimbursements,” he says.
Brady suggests ARM agents canvass their book of
business to locate those clients that fall into the categories
mentioned, or have that unusual risk not covered by the
market. “Have a conversation with those clients. It makes
compelling sense when you look at the numbers. With
marquis clients, it’s another way to drive business.”
Because Artex is part of the services available to ARM
agents, they can bring significant expertise in micro captive
solutions, as well as knowledge of captive insurance
regulations. ARM agents refer clients to Artex, which then
does an in-depth analysis of the existing risk management
program, including looking at insurance policies and
underwriting. “We identify the risks that can be covered by
Kevin J. Brady, CIC
Artex Risk Solutions
630-285-3788
[email protected]
It’s not for everyone, Brady cautions. But, for those
companies that fit within the criteria needed, it makes
sound financial sense.
11
Cyber Protection:
Protecting Your Healthcare Customers
Despite heightened security efforts in the wake of HIPAA
implementation, health care data breaches are on the rise.
Since September 2009, there have been 1,074 reported
incidents involving over 33 million patient records. With
the recent announcement that HealthCare.gov was
hacked, healthcare providers are putting cyber security at
the forefront of their risk management plans.
Nelson then provided a coverage summary and additional
materials, resulting in a submission within the week.
Nelson also set up a conference call between the customer
and CFC at Lloyds. The result: a $10 million cyber policy for
the customer. “CFC was the only market that engaged a
conversation with this client and it just paved the way to
finalize great terms,” says Nelson.
It’s a huge area of concern, and one that ARM agents
can help alleviate for their customers. RPS Healthcare is
offering comprehensive cyber coverage product and the
only product offering prior acts coverage for data breaches.
Since many cyber crimes occur months, even years prior to
detection, the addition of prior acts is essential. The product
is written by CFC at Lloyds, one of the leading writers of
cyber liability worldwide.
“Sometimes, things just work exactly like they are supposed
to work – and when they do, it’s a beautiful thing,” says
Doug Mills, COO at Gillis, Ellis & Baker (GEB). He continues,
“ARM agent (GEB) needs cyber coverage for their largest
commercial account (hospital system). GEB marketing
manager (and active ARM member) contacts ARM partner
(RPS Healthcare) for assistance. Assistance is given, terms
are developed, coverage is sold, client is thrilled…the good
guys win. ARM partnership at its best.”
Here’s what CFC provides:
Minimum premiums start at $750 with a $2,500 deductible
for companies with $1 million or less in revenue. ARM
agents get an override for placing the coverage. Plus, ARM
agents get full support from RPS Healthcare. “We work
with ARM agents to assist them in reviewing coverage
differences between products,” says Nelson.
• Full prior acts: No retroactive data for claims that weren’t
known by senior executives prior to the policy period.
• First party system damage and interruption: system
damage insuring clause with full limit cover for loss or
damage to data on an all risks basis.
• System business interruption: Protection for cyber perils,
both web-facing and back-office platforms.
• Standard financial retention: All cover provided on a first
loss basis and with no coinsurance provision.
• No encryption warranty exclusions: No mandatory
encryption requirements, either.
• Full limits for regulatory actions: Full policy limits
covering privacy liability claims.
• Separate towers for all main insuring clauses, including
privacy breach, notification costs, and expenses:
• Coverage based on financial limits and deductibles:
Coverage not based on the number of records in a
customer’s system.
What’s more, thanks to the ongoing partnership with RPS
Healthcare, ARM agents receive a premium discount of
10%.
Some ARM agents are already seeing sales success by
offering the CFC product. New Orleans agency Gillis,
Ellis and Baker sought a quote on cyber coverage for
one of their largest health system accounts. The agency
contacted several large carriers directly. “I suggested they
send over the submission to me and let us take a run at the
account too,” says Dale Nelson, area vice president for RPS
Healthcare, Tampa.
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Protection Against Government Audit
Dale Nelson, area vice president of RPS Healthcare, takes his
challenges pretty seriously. “One of the things we always
hear when we go to ARM meetings is ‘What can you bring
to the table that separates ARM from everyone else?’ This is
one of those things.”
• Other medical regulatory violations: defense costs, fines
and penalties arising out of HIPAA EMTALA (Emergency
Medical Treatment and Active Labor Act) and STARK
(physician self-referral) violations. Extends to allegations
made by government agencies, Qui Tam plaintiffs,
contractors working on behalf of the government and
commercial payors.
He’s referring to Medefense™ Plus, the government billing
coverage provided by NAS Insurance. Medefense™ Plus
covers any governmental audit that can be done on a
healthcare provider. It even extends to commercial payer
audits.
• Broad policy language and access to expert panel of
attorneys: Eliminates the need to schedule insured
persons, offers full prior acts coverage, frees the insured
from any hammer clause on Medefense coverage
components, offers free choice of counsel along with an
expert list of panel attorneys made readily available to
your clients. Coverage also remains in full force for both
defense and fines and penalties arising from voluntary
self-disclosures.
Some of the more critical audits come from Recovery
Audit Contractors (RAC) audits or Zone Program Integrity
Contractors (ZPIC). These are audits of submitted Medicare/
Medicaid claims under the The Tax Relief and Healthcare
Act of 2006.
RAC auditors have access to CMS databases and
electronically data mine healthcare providers who bill
Medicare/Medicaid. RACs take an electronic sampling of
the provider’s records to detect billing errors. They then use
that small sampling to extrapolate all the provider’s patient
records what they deem to be the number of errors made.
They base recoveries and fines on that extrapolation. Note
that RAC auditors are independent contractors who receive
12- to 14-percent commissions on recoveries.
Such audits can be costly, even for small organizations. “In
Miami, if you get a defense firm with government billing
expertise, you could be looking at $400 an hour minimum,”
says Nelson. “A small doctor’s group could spend $100,000
in defense costs.”
Any healthcare facility that’s billing Medicare or Medicaid
are vulnerable to costly RAC and ZPIC audits.
The minimum premium is $1,500. For ARM agents, it’s a
huge competitive advantage. “Eight out of ten of ARM
competitors don’t even know the product is out there,“ says
Nelson. “This is a great door-opener.” In addition, thanks to
their partnership with RPS Healthcare, ARM agents receive
a premium discount of 10%.
The Zone Program Integrity Contractors (ZPIC) are more
serious. They work on the assumption that there may
have been Medicare fraud. They can freeze provider
reimbursements, making it nearly impossible to conduct
business. ZPIC auditors are companies contracted by the
government. They do not receive commissions.
Medefense Plus offers coverage for such audit events. Key
coverage areas include:
• Actual or alleged billing errors: Typically $1 million limits
for defense costs, fines, and penalties. Note: the policy
does not pay restitution. Extends to allegations made
by government agencies, Qui Tam plaintiffs, contractors
working on behalf of the government (such as RAC and
ZPIC) and commercial payors.
• Shadow audit: The carrier will hire a specialized firm
that replicates the audit of the facility to defuse the
government allegations. The coverage trigger is the
notification letter alerting the organization to the audit
event.
Dale Nelson, Area V.P.
RPS Healthcare/Tampa
813-287-2225
[email protected]
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Give Careful Consideration to the
Wholesaler You Use
By Curtis Anderson, CIC
they market, underwriter, rate, quote, bind, issue policies
and endorsements, order MVRs and inspections, handle
accounting (including audits and collections) and process
claims. The insurance carrier can operate with leaner home
office expense. They handle the state and federal filings
and reporting, (typically) buy/ place the reinsurance,
and adjust and pay claims. A wholesale broker does not
typically handle backroom services and therefore gets less
commission from the insurance carrier. Many wholesalers
provide MGA, MGU and Broker facilities.
Risk Placement Services
President, National Binding/Programs
Getting the cheapest price or the highest commission
should not be your #1 goal when choosing your wholesale
partner. A cheap price with the wrong coverage, or with an
unstable carrier, will give you more long-term headaches
than benefits. A customer that only wants a certificate
and doesn’t care about the coverage or the strength of
the carrier will surely have a short-term memory and may
cost you much more than the commission you received
when you wrote the account. Most carriers pay similar
commissions and most wholesalers share the commissions
they receive on a fair basis with the retail producer.
Over the last few years insurance carriers have cut the
commission rates they offer to both their retailers and their
producers (if they are doing business within the wholesale
distribution system). This has caused wholesalers to
tighten their belts and retailers to ask for more commission
to increase their revenue. The wholesaler is getting less
and being asked to share more. In some states a wholesaler
relies on brokerage fee income to make the profit margins
needed to stay in business. The typical wholesaler does
business with specialty admitted carriers and approved
surplus lines insurance carriers. The wholesaler’s job is to
find acceptable coverage when the preferred marketplace
won’t offer coverage.
Do you ever wonder what services your wholesaler might
be cutting back on to give you more commission? You need
your wholesaler to be as stable as your insurance carriers.
Let me offer some background and then outline the reasons
for giving careful consideration to the wholesaler you use.
The wholesale marketplace is made up of MGA’s (Managing
General Agents), MGUs (Managing General Underwriters)
and Brokers. MGAs and MGUs act very similar to a carrier
branch office. They provide branch office services, meaning
(cont’d on page 15)
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Give Careful Consideration to the Wholesaler You Use (cont’d from page 14)
Ask yourself the following questions about your wholesaler partners:
• Do you know the owner and/or management?
• Are they knowledgeable, service friendly,
courteous, professional and ethical?
• What sort of relationship do you have with the
owners or managers and their underwriters/
brokers? Is there someone local?
• How long have they been in business?
• Do they provide services such as handling
surplus lines filings for you? (Your E&O carrier
would prefer you leave this minefield to the
professionals. Each state is different)
• Where did they get their wholesale/surplus lines
training?
• Are they members of the national wholesaler
associations? If not, why?
• What sort of staff turnover do they have? (If they
have lots of turnover they either are missing
the markets or possibly don’t pay their staff well
enough to keep them)
• Do they provide you with written quotes and
copies of forms when necessary?
• Do they view account and claim issues as just as
important as the new and renewal quoting?
• Are they trying to create a partnership with you
or are they just making quotes? Are you trying to
create a partnership with them? (Relationships
and partnerships are key when faced with a
problem claim, a customer issue, or a last minute
necessity)
• Will they provide loss runs for you or your client
when requested in a timely manner?
• Does the ownership or management promote
and believe in continuing education for their
staff?
• How many insurance carriers do they do business
with? What is the A.M. Best rating of those
carriers? Are they well-versed in what states those
carriers are licensed?
• Do they have special class and form knowledge or
exclusives they can offer?
• Are they easy to get in touch with and accessible
past normal working hours?
• Do they have a contract that clearly identifies your
mutual relationship? Is it fair?
• Are their systems and technology current? Does
their staff know how to use them? (If they have
local staff then they are more apt to know the
laws/rules in your state)
• Are they properly licensed? Are they licensed in
just one state or many?
It is the little things that cost the wholesaler extra dollars, but make them your best ally. They live on commission, just like
their retail customers do. An unstable wholesaler that doesn’t know you, the marketplace or your state laws will cause you
plenty of short and long-term pain.
When picking your wholesaler partner please think long-term rather than short-term. You and your customer’s success
might depend on it.
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