Big I Washington, Fall 2015 by Blue Water Publishers, LLC

“In spite of all the industry changes over the years, Grange Insurance Association remains my number one go-to company for Farm, Auto, Home and Umbrella/Excess coverages for my very best clients!” Bill Ankeny, President, Ankeny Insurance Agency Inc.

We value the

independent agent.

Interested? Let’s talk. Grange Insurance Association only partners with Independent Agents. Why? Because these agents are uniquely qualified to offer trusted advice and superior customer service. Independent Agents also know the value of personal relationships. And so do we, which allows us to provide the tools and support to help you succeed. Because better coverage means more satisfied customers. Call us today. California • Colorado • idaho • oregon • Washington • Wyoming

For information, contact us at (800) 247-2643 Visit us online at grange.com 2

Leading you to outstanding solutions.

Today’s tough insurance environment challenges us to continually enhance and expand our competitive edge. By leveraging our knowledge base and strong relationships in the industry, we deliver stable, competitively priced programs and products. We understand you have a choice when looking for markets. As a national wholesale broker and managing general agent, we’re focused on providing you and your clients experience, creative solutions and flexibility—to ensure your advantage in the marketplace today and tomorrow. In a world of choices, we want you to choose us.

FALL 2015 Official publication of Independent Insurance Agents & Brokers of Washington 11911 NE 1st St., Suite B103, Bellevue, WA 98005 Ph. (425) 649-0102 Fax: (425) 649-8573 Web: www.wainsurance.org Officers of IIABW President: Mike Button, AIP, PayneWest, Richland President-elect: Kim Krogh, ARM, Fidelity Associates, a Div. of Hub International, Spokane Secretary: Lori Reed, Mitchell Reed & Schmitten Insurance, Inc., Wenatchee Treasurer: Rob Tripple, Tripple Tripple & Tripple, Edmonds IIABA Director: Sue Knobeloch, CIC, CPIW, Association of Risk Managers NW, Tacoma Executive VP: Daniel Holst, IIABW, Bellevue Board of Directors Mike Button, AIP (Benton-Franklin), PayneWest, Richland Craig Field (Chelan/Douglas), Mitchell Reed & Schmitten Insurance, Inc., Cashmere Duane Henson, LUTCF (Skagit/Island), First Insurance, Mt. Vernon Kim Krogh, ARM (At Large), Fidelity Insurance, Spokane Mary Lemon (Spokane), Fidelity Associates, a Div. of Hub International, Spokane Amberlyn McQuary Buratto, CIC (At Large), Stonebraker McQuary, Spokane Dave Merrill (At Large), Merrill & Merrill Insurance, Seattle Pat Otter (At Large), Otter Insurance, Lynnwood Melissa Power, ACSR, CIC (At Large), Homestreet Insurance, Spokane Nick Stay (Pierce) American Underwriters Insurance, Tacoma Dave Street (Grant), Martin-Morris Agency, Wenatchee Rob Tripple (Snohomish), Tripple Tripple & Tripple, Edmonds Dave Whitfield (King), Soleyon Insurance Partners, Bellevue Staff Daniel Holst, Executive V.P. - dholst@wainsurance.org Susan Scott, AAI, Sr. V.P. of Education - sscott@wainsurance.org Ashley Kuaea, Director of Member Programs - akuaea@wainsurance.org Bill Stauffacher, Stauffacher Communications, Contract Lobbyist - gocougs@billstauffacher.com

Advertiser Index Anchor Bay Insurance Managers

Anderson & Murison

B C E Consulting

Burns & Wilcox Continental Western Group

9 18

Grange Insurance Association

Griffin Underwriting

Imperial PFS

Liberty Mutual

Mutual of Enumclaw

Preferred Property/JGS

Quirk & Co.

R-T Specialty, Inc.

Risk Placement Services

Ron Rothert Insurance Services

Vertafore 11

Advertising For more information on advertising, contact Jim Aitkins, Blue Water Publishers, LLC 22727 - 161st Avenue SE, Monroe, Washington 98272 360-805-6474, fax: 360-805-6475, jima@bluewaterpublishers.com Big I Washington is the official magazine of the Independent Insurance Agents & Brokers of Washington and is published quarterly. News items from IIABW members are requested. IIABW does not necessarily endorse any of the companies advertising in this publication or the views of its writers.

Western National Insurance Group

WSRB 25 Worldwide Facilities, Inc.

Table of Contents

A Message from Mike Button, IIABW President

19 Young Agents Mariners Game, Reception & Fireworks

Commissioner Kreidler: Price Optimization in Washington

20 What Do You Know About ISOâ&#x20AC;&#x2122;s PAP Ridesharing Endorsements?

10 Insurance Implications of Western Wildfires

24 Value-Added Services Could Pose an E&O Exposure

14 Healthcare Exchange Update

26 80+ Attend Young Agents Conference

16 Washington Joint Conference and Tradeshow

28 Changes in The Rebating/Inducement Law

17 Joint Conference Schedule of Events

29 Make-A-Wisht Washington Walk For Wishes

18 No Tax Increases for Agents!

30 Changes to Stateâ&#x20AC;&#x2122;s CE Rules

P&C Underwriting Assistant Gena Glasser

we have something

need!

Griffin Underwriting Services enables retail insurance agents and brokers to compete and win on hard-to-place risks. As a Northwest family-owned MGA since 1928, we are available when and where you need us: in person, over the phone, or online. Griffin continues to adapt and expand our product offerings based on your needs so that we can always provide you with a solution. Our exceptional products and service, competitive prices, and rewarding commission levels means that we have something you need.

P: 866.562.8095 I F: 425.453.8696 submissions@gogus.com Serving over 2,200 agents throughout Washington and Oregon, and a proud supporter of IIABW.

IIABW President

MIKE BUTTON

t has been my privilege to serve as your President for the past year. We have had a very successful year thanks to the hard work of our volunteers, members and staff. Here is just a sampling of our association’s accomplishments: GOVERNMENT AFFAIRS: • Protected agents from the tripling of their B & O tax and a new capital gain tax. •

•

Helped make changes to the rebating laws. Agencies can now spend $100 per person per year on hosting activities and another $100 on referral program thank you gifts. Sponsorships and contributions to nonprofits organizations are also now exempt from these limits. Protected agents from E & O lawsuits with the passing of a new law which enables insurance companies to email customers nonrenewal and cancelation notices. Helped pass an extension to the Terrorism Risk Insurance Program (TRIA) and NARAB which will make it much easier for agencies to keep licenses in multiple states. Collaborated with the Office of the Insurance Commissioner’s office to broaden the rules for producer CE requirements.

PERPETUATION: • Created a New Talent Recruitment and Development Task Force to create tools to help agents grow their agencies with the help of new employees.

•

Gave new employees an opportunity to learn and network at quarterly Young Agents events which were attended by over 250 people. The group also improved the image of the industry by collecting over 1600 pounds of food for Northwest Harvest, raising over $22,000 for the Make a Wish Walk and school supplies for First Place Schools.

EDUCATION: • Provided 7 free CE seminars throughout the state and quality education opportunities in a variety of formats. . •

Held our 4th Joint Annual Conference with the PIA in Skamania which provided great networking and learning opportunities.

•

Created a strategic partnership with a Webinar/ Webcast provider (ABEN).

•

Received IIABA’s top education award: the 2014 Excellence in Insurance Education Diamond Award.

I appreciate the opportunity to serve and am honored that you entrusted your association to my care. Kim Krogh of Fidelity/Hub of Spokane will take over in September and she’ll do an outstanding job in keeping our momentum going strong.

We can help with both. With friendly underwriters who listen, and a full complement of products to serve your small-to-mid-size commercial insurance needs (including enhanced BOP, surety, and packaged coverages), Western National is your one-stop shop for getting business done. The proof is in the partnership.

WASHINGTON STATE INSURANCE COMMISSIONER

Mike Kreidler

Insurers – Don’t use price optimization in Washington

o further protect consumers against unfair and discriminatory premium calculations, I recently issued a technical assistance advisory on price optimization. The advisory in July went to property and casualty insurers who do business in Washington. The advisory notes that property and casualty insurers are not allowed to use discriminatory “loyalty penalty” pricing practices that violate state law. I am among several insurance regulators in the United States to put insurers on notice about price optimization. This is the practice of using data – often unrelated to insurance – to predict a customer’s likelihood of renewing a policy. Insurers often use price optimization to prevent loyal customers from receiving premium decreases based on their actual claims history and risk factors. Insurers use personal consumer data to predict the likelihood of renewing a policy rather than to determine the expected costs of insurance. The National Association of Insurance Commissioners is working on a draft white paper about the subject. The NAIC describes the practice as “a sophisticated tool based on predictive modeling intended to assist insurance companies in setting prices.” An example is using a statistical analysis to gauge how large an increase would be tolerated before a longtime customer begins shopping around for a better deal. I believe this practice discriminates against people who don’t shop around. Discriminatory pricing is against state law. It’s hard to root out loyalty penalty pricing, but our actuaries are actively watching for it. A key section of the advisory notes: “Washington State law requires that premium rates for insurance not be excessive, inadequate, or unfairly discriminatory. A rate is not unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer. Thus rates must be based on cost associated with risk. Charging higher rates to certain consumers based on their willingness to look elsewhere for insurance does not reflect a genuine increased cost incurred by the insurer.” You can read the news release and full advisory on the Insurance Commissioner’s website: http://www.insurance.wa.gov/about-oic/newsroom/news/2015/07-09-2015.html

Your gateway to contractors markets.

CONTRACTORS SOLUTIONS

Placing insurance for different contractors can be a daunting project. At Burns & Wilcox, our network of domestic and international carriers opens doors to the broadest range of markets. Since time is of the essence, we deliver quotes and binders fast. When it comes to finding solutions for every stage of construction, contact the wholesale broker with the tools to make the hard-to-place easy â&#x20AC;&#x201C; Burns & Wilcox. San Francisco, California | 415.421.4244 toll free 800.759.4855 | fax 415.421.0620 sanfrancisco.burnsandwilcox.com Commercial | Professional | Personal | Brokerage | Binding | Risk Management Services 9

Insurance Implications of Western Wildfires By VU Faculty

ere are a couple of recent questions involving this issue, the first from an agent and the second from an insurer’s claims department.

QUESTION: “Need some help with a forest fire question. AZ risk -- HO 00 03 04 91 edition. Several small AZ communities have been evacuated by civil authorities due to forest fires approaching the towns. Question: Coverage D provides 2 weeks of coverage for civil authority evacuations if the ‘neighboring premises’ have been damaged by a covered peril... Can you interpret that section?? Keep in mind that no homes have been damaged yet. I think the paragraph is pretty vague. A ‘neighborhood’ is a very big area, so can a ‘neighboring premises’ be a large area too, like an entire town? Does there have to be structural damage to the neighboring premises or is ground/tree damage good enough to trigger coverage?” QUESTION: “We have had a handful of claims evolving out of the fires in Colorado and Arizona. We have decided that we will interpret the policy language as broadly as it will allow and afford coverage under the neighboring premises clause for the Loss of Use coverage. The claims that we have seen at this point deal entirely with Additional Living Expenses and so far 10

FEMA/Andrea Booher

we have not seen any damage by fire. Just curious to know if you have heard how any other carriers are approaching these types of losses. My research indicates that the ‹neighboring premises› term is elastic and hinges upon the nature of the catastrophe. Any thoughts?” ANSWER: We ran this by our HO faculty and got the responses below. Following those responses, we’ll take a look at some related issues in the HO policies beyond just civil authority coverage. Here›s the referenced HO provision: 3. Civil Authority Prohibits Use If a civil authority prohibits you from use of the “residence premises” as a result of direct damage to neighboring premises by a Peril Insured Against, we cover the loss as provided in 1. Additional Living Expense and 2. Fair Rental Value above for no more than two weeks. FACULTY RESPONSE This would qualify for coverage if there is a governmentally mandated evacuation due to the peril of fire. The terms used in the policy are broad enough to encompass this situation and I suspect that no carrier would be bold enough to deny such

From one local to another. Weâ&#x20AC;&#x2122;ve been earning your trust for more than 45 years. By making it our business to know yours, we provide the expertise, integration, and innovation that help you stay competitive. Vertafore, your home town technology provider.

800.444.4813 | vertafore.com

claims. The adverse publicity and potentially heavy hammer of the DOI would probably make them think twice. This is a significant exposure...check out these statistics from the U.S. Fire Administration. FACULTY RESPONSE I feel that civil authority does apply. The key is that people have to leave because they are ordered to not because they want to and it has to arise out of a covered cause of loss. FACULTY RESPONSE This came up in the summer of 1998 in Florida when we had bad fires here. Flagler County (Daytona Beach area) was ablaze. Almost every resident could look out the window and see smoke. The local authorities issued a mandatory evacuation order for the entire county due to the threat of the fires. Fire embers were literally falling all over the county. While there was no litigation to my knowledge, all the companies that I know of paid the HO Additional Living Expenses under Coverage D for the 2-3 days that folks were out. Interestingly, our then Commissioner and now Senator Bill Nelson made a plea to the companies, at a big press conference, to waive the deductible. In a nice manner the companies (a “neighborly” carrier being the main one) said, “Stick it Mr. Commissioner, the deductible applies.” So while I can’t tell you what “neighboring premises” means (the policy sure doesn’t), here in Florida companies pretty much paid it. Then again, we were talking about 4 days max. here, so that less deductible wasn’t much money. FACULTY RESPONSE The “neighboring premises” wording is intrinsically broad and, in addition to the political/regulatory/media pressures, carriers would have a hard time denying claims when areas are evacuated due to wild fires that could still be several miles away. In the absence of a definition of “neighboring premises,” I think that carriers would have to pay such claims. In addition to the Additional Living Expense civil authority issue are the following HO 00 03 04 91 policy provisions: C. Coverage C – Personal Property 1. Covered Property We cover personal property owned or used by an “insured” while it is anywhere in the world. 2. Limit For Property At Other Residences Our limit of liability for personal property usually located at an “insured’s” residence, other than the “residence premises”, is 10% of the limit of liability for Coverage C, or $1,000, whichever is greater. If you evacuate your premises, all of your personal property is covered anywhere in the world for Coverage C perils, including 12

a mini-storage warehouse. Even if you move property to another residence, it is covered for the full Coverage C limit since it is not “usually located” at that residence. E. Additional Coverages 1. Debris Removal b. We will also pay your reasonable expense, up to $1,000, for the removal from the “residence premises” of: (2) A neighbor’s tree(s) felled by a Peril Insured Against under Coverage C; provided the tree(s): (3) Damage(s) a covered structure; The $1,000 limit is the most we will pay in any one loss regardless of the number of fallen trees. No more than $500 of this limit will be paid for the removal of any one tree. This coverage is additional insurance. Up to $1,000 of additional insurance (over and above the policy limits) is available for debris removal if, for example, fire causes a “neighbor’s” tree to fall on a covered structure. 2. Reasonable Repairs a. We will pay the reasonable cost incurred by you for the necessary measures taken solely to protect covered property that is damaged by a Peril Insured Against from further damage. Note that this coverage only applies to protect your property from FURTHER damage. In other words, there must first be direct damage before reasonable protective repairs are covered. Expenses you incur to PREVENT a loss are not covered unless damage is first incurred. The “further damage” requirement has often been cited to exclude the costs, for example, of boarding up a home prior to a hurricane evacuation, despite the fact that such expense could have saved the insurer thousands of dollars in claims expenses. 3. Trees, Shrubs And Other Plants We cover trees, shrubs, plants or lawns, on the “residence premises”, for loss caused by the following Perils Insured Against: a. Fire or Lightning; We will pay up to 5% of the limit of liability that applies to the dwelling for all trees, shrubs, plants or lawns. No more than $500 of this limit will be paid for any one tree, shrub or plant. We do not cover property grown for “business” purposes. This coverage is additional insurance. While damage to landscaping is covered only for a few perils, one of those perils, as shown in the excerpt above, is fire. 5. Property Removed We insure covered property against direct loss from any cause while being removed from a premises endangered by a Peril Insured Against and for no more than 30 days while removed. This coverage does not change the limit of liability that applies to the property being removed.

Although personal property is covered anywhere in the world, this coverage expands the normally named perils coverage to “all risks” for up to 30 days if the premises is “endangered” by a covered peril. Note that this provision doesn’t say anything about “neighboring premises,” just that the property be “endangered” by a covered peril, however remote. SECTION I – PERILS INSURED AGAINST A. Coverage A – Dwelling And Coverage B – Other Structures 2. We do not insure, however, for loss: c. Caused by: (6) Any of the following: (e) Discharge, dispersal, seepage, migration, release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against named under Coverage C. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. Since fire suppression activities in wild fires often involve the air dropping of fire retardants, it’s possible that this exclusion might be cited to deny coverage for any damage or cleanup required. However, the exclusion, unlike that found in many commercial lines policies, doesn’t apply if the pollution is “caused by” a Coverage C peril. If one argues that the retardant was “caused by” fire, then the exclusion would not apply. The same would apply for “smoke” damage...since smoke is included in the list of “pollutants,” there would still be coverage due to the fire (Coverage C peril) exception. SECTION I – EXCLUSIONS A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area. 9. Governmental Action Governmental Action means the destruction, confiscation or seizure of property described in Coverage A, B or C by order of any governmental or public authority. This exclusion does not apply to such acts ordered by any governmental or public authority that are taken at the time of a fire to prevent its spread, if the loss caused by fire would be covered under this policy. Establishing fire breaks is a common fire fighting practice in conflagration fires and sometimes requires the deliberate destruction of property in order to prevent the spread of fire. This clarifies that such governmental action is covered by the policy. Reprinted with permission from IIABA’s Virtual University

Tough, high-hazard property, casualty, transportation and professional and management liability risks require detailed expertise and specific industry experience. At RT Specialty, our brokers draw on the most comprehensive resources worldwide to provide better, faster, smarter insurance solutions. We do whatever it takes to find the solution that meets your clients’ complex coverage needs. When it comes to tough risks, experience the difference a tough broker can make. Tough risks demand tough brokers. For more information, contact: Ed Bukovinsky | 206.708.2074 ed.bukovinsky@rtspecialty.com 1200 Fifth Avenue, Suite 1910 | Seattle, WA 98101 www.rtspecialty.com

R-T Specialty, LLC (RT) is a subsidiary of Ryan Specialty Group, LLC, specializing in wholesale brokerage, MGA/MGU underwriting facilities and other services to agents, brokers and carriers. In California: R-T Specialty Insurance Services, LLC License #0G97516 © 2013 Ryan Specialty Group, LLC

Health Care Exchange Update ON THE NATIONAL LEVEL In a 6-3 decision, the Supreme Court ruled to uphold health insurance subsidies for 6 million Americans in the federal exchange. In the case, King v. Burwell, the plaintiffs unsuccessfully argued that consumers could only obtain subsidies through exchanges run by a state (like Washington State). The Obama Administration successfully argued that the term “established by the state” in the Affordable Care Act was a drafting error and that the writers never meant to prevent subsidies through the federal exchange. The Big I is currently involved in two bills before Congress which would improve the ACA. • S. 1661, the “Access to Independent Health Insurance Advisors Act,’’ aims to exclude agent commissions from the Medical Loss Ratio formula. This bill will protect agency commissions from being cut. •

H.R. 879, the “Ax the Tax on Middle Class Americans Health Plans Act of 2015,” would fully repeal the ACA’s excise tax or “Cadillac tax.” ASSOCIATION HEALTH PLANS

WASHINGTON EXCHANGE •

•

17 health insurers have submitted to the OIC an average rate increase of 5.4% for individual health plans for 2016. 13 insurers filed 188 individual health plans for sale inside the Exchange. If all are approved, it would double the number of Exchange plans available. Three health insurers have filed 47 plans for the Exchange’s small business market: Kaiser Foundation Health Plan of the Northwest, Moda Health Plan, and United HealthCare of Washington More than 100 Washington small businesses have enrolled through Washington Healthplanfinder Business. In November the program will expand its coverage to businesses from up to 50 employees to larger businesses of up to 100 employees.

Last month a judge affirmed Commissioner Kreidler’s authority to review large-group association health plan rate filings but ruled against the OIC that the Affordable Care Act permits plans to rate at the employer level. After passage of the ACA, the OIC asserted it had the legal authority to regulate the trusts in two regards. Commissioner Kreidler wrote in the Spring issue of the Big I Washington that association health plans must: •

“Be a bonafide large employer to continue selling largegroup insurance... This means that association members must share a common industry or trade and the association is formed for a purpose other than to sell health insurance.”

•

“Use rating systems that treat all of their members equally... Some insurers have submitted plans for the same association with hundreds of different rates for individuals in the same age group who are doing the same kind of work.”

Commissioner Kreidler has accused these plans of “cherrypicking” the healthiest, cheapest-to-insure workers and driving out businesses with sicker employees. In reviewing 2014 insurance plans, the OIC ruled that only 18% trust plans were operating legally. The OIC will not be appealing the administrative law judge’s ruling.

We stand shoulder to shoulder with our independent agency partners to provide coverage

that really covers.

www.thoughtfulcoverage.com 15

TiTle SponSor

Kayak Point Golf Course is a 20 minute drive west of the Tulalip Resort. Kayak Point features large immaculately manicured greens and spectacular views. Rated year after year as one of “America’s Top 50 Public Golf Courses” by Golf Digest, awarded a 4-star rating in Golf Digest’s “Places to Play” and selected as a “Must Play” by the Seattle Times. The tournament begins at 1:00 PM with a shotgun start and ends with a BBQ dinner in the clubhouse afterwards. The tournament is a best ball scramble format with prizes for the top foursomes and contest holes. You can build your own foursome or will be put on a team. Companies can sponsor holes and are encouraged to greet golfers at their hole. Enjoy a beautiful Fall afternoon on the golf course while networking with your fellow industry professionals. If you have any questions, send an email to dholst@wainsurance.org.

TiTle SponSor

Hotel Reservations Indulge in the luxury and excitement of Tulalip Resort Casino. The AAA Four Diamond Tulalip Resort Casino is among the premier destinations in Washington State offering luxurious accommodations, award winning dining, casino excitement, world class shopping and impeccable service. Hotel reservations are not included in registration fees and may be made directly with The Tulalip Resort by calling 866-716-7162. Identify yourself as part of the 2015 Washington Joint Conference. Room rates begin at $149 per night plus tax and resort fee. Room block is open for reservations until Wednesday, August 19, 2015. Once room block is full, rooms are subject to availability. Credit card required at time of reservation.

sChEduLE of EvEnts Wednesday, September 16, 2015 1:00 pm - 7:00 pm 8:00 pm - 10:00 pm

Golf Tournament and Dinner/Golf Awards Hospitality Suite

Thursday, September 17, 2015 7:30 am - 6:00 pm 8:00 am - 8:45 am 9:00 am - 11:30 am

Registration Open IIABW Annual Business Meeting and PIA Annual Business Meeting General Session Breakfast IIABW & PIA Presidents Welcome Remarks Marketing to New Generations: Beyond The Boomers Chris Amrhein, AAI, Amrhein & Associates Awards Lunch

12:00 pm - 1:15 pm

Concurrent Sessions A & B:

(Choose one)

1:30 pm - 3:30 pm

Session A: Social Networking; OMG or E&O (2 CE WA) Chris Amrhein, AAI, Amrhein & Associates

1:30 pm - 3:30 pm

Session B: Environmental Risks Come to Main Street and The Family Farm (2 CE WA) David Dybdahl, CPCU, ARM, MBA, American Risk Management Resources Network

3:30 pm - 6:00 pm 6:00 pm 8:00 pm - 10:00 pm

Trade Show Reception Evening Free Hospitality Suite

Friday, September 18, 2015 7:00 am 7:30 am 7:30 am 9:00 am

- 5:30 pm - 9:00 am - 9:00 am - 11:30 am

Registration Open IIABW Board Meeting PIA Board Meeting Trade Show / Brunch

Concurrent Sessions A & B: 11:45 am - 1:45 pm

(Choose one)

Session A: The Big Picture: Valuing, Buying and Selling an Agency Gary Jacobson, JD, Vander Wel, Jacobson & Kim PLLC and Larry Morrison, MBA, CBA, CMA, Business Transition Network Session B: Data Compromise and Identity Theft and Insurance (2 CE WA) Scott Ellis, Hartford Steam Boiler

1:45 pm - 2:00 pm

Refreshment Break

Concurrent Sessions C & D:

(Choose one)

2:05 pm - 4:00 pm

Session C: How The Industry Is Addressing The Talent Crisis Angela Arralde, CPCU, Capital Insurance Group

Session D: Equipment Breakdown - Commercial and Homeowners Equipment Breakdown and Service Line Coverage (2 CE WA) Scott Ellis, Hartford Steam Boiler

8:45 pm

Hospitality Suite

Program may be subject to change.

No Tax Increase for Agents!!!

ur state legislature finally passed a $38 billion operating budget after three special sessions which included $180 million in tax increases. Agents’ preferential B & O rate of 0.484% was NOT increased thanks to the intensive lobbying by IIABW and others in the industry over the past few years!! Legislators told us they remembered the thousands of calls and emails from agents and brokers about their plans a couple years ago to triple our B & O tax rate. Others industries were not successful fighting back against a major tax increase. The legislature, for example, eliminated the preferential B&O rate of 0.484% for royalty income - compensation for the use of intangible personal property such as copyrights, patents, licenses, franchises, trademarks, and similar items. Their B&O tax rate will triple to 1.5%. Agents pay B&O taxes on gross revenues at a special rate of .484% while over 50 types of professional services (including stock brokers, real estate brokers, CPAs, bankers, etc.) pay a B&O tax rate of 1.4%. We were successful working with the state legislature to set up this special rate in 1983 at the rate of 1.1% and then reducing

it two times since, most recently to .484% in 1998. Over the past few years IIABW has been fighting annual proposals to remove our preferential rate. We have fought back by arguing that the tax increase : •

Will make independent agents less competitive with GEICO and other direct companies who do not pay the tax;

•

Hits agents harder than other professional services because we don’t set our price so we can’t simply pass on the increase to our customers.

In addition to the strong grassroots lobbying by our members, IIABW has also supported legislators by contributing over $60,000 every election cycle from Big I Pac, our state political action committee. We have given these dollars to legislators who are in key leadership positions and educated them about the importance of our special rate.

Do you want: • Binding authority for your clients? • 20% New Business Commission? • Experienced Underwriting Staff who provide great service?

Berkley Classics specializes in providing Agreed Value coverage on Collector Vehicles of all types. Contact the Berkley Classics specialists at 1.507.449.6775 (Kathy) or 1.507.449.6839 (Joni) for more information.

The companies of CWG are A+ rated (A.M. Best Company). CWG has been providing this coverage for over 35 years.

Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued. | 1256CWG-BC-01-15

1256CWG-BC-01-15.indd 1

12/12/14 8:29 AM

What Do You Know...

About ISO’s PAP RIDESHARING Endorsements

By Bill Wilson idesharing is once again making headlines in the wake of a California Labor Commission ruling that Uber drivers are employees of the company, not independent contractors. Did you know that ISO has already made two nationwide filings in response to the rise of ridesharing through transportation network companies such as Uber and Lyft? Pertaining to personal auto and umbrella insureds who drive for these organizations, the filings include: PAP Forms Filing PP-2015-OTNFR “Introduction of a Reinforced Public or Livery Conveyance Exclusion and Related Optional Coverage Endorsements”: • PP 23 40 10 15 – Public Or Livery Conveyance Exclusion Endorsement • PP 23 41 10 15 – Transportation Network Driver Coverage (No Passenger) • PP 23 45 10 15 – Limited Transportation Network Driver Coverage (No Passenger) PUP Forms Filing DL-2015-OTNFR “Introduction of a Reinforced Public or Livery Conveyance Exclusion”: DL 99 12 10 15 – Personal Umbrella Liability Policy Public Or Livery Conveyance Exclusion Endorsement Each filing goes hand in hand with a companion rules 20

filing. The proposed nationwide effective date for these changes is Oct. 1, 2015, though the actual implementation date could vary in specific states. The PUP endorsement follows the reinforced PAP “public or livery conveyance” exclusion ISO introduced with the PP 23 40 PAP endorsement. At this time, no options are available to extend even limited coverage under ISO’s PUP to ridesharing drivers. What do you need to know about the three PAP endorsements for ridesharing? PP 23 40 10 15 – Public Or Livery Conveyance Exclusion Endorsement This endorsement revises the existing ISO PAP exclusion for the use of a vehicle as a public or livery conveyance. According to the filing explanation, the endorsement clarifies that the exclusion applies to any period of time that an insured is logged into a “transportation network platform” as a driver, whether or not a passenger is occupying the vehicle. The endorsement defines a “transportation network platform” as “an online-enabled application or digital network used to connect passengers with drivers using vehicles for the purpose of providing prearranged transportation services for compensation.”

Service

Integrity

Security

Stability

Serving Independent Agents Since 1930 www.quirkco.com

(800)299-9421

teamwork Imperial PFS, the leader in premium financing, continues to focus on the success of our agency partners. The relationships we have developed with our agency partners are a critical element in the way we do business. These relationships have enabled Imperial PFS to continually develop and improve programs and services. Customer focus is why we operate a nationwide network of local offices, each shaped by the region it serves. We look forward to your continued partnership with Imperial PFS and providing you the most comprehensive benefits in the industry.

ipfs.com marketing@ipfs.com Bothell: 800.888.2750 Spokane: 800.234.7373

The new Part A – Liability Coverage “public or livery conveyance” exclusion reads as follows (new language italicized): “5. We do not provide Liability Coverage for any ‘insured’: For that ‘insured’s’ liability arising out of the ownership or operation of a vehicle while it is being used as a public or livery conveyance. This includes but is not limited to any period of time that ‘insured’ is logged into a ‘transportation network platform’ as a driver, whether or not a passenger is ‘occupying’ the vehicle. This exclusion (A.5.) does not apply to a share-the-expense car pool.” The implication of the language “but is not limited to” is not yet known. ISO is also making the same revision to the “public or livery conveyance” exclusion that appears in similar form under Part B – Medical Payments Coverage and Part D – Coverage For Damage To Your Auto in the PAP. Since state-specific endorsements in most states provide statutory uninsured and underinsured motorist coverages, ISO is filing a similar change, to the extent permitted by law, to each state’s UM/UIM endorsements. PP 23 41 10 15 – Transportation Network Driver Coverage (No Passenger) This optional premium-bearing endorsement would replace the PP 23 40. According to the filing explanation, it extends PAP coverage to an insured ridesharing driver for the period of time from when the driver logs into a “transportation network platform” up until a passenger has entered the vehicle. The endorsement modifies the “public or livery conveyance” exclusions in Parts A, B, C, and D of the PAP and includes a schedule of the following information: • Identity of the “transportation network platform(s)” for which the insured drives • A description of the vehicle in question • A list of provided coverages, triggered by premium entry for each desired coverage PP 23 45 10 15 – Limited Transportation Network Driver Coverage (No Passenger) This optional premium-bearing endorsement would replace the PP 23 40. According to the filing explanation, it extends PAP coverage to an insured ridesharing driver for the period of time from when the driver logs into a “transportation network platform” up until the driver accepts a request through the “transportation network platform” to transport a passenger. The endorsement differs from the PP 23 41 in that it does not cover the time period between accepting a ridesharing request and the passenger’s entry into the vehicle. It modifies the “public or livery conveyance” exclusion in Parts A, B, C and D of the PAP and includes the same schedule as above for the PP 23 41. 22

Neither optional endorsement extends PAP coverage while a passenger is in the vehicle, meaning a driver with only an ISO PAP must rely on whatever coverage is provided by their transportation network company. That may or may not include medical payments, UM/UIM coverage for the driver or passenger(s) and physical damage coverage. Agents should take great care when providing advice to insureds about these endorsements. Even under the PP 23 41, the full driver exposure does not enjoy full coverage and the insured may not elect to extend limited coverage to all PAP coverage parts. If drivers are independent contractors, they are basically operating a business. Legal counsel might advise them to do so as a corporation or LLC and purchase a BAP rather than relying solely on a PAP. Some situations could involve claims or suits filed against drivers that a CGL, BOP or other commercial policies would more appropriately address than a BAP. For example, a claim for slander, invasion of privacy or wrongful eviction might be unrelated to the use of an auto and unlikely constitute BI or PD. Since the driver is engaged in a business activity, a homeowners policy would likely not respond. Bill Wilson is director of the Big “I” Virtual University. Reprinted from IIABA’s Virtual University.

One Submission – Multiple Markets.SM

Endorsed by IIABA

We Say YES! Personal Umbrella Specialists for

Washington Producers

On-Line Rate, Quote, Apply and Request Binding 24/7 or Call from 6am to 6pm PST. Umbrella Solutions For 50 years.

(800) 234-6977 x260 A n d e r s o n a n d Mu r i s o n

www.andersonmurison.com

3285 Big I Washington 7.675X4.9 Gen Umbrella

Our Umbrella Programs Give You More Options Preferred Property Program gives you broader, more flexible coverage with a range of limits Fast Service and more security are what you get with Preferred Property Program. Our umbrella liability policies are written by XL Insurance with Chubb Insurance Group for excess layer – two of the industry’s most highly rated carriers.

• • • •

A subsidiary of

JGS INSURANCE

Celebrating Our 95th Year

Options of $5 to $50 million in umbrella coverage. Hi-Rise apartments up to 35 stories eligible. Developer-sponsored board eligible. Excess of D & O General Liability, Auto Liability, and more

888.548.2465

info@umbrellaprogram.com

Service is our specialty; protecting you is our mission ®

960 Holmdel Road, Holmdel, NJ 07733

Value-Added Services Could Pose an E&O Exposure By Mike Edwards QUESTION: “I currently write a very nice tree service account, which is coming up for renewal in a couple of months. Last year, we had some stiff competition, and barely kept the renewal. I suspect that this year will be no different, so I’ve already touched base with the underwriter about renewal pricing. During the current policy, we also got very involved with helping the insured get a claim paid, and I think that will be a “plus” for us come renewal time. Along those lines, we’re also working on some ideas to present to the insured about value-added services we can offer. As appreciative as he was about our help with the claim, I think he would be interested in some of the additional benefits we offer. “For example, one of his concerns is his liability exposure for the 3 arborists, who drive their personal cars to job sites. We could offer to review the limits of liability on their auto insurance, as well as determine if the tree service is covered under the employee’s policy, or if an endorsement is needed. In addition, we would recommend that employees carry a liability limit that we thought was adequate. We could also furnish our insured the MVRs on any employees who drive on behalf of the company, whether they use a company auto or their personal vehicle. “Any additional ideas you can offer would be appreciated.” ANSWER: You’re right. In today’s competitive marketplace, independent agents need every advantage we can find. And service (now elevated to “value-added service,” in the current 24

vernacular) is as important today as ever. While the old Big I slogan “Your Independent Agent Serves You First” has faded into history, many of us old timers wish we could bring back Raymond Burr (“Perry Mason”), who did those great commercials back in the 1980’s. But a word of caution. In today’s legal environment, care should be used to evaluate which value-added services are prudent, and which could possibly lead to an E&O claim. As one example, providing the MVRs of employees to your insured – who is their employer – is almost universally discouraged by legal and E&O experts. Motor Vehicle Reports (MVRs), CLUE Reports, and credit reports/insurance scores, are an everyday part of insurance underwriting. However, all are considered “consumer reports” which are protected under the Fair Credit Reporting Act (FCRA). The FCRA prescribes very strict guidelines on who can access any defined “consumer report,” and what can be done with it, such as sharing it with third parties. An employer probably should review the MVR of every employee who drives a vehicle on company business. Many employers also routinely require drug tests of employees and job candidates. But an insurance agency should not be the source an employer turns to for these and any other protected private information. However, there are legitimate third-party providers available for such information, which is where an employer should go, not his insurance agent. A friend of mine, who is an E&O defense attorney, did a program several years ago for a group of independent agents,

which was called, “E&O That Comes From Being Too Helpful.” He cited many E&O cases that had resulted from some wellintentioned “value-added services.” One example dealt with MVRs. An agency CSR handled the personal insurance for a friend who was involved in a bitter child-custody case with her ex-husband. The friend knew he had a drinking problem, and was concerned about her kids being in the car with him. The CSR offered to pull his MVR, which listed two DUI citations. The CSR gave the MVR to her friend, who gave it to her attorney, to support her request for a restraining order against the husband having the kids in his car. During cross-examination, the source of the MVR came to light. The ex-husband successfully sued the agency for $250,000. As to the agency reviewing the auto insurance of the arborists, I frankly have a concern that this, too, is unwise. Many employers do set insurance guidelines – such as minimum required limits of liability – for employees who drive, but in my view, they should obtain evidence of insurance from each employee. Also, my preference would be that the agency not recommend “a liability limit that we thought was adequate.” Lastly, your successful efforts to help your insured with his claim are laudable, and possibly risky. In my 30+ years working with independent agents, I’ve always felt that collaborating with insureds and insurers to get legitimate claims paid fairly was

one of the hallmarks of the independent agency system. At the same time, I know from an E&O standpoint that any type of “service activity” with insureds carries some risk of an adverse outcome. And the current focus by nearly every business to provide “value-added service” only magnifies the potential risk of something going wrong. A couple weeks ago, I sat in on a very interesting webinar presented by the Independent Insurance Agents & Brokers of America (IIABA) and SwissRe, titled “Avoiding E&O Exposures When Advocating for Customer Claims.” The basis for the webinar, according to IIABA, was a 2012 survey of panel counsel attorneys for SwissRe, which revealed that improperly advocating for customer claims was one of the most common errors and most dangerous things agents could do to expose themselves to E&O claims. Initially, the title of the webinar seemed to suggest that “advocating” for claims on the customer’s behalf was a significant source of E&O claims. But during the webinar, which included two E&O attorneys along with a coverage expert, I think the key point was that agents need to be aware of when they have taken “advocating” for claims too far, and strayed into legal difficulties. Good luck with the renewal! Reprinted from IIABA’s Virtual University.

WSRB extends credit for all qualifying sprinkler systems through...

Order your FREE report today to ensure you’re getting the maximum available sprinkler credit for your client!

Original sprinkler plans are NOT necessary however they will provide the most credit.

Please go to www.wsrb.com/nosprinklerleftbehind for more information and eligibility 25

80+ Attend Young Agents Conference

he Young Agents held their Annual Conference in June at Campbell’s Resort in Chelan. Over 80 agents, CSRs, underwriters and marketing reps of all ages attended the conference to: • Attend seminars which qualified for 12 hours of CE, •

Network with others new to the profession to share what was working

•

Have fun at the events social functions.

The IIABW Young Agents is an informal network of insurance professionals striving for professional growth through educational achievement, leadership development, legislative involvement, and insurance career perpetuation. If you would like more information about future Young Agent networking events, go to their Facebook page or contact Reid Ekberg at rekberg@pheinsurance.com.

Changes in the Rebating/ Inducement Law Daniel Holst and Bill Stauffacher, IIABW’s Executive V.P. and Lobbyist, participated in the signing of ESSB 5743

ver the past year agents have been fined by the Office of the Insurance Commissioner under our state’s anti-rebating/inducement law for spending more than $25 on clients for dinners and referral gifts. IIABW helped write and lobby for a new law to allow agents to spend more money entertaining and thanking their clients. The new law, which went into effect on July 24th: •

•

Increases from $25 to $100 per person per year the rebating and inducement expenditure exemptions for marketing and hosting activities; Creates a new $100 per person per year for referral thank you gifts, separate of the rebating and inducement exemption;

Exempts sponsorships and contributions to nonprofit organizations from these same expenditure limitations. Last summer the Office of the Insurance Commissioner adopted rules providing guidance to producers on how referral ‘gift’ programs are impacted by our state’s rebating laws. These rules, which were to become effective on July 1st, were determined to be in conflict with the new rebating law. Consequently, the OIC repealed three sections of the rule which dealt with producers donating commissions to charities, limiting gifts to $25 per year and limiting promotional games of chance. IIABW would like to thank the OIC for acting so quickly to fix the conflict and looks forward to working with them on new rules this fall. •

We Haven’t Raised Our Rates in 10 Years... Restaurant, Bar & Tavern Program Can your current restaurant, bar & tavern market make that claim?

We’ve had a restaurant, bar and tavern program for ten years and right now – today – it is Since 2000, have written program restaurants, barsaccounts, & tavernswe in Alaska, Oregon, morewe competitive thananit exclusive has ever been. Onon “target” (preferred) have been Washington and, more recently, in Colorado. We’ve written over 10,000 policies and over $50 consistently able to beat expiring pricing by 20% and more and our bind-to-quote ratio million is morein premiumthan in this class of business. 70%. We’re stable. We’ve been with the same carrier for over 10 years and our loss and loss expense ratio is the–six priorfor to submitting this advertisement, we have only lost two renewals and right at In 40% so weeks we’re here the long haul. our written premium versus the same period in 2009 has more than doubled. Our application We have great rates. Because we have been so profitable, we haven’t been forced to take the big rate flow is up more than five-fold. Most accounts are quoted within 4 to 48 hours. increases that have plagued our competition. We haveOur a strong form. Wenon-admitted are usually silent on policy Assaultform & Battery on the we offer several carrierpolicy is rated A- IX, and our is strong. ThisCGL is a and package policy other coverage advantages over our competition. that includes Property, General Liability and Liquor Liability. We have a Property broadening dohave not exclude Medical Payments. Battery is of usually included We are endorsement. growing rapidly.WeWe a very high “hit ratio” and, inAssault the first&six months the year, our written without limitation or sublimit on target accounts. We offer Food Borne Illness coverage with premium is up almost 40% over last year. We do rushes. sublimit. Our commission level is generally much higher than our competition’s. Regrettably, we are unable to consider nightclubs, adult entertainment or accounts with liquor serving issues. For No details substandard business program please. and target account eligibility criteria, and an about or thedistressed program, including application, please visit: http://www.surpluslines.com/products/restaurant-bar-tavern.asp

We compete favorably with all the major programs! Anchor Bay Insurance Managers, Anchor Bay Insurance Managers, Inc.Inc. Post Box Office // Silverdale, 98383 Post Office # Box 2510# 2510 // Silverdale, WAWA 98383 Contact Bill at (360) 649-8969 Phone: (800) 929-9560 // Tanner Fax: (800) 929-9794 www.SurplusLines.com Web: Web: www.SurplusLines.com Email: Info@ SurplusLines.com Email: Info@ SurplusLines.com

Changes to State’s CE Rules IIABW worked with the Office of the Insurance on changes to the continuing education rules governing insurance producers. The new rules went into effect on July 10th. Here is a brief summary of the changes: • CE will be available for webinar classes and webcasts. IIABW is now offering a new series of webinars and webcasts for CE. • Producers will be able to repeat a CE course for credit once each license term instead of once every 3 years. • Producers will no longer be able to apply for individual course credit if the CE provider hasn’t already received preapproval (something IIABW always does for our seminars). • Full CE credit will not automatically be given to all hours of designation courses (i.e. CIC, ACSR, etc.). Instead, the OIC will determine appropriate credit depending on the content. • At least two Washington licensed producers will need to be present at a seminar to receive CE credit. This is the most controversial part of the rule because of the impact of Washington producers who attend seminars in other states.

B C E Consulting, LLC Our mission is to help you grow your business and improve your bottom line. Our team of professional and experienced consultants has assisted insurance companies and agencies in achieving their goals and objectives for many years. We focus on the following areas of business development. • • • • •

Strategic, succession and contingency planning Business growth and development Market feasibility studies Education, sales training and professional development Operational efficiency and process improvement

IIABW’S WEBCASTS IIABW is now offering webinars and webcasts conducted by many of the best presenters in the country, covering a wide range of technical, management and sales topics. We have partnered with ABEN (Agents & Brokers Education Network) to deliver your education via live streaming video. You can follow along with the presenter’s PowerPoint slides, take notes, submit questions, and get full access to written materials. Webcasts cover a broad spectrum of programs including:

CE Programs • • • • • • •

• • • • •

Non CE Programs • • •

For further information or details please see our website: www.bceconsulting.co or contact: Jeff Bronaugh, CPCU, CLU, ChFC, CIC jeff@bceconsulting.co 404 3rd Ave S, Edmonds, WA 98020 (520) 343-4394

Directors, Officers & Entities - Oh My! Policy Provision Potpourri Commercial Property Endorsements That Can Make Money Insurance and Property Lease Business Auto Claims That Cause Problems Commercial Lines Claims That Cause Problems Building Codes are BAD for your Insureds: Why Ordinance or Law Coverage is Necessary Home Based Business Exposures Personal Lines Claims That Cause Problems Rental Cars - More Than Meets the Eye! Those Kids and Their Cars! Environmental Strategist (eS) designation program

• •

Predictable & Guaranteed Sales Success (Roger Sitkins) Recruiting & Developing Young Producers (Reagan Consulting) Insurance Agency Ownership Perpetuation (Reagan Consulting) The Ultimate Account Manager (Mary Eisenhart & Cheryl Koch) CSR Essentials (New Level Partners)

For webcast programs and dates, go to IIABW’s Website at www.wainsurance.org and click on the Education tab.

A NAME THAT BUILDS RELATIONSHIPS At Risk Placement Services (RPS), we are committed to building relationships one retail partner at a time. Our stewardship begins by providing you access to the finest markets and top producers in the industry and providing customized solutions to meet your needs by designing, negotiating and tailoring individual risks that help you succeed. Itâ&#x20AC;&#x2122;s a partnership you can count on! To learn more contact Bud Carter 480.860.5572 or email at Bud_Carter@RPSins.com. www.RPSins.com

You’re passionate about your clients. We’re passionate about protecting them. You have a passion for supporting your clients. Liberty Mutual has a passion for protecting them with coverages like commercial auto, workers compensation, and business owner’s policy (BOP). With regional offices, industry understanding, and comprehensive coverages for businesses of all sizes, we have the local knowledge and national resources to help your clients thrive. Talk to your territory manager today about Liberty Mutual Insurance, or go to libertymutualgroup.com/business. We are proud to support the Independent Insurance Agents & Brokers of Washington. @LibertyB2B