IIABL December 2022 Louisiana Agent Newsletter

LOUISIANAAGENT

D E C E M B E R 2 0 2 2

IIABL STAFF

JEFF ALBRIGHT

Chief Executive Officer jalbright@iiabl.com (225) 236-1366

BENJAMIN ALBRIGHT

Vice-President of Strategic Initiatives balbright@iiabl.com (225) 236-1357

KAREN KUYLEN

Director of Accounting & Finance kkuylen@iiabl com (225) 236-1353

JAMIE NEWCHURCH

Director of Insurance Programs jnewchurch@iiabl.com (225) 236-1350

KATHLEEN O'REGAN

Director of Communications & Events koregan@iiabl.com (225) 236-1360

BRANDI VAN PELT

Insurance Programs Administrator bvanpelt@iiabl.com (225) 236-1358

DUSTIN

WAMBSGANS

Agency Consultant dwambsgans@iiabl.com (225) 236-1361

LISA YOUNG-CROOKS

Director of Member Relations lyoung@iiabl.com (225) 236-1351

What should you tell your customers about the Louisiana Property Insurance market Crisis?

Jeff Albright Dec 2022

There is no good news about the Louisiana property insurance market right now. And it will probably get worse before it gets better.

But IIABL has been studying the underlying problems and searching for solutions Following is an analysis of the problems, plans to address some of the problems, and suggestions on what you need to tell your customers.

The Problems

Louisiana has a difficult insurance environment. There are a combination of factors that insurance companies consider as impediments to committing capital investments in writing insurance in our state.

1) Louisiana is a small insurance market with small profit opportunities that major insurers consider insufficient to merit the commitment of capital to write insurance

MARKETCRISIS

here. Florida and Texas have significant hurricane exposures like Louisiana, but the risk is offset by the profit opportunities when the wind does not blow. Insurers believe the risk outweighs the rewards in Louisiana.

2) The economic opportunities are further diminished by the weak economy in Louisiana. Louisiana per-capita GDP was $55,213 in 2021. which is $14,008 lower than the US average percapita GDP, further limiting economic opportunities for insurers.

3)The dominant business and personal insurable risk exposures in Louisiana are high risk and not desirable for most insurance companies. Oil and gas, petro-chemical, heavy contractor, wet marine, agricultural and timber risks are not what most insurers want to insure. A large population of low income policyholders who often carry minimum limits on automobile and who more often rent apartments than own high value homes is not the

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target market for top rated personal lines companies.

4) After the historic hurricane seasons of 20202021 with four storms and two Category 4 hurricanes, it is obvious to everyone that Louisiana has severe catastrophe (hurricane) risks. IIABL did an analysis of A.M. Best market statistics of the Louisiana Homeowners market from 2005 when Hurricanes Katrina & Rita ravaged our state through 2021. The cumulative underwriting profit for the period was almost a $14 billion LOSS! Insurers paid out almost $14 billion more than they took in! Total, annual Homeowners market premiums in Louisiana total $2 billion, and in the most profitable year since Katrina, insurers made just under $800,000 in underwriting profit. It takes a lot of good, storm-free years to make up that deficit. Insurers HAVE NOT made a long-term profit by writing Homeowners insurance in Louisiana

MARKETCRISIS

5) Louisiana has a long standing hostile tort system that dramatically increases insurance company claims expenses. Our automobile claim rate is only slightly higher than the national average, but our bodily injury claim rate is consistently double the national average. As a result, we have the highest automobile insurance premiums in the country. In the past couple of years, the tort problem has expanded into property insurance as frustrated policyholders, judges, and juries award 50% bad faith penalties and 40% attorney fees to hurricane claims. Not an attractive legal environment for insurance companies.

6) Insurers consider the legislative environment in Louisiana hostile. The Louisiana Legislature continually tightens insurance laws in the interests of “protecting consumers” but ultimately discourage insurers from selling insurance in our state which is not good for consumers.

7) The Louisiana Department of Insurance prides itself on their strict regulation of insurance companies, again in the cause of “protecting consumers.” But insurance companies find the

regulatory environment bureaucratic, unresponsive, and difficult to navigate. If insurers feel that they cannot properly manage their business in Louisiana, they will not do business here.

The Near Term Future

The Louisiana property insurance market does not appear likely to improve significantly in the next couple of years. Eleven Homeowners insurers have gone insolvent over the past two years. Primary insurance companies, especially large national carriers, have retreated from the Louisiana market after the historic losses from Hurricanes Laura and Ida in 2020-2021. Reinsurers lost over $100 billion from natural catastrophes in both 2021 and 2022. Indications are that reinsurers are seeking significant premium increases on January reinsurance treaties, but more importantly are demanding higher attachment points and participation by primary insurers in the reinsurance layers Small insurers will struggle to maintain capacity with such reinsurance terms

MARKETCRISIS

Where do we go from here?

Louisiana desperately needs new property insurance market capacity. We must find ways to address our market problems and attract new insurers.

There is little we can do about hurricane loss experience except pray for some years without major storms.

Louisiana can try to address economic, business, and demographic challenges, but it is hard to be very optimistic that we will see major improvements.

The call to action was made by the insurance industry in August in an important report: It’s Not Just the Weather. The American Property Casualty Insurance Association, Reinsurance Association of America, and Bermuda Insurance Association jointly identified the man made crisis for property insurance markets in Louisiana, Florida, and California. The report acknowledges that climate change is causing more frequent and more severe natural catastrophes which is causing stress on the insurance industry. However, the report states that the industry is well positioned to handle these changes.

The problem in certain states, including Louisiana is the man made catastrophes caused by hostile plaintiff oriented legal environments, state legislatures that pass laws that burden insurance companies, and regulatory systems that prevent insurers from effectively managing their business so that they have a reasonable expectation of making a profit.

These are the problems that Louisiana must address.

IIABL has been discussing specific problems insurers have with the legal, legislative, and regulatory systems in Louisiana to identify reforms that the Louisiana Legislature can consider.

We must immediately reform our bad faith statute with its amorphous “satisfactory proof of loss” trigger to provide a clear standard of how insurers pay property claims, with a reasonable process for resolving disputes on the value of a claim. Additional tort reforms are desperately needed, but realistically will have to wait until 2024 when Louisiana will have a new governor and legislature.

The Louisiana Legislature needs to pass laws to reduce the “social inflation” which results after a major storm when billions of dollars of insurance payouts cause massive increases in the price of materials, cost of labor, and abuses by contractors, roofers, and mitigation contractors.

The Louisiana Legislature needs to reform insurance laws to accommodate insurance companies and encourage them to do business in our state. For example, two thirds of states have more flexible insurance rating laws than Louisiana

MARKETCRISIS

to allow insurers to charge the premiums they need to offer coverage.

These are just a few examples of the reforms that insurance companies have identified that would make Louisiana a more attractive place to deploy property insurance market capacity.

IIABL will work with the insurance industry to try to pass some of these reforms in the 2023 Legislative Session and in the coming years to improve the Louisiana insurance market.

What to tell your customers?

First, educate them about the problems. It doesn’t take a rocket scientist to figure out that after losing almost $14 billion since 2005, insurers don’t want to write Homeowners insurance in Louisiana. With the increasing severity of catastrophes (in Louisiana, but also globally), the rates that homeowners were paying before Hurricane Laura in 2020 were probably inadequate. However, there is hope that the current rates, in some cases double, triple or quadruple what insureds were paying just a couple of years ago will not be a new normal for Louisiana. What we need is to attract insurers do offer new capacity in Louisiana so that the competitive market drives down the price to a stable, affordable value.

Talk to them about the need to bring down the cost of claims in Louisiana.Discuss the problems in our legal, legislative, and regulatory systems. We can’t beat up on insurance companies and then expect them to sell us cheap insurance. We need to attract insurance companies to Louisiana with the hope of someday creating a healthy, competitive insurance market that drives down insurance premiums.

Second, ask your customers to talk to their legislators about what they are going to do to bring new insurance companies to Louisiana. Only the Louisiana Legislature has the power to fix our legal, legislative, and regulatory environments to make Louisiana more attractive to insurance companies.

IIABL will provide much more information about specific reforms and our plans for the 2023 Legislative Session as our legislative plans develop.

Finally, when it’s appropriate, encourage your clients to build for the future.Modern construction practices including the Fortified building standard, superior building materials, and other best practices can not only provide discounts on some insurance policies, but they can help harden Louisiana’s coasts to minimize damage from future storms.You don’t need to be an expert, but encouraging your clients to contact a reputable contractor that specializes in these best practices is one of the best things we can do to bring down the long-term cost of Hurricane claims and make insurance in Louisiana affordable.

Big "I" Markets

When it comes to small commercial coverage, Big “I” Markets put choice and quality at your fingertips. As a Big “I” member, you have access to three big carriers with big appetites and great coverages in most states to help you find the small commercial coverages you need. Submit one application online, then select from among available carriers online. It is that easy.

Our all-star carrier lineup includes:

Travelers Select®

Travelers Select Accounts offers a robust variety of coverages for small businesses. A proprietary BOP product called Master Pac®, workers' compensation, commercial automobile, and commercial umbrella are available, with a broad array of industry-specific coverage options and coverage extensions. Review the full Travelers eligibility guide to learn more. Travelers is available in all states except AK, FL, & HI.

CNA Small Business

CNA Small Business currently offers a market for a broad variety of businesses, representing

healthcare, financial institutions, professionalservices, business services, technology, retail, real estate, wholesalers and manufacturing. BOP, workers’ compensation, commercial automobile, umbrella and miscellaneous professional liability products are available. Review CNA’s eligibility guidelines to learn more. CNA is available in all states except AK, FL & HI.

Chubb

Chubb Small Commercial Insurance (SCI) leverages superior underwriting expertise and world renowned claims, account services, and financial strength to offer solutions for small businesses with up to $10M in revenue, in more than 500 business classes across the following industries: Clubs and associations, cultural institutions, financial services, healthcare, real estate, retail stores, service businesses, technology, and whole-sale businesses. BOP, workers compensation, commercial automobile, and umbrella products are available. Review Chubb’s appetite guidelines for full details. Chubb is available in all states except AK, HI, LA & WA. Additional regional limitations may apply.

COMMERCIALCARRIERS

Progressive Progressive Insurance is available for commercial auto only. Progressive offers a wide range of commercial auto insurance programs to fit the needs of the small business operation. Whether it is for passenger autos or heavy trucks, Progressive can write the policy. Cover a wide variety of drivers and vehicle types, with accurate and competitive pricing that considers each risk independently.

To submit a quote, log into Big "I" Markets and click on "Small Commercial." Contact Big "I" Markets commercial underwriters Claire McCormack at claire.mccormack@iiaba.net or Gwen Lombardi at gwen.lombardi@iiaba.net to learn more.

Not yet registered for Big “I” Markets, the online market access program available exclusively to Big “I” members featuring no fees, no minimums and ownership of expirations? Complete a simple and

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free registration online at www.bigimarkets.com.

This article is intended for general informational purposes only IIABA and its subsidiaries and affiliates shall not be held responsible in any way for, and specifically disclaim, any liability in any way relating or connected to any reliance on or use of this article. The information contained or referenced herein is not intended to constitute and should not be considered legal, accounting or other professional advice, nor shall it serve as a substitute for obtaining such advice If specific legal or other expert advice is required or desired, the services of an appropriate, competent professional, such as an attorney or accountant, should be sought.

Copyright © 2020, Big I Advantage, Inc. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big I Advantage For permission or further information, contact Big “I” Markets, 127 South Peyton Street, Alexandria, VA 22314 or email at bigimarkets@iiaba.net.

CLOSING THE DISCONNECT BETWEEN CYBER RISK AWARENESS AND ACTION

Cyber threats are keeping business leaders up at night because of their ability to shut down a company for a long period of time, or even put it out of business completely.

According to the 2022 Travelers Risk Index, cyber threats were the top overall concern for business decision markets – for the third time in four years. Of the 1,200 survey participants, 59% said they worry some or a great deal about cyber threats, and 57% think a future cyberattack on their company or organization is inevitable.

While awareness of cyber risk has increased significantly in recent years, there remains some disconnect in terms of how business leaders turn that awareness into effective risk management and insurance decisions, according to John Menefee (pictured), CyberRisk product manager at Travelers.

“More and more organizations are purchasing cyber insurance; 59% of respondents have a

Bethan Moorcraft

&ACTION

cyber policy,” he said. “That number has increased, but it should continue to increase, and we're engaging every day with agents and customers to stress the importance of that coverage. That's a battle that we've been fighting for a long time, and we're starting to gain some ground.

“From a risk management perspective, despite the increased awareness of attacks, ransomware, and all sorts of bad things that can happen on the internet, we still see that many of the most effective controls and prevention methods are underutilized. Most respondents aren't utilizing endpoint detection and response (EDR) technology, about half report they don't require multi-factor authentication (MFA) for remote or admin access, and most don't have an incident response plan. So, there's still a big disconnect there.”

There are lots of things that businesses can do to mitigate their cyber risk, some of which are relatively low cost, such as MFA. Menefee said MFA is “ one of the most impactful preventative controls,” and if more companies implemented MFA for email, remote access, and internal administrative access to systems, “the number of successful attacks would plummet”.

However, MFA has been slow to catch on. According to the 2022 Travelers Risk Index, 90% of survey respondents said they were familiar with MFA, yet only 52% said their company had implemented the practice for remote access.

“I found that really interesting … especially since so many of our respondents (93%) were confident that they'd implemented best practices to prevent or mitigate a cyber event,” Menefee told Insurance Business. “I think it's just a knowledge gap. Because we [as insurers] respond to so many events, we know which controls are the most effective in reducing the chances of an organization being the victim of a cyberattack. And we also know many of the vulnerabilities and attack methods that the threat actors are using to gain access to these networks. Based on the low usage of some of those controls, there seems to be a disconnect in the level of confidence respondents have and their actual exposure.

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“For that reason, it's important for cyber carriers to share the information and intel that we have. If we work with our customers, we provide them with resources to reduce that knowledge gap, we can reduce the likelihood that they'll become victims of cybercrime. And when we engage with our customers in this way… our customers seem to be very receptive, and they tend to work towards putting those controls in place. They just don't know what they don't know.”

Beyond MFA, all cyber risk experts stress the importance of employee education, and training employees how to identify and report suspicious online activity and phishing emails. As Menefee noted, the user is sometimes the weakest link, and even the best cybersecurity controls can be defeated by a lack of education.

“Also, threat actors often choose their victim based on vulnerabilities that are visible on the internet,” Menefee added. “Organizations that are

AWARENESS&ACTION

aware of their attack surface, that effectively patch critical vulnerabilities, avoid having ports open that are often targeted by threat actorsthose organizations are much less likely to be targeted in the first place. Organizations that can avoid doing things that will put them in the crosshairs of a threat actor are going to be a lot better off.

“For some of the more advanced technology that costs a little more, EDR technology can be a really sophisticated control that can identify behavior or commands on the network that's unwanted, and stop it from executing. It's almost like a backstop, so if other things fail, EDR is another layer of protection that can prevent a claim from happening or ransomware from being executed.”

One challenge with cyber is the ever-changing nature of the risk. Security controls implemented one day could be obsolete the next day. While 93% of business decision makers in the 2022 Travelers Risk Index are confident they’ve implemented best practice controls to mitigate or prevent

cyberattacks, 80% of respondents also said it’s difficult to keep up with the evolving cyber risk landscape and threat vectors.

“And we can help, we can share our data, we can provide resources to customers, and then by encouraging customers to implement those best practice controls, we can reduce the number of cyberattacks that happen,” Menefee reiterated. When we're successful at encouraging our customers to make those changes based on all that knowledge, we can be a major factor in reducing the impact that cyber criminals have in our daily lives. I think it is important for our customers to view this as an ever-changing risk. I think many of them are starting to, the awareness is there, and we're encouraged by it.”

Y O U R S T A T E S C O N N E C T I O N T O

Since its inception in 2007, Independent Market Solutions (IMS) has expanded its partnership to include 13 state associations across the United States. IIABL has invested in IMS with the goal of bringing scale and efficiency that provide for the development of better products and terms for producing agencies.

Through your membership in the association, IMS provides independent agents with a viable option for market access while also affording 100 percent ownership of expirations. Many IMS programs are established to allow subagents to reach a predetermined premium volume and qualify for direct appointment at no additional cost to the agent. While incubating with IMS, subagents are paid competitive commissions and can also participate in any earned contingencies.

I M S

IMS market availability in Louisiana includes several participating carriers that various specialty lines. See the full list of carriers IMS can get you connected with here.

P R E P A R E Y O U R V E N U E

F O R W I N T E R

W E A T H E R

It is essential to prepare your venue for winter weather to avoid any issues that might arise when colder temperatures arise. Music venues are a popular destination for anybody who enjoys the fun of live performances, but joy can quickly get interrupted if liabilities come to fruition. It is especially true in wintertime when many unique risks can occur and threaten an establishment. Venue management must be cognizant of these risks and take steps to protect patrons. Investing in the right music venue insurance is essential to this task.

Prepare Your Venue for Winter Weather Hazards with These Steps

Find out what else live music venues should do to minimize risks in winter and ensure that attendees stay safe during events.

Implement a Music Venue Insurance Risk Mitigation Plan

In addition to obtaining a music venue insurance policy, management should also invest in comprehensive liability insurance to cover general business liabilities. Indeed, securing sufficient insurance can massively reduce a venue’s risk, and developing a risk mitigation plan can also help. A risk mitigation plan should include an outline of the liabilities that most commonly affect operations for example, property damage or liquor liability and explicate protocol for minimizing these risks. The plan should identify each staff member’s role in reducing risk throughout daily operations.

WINTERWEATHER

Identify Unique Wintertime Liabilities

Music venue management must account for more than general business and premises liability especially when winter arrives, and unique exposures emerge. During winter, event attendees are far more likely to track in snow, rain, and sleet when they enter the venue. Slips and falls will happen, and venue owners must prepare for it. When inclement weather arrives, a venue may install temporary carpeting, for example, so that slick surfaces don’t increase the likelihood of injury.

Invest in a Venue Crisis Response Plan

Some liabilities will still exist even if a live music venue invests in risk mitigation strategies. Rather than betting that these liabilities will never occur, venues should proactively plan for the possibility that they do. If the snow in the wintertime does indeed cause a slip-and-fall accident, for example, a venue must have a clear protocol for dealing with this situation. The injured party should receive medical care, and management should complete an incident report document.

Get Protected With Music Venue Insurance

Music venue insurance is the only kind of coverage that caters to the unique exposures that face live performance venues. This coverage is vital yearround, but it’s even more critical when winter causes risks such as slip and fall accidents to increase. Venue managers should invest in a policy for protection. More importantly, management must identify any safety issues that emerge in winter so that concertgoers aren’t at risk. Insurance agents can partner with venue clients to address and insure these exposures.

About RMS Hospitality Group

At RMS Hospitality Group, our expertly crafted policies are written specifically for the hospitality industry. We offer custom tailored solutions to meet any venue’s specific needs. For more information, contact our knowledgeable experts today at (888) 359-8390.

Big “I" members and industry partners on the Flood Insurance Producers National Committee (FIPNC) met with staff from FEMA to discuss several issues.

Recently, Big “I" members and industry partners on the Flood Insurance Producers National Committee (FIPNC) met with staff from FEMA to discuss a broad range of issues related to the National Flood Insurance Program (NFIP).

Specifically, the continued rollout of Risk Rating 2.0, NFIP's recent request for information on their Direct-to-Consumer (D2C) proposal, loss avoidance and an update from FEMA on Hurricane Ian were discussed.

The Big “I" has expressed concern with the D2C proposal and how it could impact the future role of independent agents. Both FIPNC and the Big “I" Flood Insurance Subcommittee will continue to collaborate with FEMA to foster growth in the private flood market and the independent agency system.

FIPNC is a coalition comprised of three major insurance associations and industry partners. The coalition includes members of the Big “I" Flood Insurance Subcommittee, which is chaired by Joe Rossi.

In other important flood news for Big “I" members, last week, the Federal Housing Administration (FHA) announced that it will start accepting private flood insurance policies for the mortgages it backs.

The decision, which will take effect on Dec. 21, 2022, is another critical step in expanding the private market, which will benefit both consumers and Big “I" members.

Specifically, Marcia Fudge, secretary of the U.S. Department of Housing and Urban Development, noted that “flood insurance is required to ensure families and individuals are prepared if disaster strikes."

Joseph Cortina, Staff Administrator

Big "I" Crop Insurance Task Force

“Increasing consumer options for this important protection is one way we are building more resilient communities in the face of climate change," she added.

In November 2021, the Big “I" submitted comments to FHA on the proposal to allow consumers to purchase a private flood insurance option. Over the last several years, the Big “I" has spent a significant amount of time advocating for this policy change.

The Big “I" will continue to provide its members with NFIP updates through the News & Views enewsletter.

BigIVirtualUniversity

Insurance Services Office filed 30 changes to its personal auto policy program effective Sept. 1, 2018. Over a year later, most carriers have adopted the new language. How well do you understand the changes ISO made to the base PAP form?

Insurance Services Office (ISO) filed 30 changes to its personal auto policy program effective Sept. 1, 2018. Over a year later, most carriers have adopted the new language. How well do you understand the changes ISO made to the base PAP form (PP 0 01) and the 21 endorsements it either revised, removed or created?

Base Form Revisions

Newly Acquired Auto Wording. Historically, the PAP granted insureds automatic liability, medical payments and uninsured motorist coverage for the remainder of the policy term when a replacement

vehicle was purchased. Physical damage was the only coverage that did not continue for the remainder of the policy term.

If the insured wanted collision and/or other-thancollision coverage, the carrier had to be notified of the newly acquired vehicle and the desire for coverage. Time limits for this notification depended upon whether the insured’s policy already provided collision and/or other-thancollision coverage:

If the PAP extended collision and/or otherthan-collision coverage to at least one vehicle, the insured had 14 days to notify the carrier of the newly acquired vehicle and the desire for coverage.

If the PAP extended no physical damage coverage to any vehicle, the insured had only four days to notify the carrier of the desire for coverage.

ChrisBoggs,ExecutiveDirector

PAPCHANGES

ISO’s new PAP form wording requires the insured to notify the insurance carrier of any newly acquired vehicle whether it’s an additional vehicle or a replacement vehicle within 14 days of acquisition. No automatic coverage is granted.

Supplementary Payments. ISO increased the coverage amount to $250 per day for loss of earnings to attend hearings from the prior limit of $200 per day.

Public or Livery Conveyance Exclusion. Prior to 2018, when a carrier wanted to specifically exclude any activities or exposures arising from the use of a covered vehicle as part of a transportation network platform such as Uber or Lyft, it attached the public or livery conveyance exclusion endorsement (PP 23 40), which ended coverage when the transportation network platform app was turned on and the vehicle was made available for use. This exclusionary wording is now included in the base PAP language.

ISO also addressed concerns that the public or

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livery conveyance exclusion might be misapplied when a vehicle is used for volunteer or charitable purposes, such as Meals on Wheels or volunteer medical transportation. New exception wording specifically states that the exclusion does not apply when the vehicle is being used for volunteer or charitable purposes.

Personal Vehicle Sharing Program Exclusion Endorsement (PP 23 16). ISO withdrew the endorsement and included the exclusionary wording within the PP 00 01 to specifically exclude coverage for any vehicle enrolled in and being used in a vehicle-sharing program.

Custom Equipment Exclusion Endorsement (PP 13 06). ISO withdrew the PP 13 06 endorsement and incorporated the wording into the base PAP to exclude specific types of custom equipment.

Racing Exclusion. ISO expanded the racing exclusion to exclude coverage for any vehicle located inside a facility designed for racing for the purpose of participating in any prearranged or

PAPCHANGES

organized driver skill training or driver skill event. Now, any activities occurring on or at a racing facility in an attempt to improve driver skill are excluded.

Flying Car Exclusion. There are no viable flying cars currently in existence, but the base form now contains a flying car exclusion.

Other Insurance Clarification. ISO added wording to the Part A Other Insurance provision to recognize the possibility of an umbrella and reduce potential legal confusion. New wording states that the PAP is not excess over a policy that is intended specifically as an excess policy.

Transportation Expense Coverage. ISO increased Coverage D’s transportation expense limit to $30 per day/$900 maximum from $20 per day/$600 maximum.

Duties After a Loss. Historically, the insured was not required to provide a recorded statement after an accident even if the carrier requested one; and such refusal did not endanger coverage. New policy wording requires the insured to submit to recorded statements as often as reasonably required.

Revised Endorsements

ISO added new mold exclusionary wording to the Trailer/Camper Body Coverage (Maximum Limit of Liability) PP 03 07 Endorsement, resulting in a reduction of coverage.

ISO inserted the statement “Coverage is not provided on an agreed value basis” into the Coverage for Damage to Your Auto (Maximum Limit of Liability) PP 03 08 Endorsement.

ISO withdrew the PP 03 10 Change Endorsement, which was intended for use when the policy was endorsed after the effective date.

ISO made three changes to the PP 03 11 Underinsured Motorist Coverage Endorsement to dovetail with revisions in the base form:

Addition of the volunteer or charitable use exception wording

Incorporation of the personal vehicle sharing exclusionary wording

Addition of the flying vehicle exclusionary wording ISO revised the PP 03 21 Limited Mexico Coverage Endorsement based on research that determined not all accidents are considered criminal offenses in Mexico as previously thought. The new warning replaces “are” and “does” with less definitive language and now reads:

AUTO ACCIDENTS IN MEXICO ARE SUBJECT TO THE LAWS OF MEXICO, NOT THE LAWS OF THE UNITED STATES. UNDER MEXICAN LAW, AUTO ACCIDENTS MAY BE CONSIDERED A CRIMINAL OFFENSE AS WELL AS A CIVIL MATTER. THE COVERAGE WE PROVIDE YOU BY THIS ENDORSEMENT MAY NOT MEET MEXICAN AUTO INSURANCE REQUIREMENTS.

PAPCHANGES

ISO made minor alterations to the Miscellaneous Type Vehicle Endorsement PP 03 23, introducing a mold exclusion under coverage Part D and adding a definition of “fungi.” ISO also revised the exception to Exclusion 7 to reinforce that coverage is excluded for any motor home a named insured does not own when used as a temporary substitute for a covered motor home.

ISO revised the PP 03 28 Miscellaneous Type Vehicle Amendment (Motor Homes) Endorsement to allow an insured to purchase liability, med pay, comp and/or collision when a motor home that is “ your covered auto” is rented to others.

ISO revised the PP 03 34 Joint Ownership Coverage Endorsement to provide for a listing of joint owners and, if the person is a nonresident relative, space for name and address. ISO removed coverage information from the endorsement because it’s found in the declarations.

ISO altered the PP 03 35 Auto Loan/Lease Coverage Endorsement to address handling of interest from deferred payments and primacy of coverage when another source of gap coverage applies to the loss.

ISO added other-than-collision coverage to the schedule of coverages that can be suspended under the PP 02 01 Suspension of Insurance Endorsement.

ISO revised the Named Non-Owner Coverage PP 03 22 Endorsement to make physical damage coverage an available option. ISO revised the PP 13 03 Trust Endorsement to provide more flexibility to accommodate various trust structures.

New Endorsements

The PP 33 05 Full Safety Glass Coverage Endorsement applies when other-thancollision coverage is in effect and the auto is listed in the endorsement.

PAPCHANGES

The Key Replacement and Related Services Coverage PP 33 27 Endorsement pays, without application of a deductible, for: Reasonable expenses to get into the car if the fob is lost or stolen.

The cost to replace and program keys or key fobs lost or stolen. The schedule for each listed auto shows a maximum limit.

The Pet Injury Coverage PP 33 31 Endorsement extends coverage from Part D and applies only when all of the following conditions are met:

Collision and other-than-collision coverage applies to at least one vehicle.

The dog or cat owned by “you” or a “family member” is in the car at the time of the accident.

The car qualifies as “ your covered auto” or a “non-owned auto.”

Covered costs include vet expenses or costs to cremate or dispose of the pet incurred within one year of the date of loss. The limit is per occurrence.

The PP 33 30 Child Restraint System Coverage Endorsement provides coverage to replace a child restraint system following an accident. Coverage extends from Part D and applies only when all of the following conditions are met:

Collision and other-than-collision coverage applies to at least one vehicle.

The child restraint system is owned by “you” or a “family member.”

The child restraint system is inside “ your covered auto” or a “non-owned auto” at the time of the loss.

The schedule or declarations shows a maximum limit, which provides replacement with like kind and quality without application of a deductible.

The PP 33 10 Replacement Cost Coverage Endorsement replaces actual cash value loss settlement with replacement cost. To qualify for replacement cost, all of the following conditions must be met:

The covered auto must be added to the policy and the loss must occur within 24 months of purchase, with the insured as the original owner.

The covered auto must have less than 24,000 miles at the time of the loss. The covered auto must suffer a total loss. There is no automatic coverage for a newly acquired auto or a leased vehicle. Coverage is subject to a deductible, and the amount of coverage is limited to the amount to replace with a new vehicle of the same make, model, trim level and equipment, or its equivalent. Wording does not specify model year. If the same make, model, trim or equipment is not available, the carrier will pay for one similar, but not to exceed 110% of the Manufacturer

Suggested Retail Price of the covered auto. The Additional Resident of Your Household PP 33 37 Endorsement was developed to extend coverage to individuals such as live-in nannies, roommates, legal domestic partners and significant others who do not own but have access to the named insured’s vehicle(s). The endorsement:

PAPCHANGES

Allows the naming of an additional resident. Amends the definition of “family member” to include the named resident. Specifies that the carrier is depending on the insured to be truthful. Requires the insured to notify the carrier if residency changes.

The Personal Property Coverage PP 33 42 Endorsement was designed to extend homeowners-like personal property coverage to personal property anywhere in the world. Coverage is provided on an open-perils basis and paid on an actual cash value basis, with a replacement cost option.

Note that although ISO filed these changes with an effective date of Sept. 1, 2018, not every carrier adopted the changes immediately, and two states did not adopt the changes at all: Hawaii and North Carolina. Additionally, ISO does not establish effective dates in four states: California, Colorado, Texas and Virginia

For more details on this topic, check out the VU’s webinar and Risk & Reality Report.

UNDERINSURED CONCERNS

"Majority Of Home And Auto Policyholders Are Concerned They Are Underinsured"

This is the headline based on polling in midOctober 2022. HUB sponsored the research and kudos to them for doing so I encourage everyone to find the survey results and read them. One key point is that 59% of policyholders are concerned their insurance coverage will not be adequate in the event of a claim. The other 41% are delusional, ignorant of their lack of coverage, or extremely overconfident

About 100% of policyholders are materially under-insured. I have audited tens of thousands of personal insurance files, conducted hundreds of E&O audits, and taught hundreds of insurance coverage classes The vast majority of agents do not offer adequate coverage due to some combination of the agent not knowing coverage options well enough to offer their clients the needed coverages and/or because they think (and often know) that their clients will not buy adequate coverage so why waste their breath?

Another reason is the discombobulated use and quality of Replacement Cost Estimates. Another

far more nefarious reason, a dirty secret that those who work in the trenches daily know, is that some carriers and agents purposely, quite purposely, sell inadequate coverage because that is how they get to a lower rate. The most common example is, "You only need to insure your home to 80%..."

Rationalize that thought process all you want, but it is bad advice and the number one reason it is used is to convince a homeowner that the agent is looking out for them by finding a way to cut their premium. Premiums are lower because coverage is lower, i.e. inadequate.

A friend asked me recently about the barrier agents encounter when offering better coverage. The barrier is that the insured does not want to pay more for insurance. They do not want to pay more and in fact, they do not want to pay anything because virtually no one but arsonists want to buy insurance. Insureds buy the base amount because they are forced to do so and think that is all they need No one has ever taken the time to explain to them why and what buying more than the minimum, which is almost always inadequate, will do for them. Consumers will not buy the

UNDERINSUREDCONCERNS

additional coverage they need if no one ever takes the time to explain the coverage and the benefits of that coverage to them. No magical osmosis will happen. No transcendental thought process exists when it comes to insurance knowledge.

Offer the coverage and if the consumer does not understand it, explain it. Let them make an educated decision. Let them make a decision regarding the trade off between paying more for the coverage they need or self-insuring. Is $50 more in premium worth it to them to avoid becoming their own insurance company?

Summary ReportAmend Rule 10Continuing Education

Louisiana Department of Insurnace

The Louisiana Department of Insurance (LDI) is in the process of amending Rule 10 – Continuing Education. The purpose of the amendment to Rule 10 is to (1) remove the first renewal exemption for completion of continuing education as prelicensing education is no longer required; (2) include required information that must be submitted to qualify for continuing education credit for participation in professional association activities; (3) clarify what data is required in association with the renewal of a continuing education course; (4) modify terminology relative to accident and health insurance and the commissioner; and (5) provide for technical changes. If you have any additional questions, please submit them to regulations@ldi.la.gov.

View Rule 10 here.

If you have any questions, please submit them to regulations@ldi.la.gov.

A natural disaster is a terrible thing to endure. The loss of life and property can be devastating If you're an insurance agency owner, a natural disaster like a hurricane can overwhelm your staff with claim requests, which doesn't help anyone, including the customer. In fact, it's recommended that people who are victims of natural disasters call their insurance provider as soon as possible

With these simple steps, you can ensure that your clients quickly file their claims, and your employees don't get swamped.

1) Reach Out Before the Natural Disaster Occurs

Weather forecasts are extremely accurate these days and can predict when and where a hurricane is most likely to make landfall. As an insurance provider, you can and should reach out to your

clients 48 hours beforehand via text and email. Every client that is in the presumed affected area gets a text message with the form to file their claim.

This lets them know that you're there for them. Include a link that lets them begin the claim process with your agency should they experience a claim.

2) Process the Form that Your Client Filled Out

The upside to your client filling out this form ahead of time is that you can categorize it specifically as a “catastrophe claim." Using your company's customer-relationship management software, you can then initiate a tailored set of automated and manual responses.

SMOOTHCLAIMS

3) Respond to Your Client's Form

Your client should receive a set of personalized automated messages that help them with everything from damage control pointers to how to reduce further damage. This should prevent your phone lines from being flooded with calls.

4) Use Your Remote Team

Now is the time to utilize your remote workers who don't live in the disaster-affected area. They should have electricity and full internet access, so route all your calls to them. Our office outsources part of our service to virtual assistants in the Philippines. This is their time to shine. We create a duplicate version of the form above for our remote team, except this form has built-in scripts that tells them exactly what to say. When Hurricane Sally hit our area in 2020, my office was filing claims and answering phone calls immediately as if it was a normal day. Our competition didn't get power or phone lines back until a full six days later.

5) Bring In Your Local Team

At this point, nine out of ten claims should already be in your queue and ready to file. Now you can have your local team call each individual client to speak with them one on one. You can offer help and advice during this step.

6) Begin Tracking Your Claims

Use your customer-relationship management software to track each claim along the way, from inception to payment. You should communicate with your clients both in person and automatically throughout this process. Let your clients know that you're available for any questions that they may have. Be sure to clearly define your role as a retail agent and not a carrier.

7) Track and Map Your Claims

Using Google maps, you can create a color-coded mapping system that shows the location of your clients' claim, and which carriers are managing them. This is a good visual tool that allows carriers to see how they're doing in relation to their competition.

For more great tips from Flowers, visit his podcast The Insurance Guys.

TIME TO KNOW YOUR AGENCY'S VALUE

Over the past several years I have worked with many agency owners across the country helping them understand the value of their agencies. It is some of the most rewarding work I have ever done, and I have learned a lot about agencies and agency owners as a result of this work. There is a common perception among agency owners in our industry that you only need to know the value of your agency when you are getting ready to sell or retire – that is 100% false. Through hundreds of conversations with agents, I have put together some of the most common reasons why so many agency owners hesitate to start the process of knowing their agency's value

Time

So often I hear “I've been meaning to do this for years, but I could never find the time." Time is the number one reason given why agency owners do not know the value of their agency. I know agency owners are busy and wearing many different hats. Their focus is on taking great care of their clients, building a great team and running their agency. Far too often, taking care of the tasks that are time sensitive leaves little time left over to get to

the things that do not HAVE to be done. The thought of gathering information needed to complete a valuation report for your agency may seem like a daunting task given the system limitations or flexibility. Putting off knowing the value of your agency may be one of the most costly decisions an agency owner can make because you lose the gift of time Investing the time to know your agency’s value is critical to you, as it will provide you with insights and opportunity to reallocate resources, invest in growth and ultimately increase your agency’s value over time. Without that insight you could be missing opportunities, the long-term impact of which can be significant to you, and your agency. I recognize time is valuable and work hard to streamline the process and information needed to provide you with the insights you need know your agency's value and plan for your future.

Assumed Agency Value

Many times, agency owners share that they already know the value of their agency – “It’s one and a half times revenue, right?” or they share what they know about the last few agencies that

Carey Wallace Agency Focus LLC

AGENCYVALUE

they know who sold. All agencies are not created equal. When you use revenue as the only factor in valuing your agency you are forgetting that your agency may be growing faster, have less risk, be better positioned for future growth, have stronger carrier partners, have superior processes, systems, and marketing in place that are driving better performance and profitability. There are many factors to consider in valuing your agency and using only revenue or other examples of transactions is not a good reflection of your situation, timing or specific strengths or weaknesses. In many cases, your agency is your largest asset, and it is worth knowing the true value, not just assuming you know.

Fear

The last factor that prevents agency owners from taking the step to know their value is best described as fear. Fear of the unknown is difficult and applies to a few areas. First, no agency owner wants to learn that their agency’s value is not what they think it is or assumed it would be. In addition, many are afraid that they will not be able to transition their agency to the next generation. That may be because it has grown to a size that make make that transition difficult financially for the next generation. The most common fear is really about the owner. The thought of starting the process by getting a fair market valuation feels to many agency owners like the beginning of the end of their career. So many agents have worked their entire lives in their agency and the thought of retiring is hard to imagine. They cannot imagine what they will do, and so it becomes scary to even start the process. I can’t tell you how many times I have heard, “I’m not ready to retire.” or “I’m not sure what I would do in retirement.” This feeling is completely understandable for many the agency is a reflection of their life’s work, but putting off knowing the value of their agency may be the worst thing they could do for themselves and their agency.

Take the Time

What many agency owners do not realize is that knowing the value of your agency is important long before you are ready to retire. Each agency is unique so assuming the value is a dangerous practice that could be very costly, and finally knowing the value gives you the power to change it. In this process agency owners learn far more than a number. They learn about important benchmarks that can impact how they think about allocating their resources, the risk factors inside their agency and what they can do to mitigate them, and most importantly the actions that they can take to increase their value. Going through this process, gives you the insight you need to make informed decisions about running your agency. Waiting until you are ready to retire can be very costly decision as there will be no time to utilize all that you learned to maximize the value of your agency. To learn more, visit www.agencyfocus.com.

AIG

Insurance for homes, cars, fine art, jewelry and other material assets is a critical part of wealth management, yet many still overlook it. Consider the following suggestions to help you protect what you ’ ve acquired:

It’s good to have all your eggs in one basket. You make significant purchases over time, so it’s common to insure them in different ways. However, this fragmented approach makes insurance more difficult and expensive to manage. Consolidation with one independent insurance advisor and one carrier simplifies paperwork and helps avoid coverage gaps.

Seek out the specialists. Most insurers are not equipped to address complex risk management needs. Consult an independent insurance advisor who focuses exclusively on affluent clientele. He/she can connect you to custom-tailored solutions that you cannot access directly.

Recognize the value of personal liability insurance.

Excess liability (umbrella) insurance responds to claims of personal injury or property damage, and obtaining higher coverage limits is more affordable than one might think. As jury verdicts continue to escalate into the tens of millions, this is not an area on which to skimp.

Replacement costs often exceed the real estate market.

If you had to rebuild your home from scratch, could your policy fully cover the expense? Insurance values should be based on replacement costs. Despite fluctuations in a home’s market value, materials and workmanship costs for custom properties typically hold strong or increase over time.

PERSONALINSURANCE

Collections require special treatment. Distinct coverage is available for art, jewelry, wine and other collectibles, yet many include them on a homeowners’ policy and diminish their protection. Homeowners’ policies generally cap limits on “contents” coverage, and items may be subject to depreciation Insuring collections appropriately means broader, more flexible protection.

Evaluate the health of your insurer. In the event of a hurricane, wildfire or other catastrophic event, will your insurer be able to pay your claim? Look for financial stability, substantial liquidity and longevity in the business when choosing your insurer.

Read the fine print. Don’t wait until claim time to find out what is (or isn’t) protected. A high net worth carrier is more likely to address the special circumstances that come with wealth. For example, you can obtain insurance to address lawsuits filed by domestic staff.

Look beyond coverage. Expect more from your insurance carrier. Look for additional, in-house services to minimize the risk of property damage, safeguard collections, simplify claims and promote family safety.

PERSONALINSURANCE

Keep your options open.

The personal insurance landscape is always evolving. If you’re not periodically presented with options, it may be time to find a new independent insurance advisor.

Rethink the role of insurance. There are two costs of insurance: the policies themselves and the hidden costs of a claim out-of-pocket expenses, lost time and frustration.

With proper management, insurance becomes more effective and affordable.

2023 TRUSTED CHOICE MARKETING REIMBURSEMENT PROGRAM

Trusted Choice will reimburse a portion of expenses incurred in 2023 by Big “I” members for co-branding advertising and marketing materials or making certain digital improvements for your agency.

Reimbursement Allotment

All agencies are eligible for up to a $1000 reimbursement for co-branded marketing and certain digital improvements. This is a 50% match base on one allotment per member agency (limited to one location.)

Ways to Qualify

Co-branding: Use of the Trusted Choice logo on consumer facing advertising. For access to pre-produced advertising materials visit our Marketing Campaigns that can be customized for your agency free of charge by Trusted Choice staff. There are print, digital, video and radio ads available.

TRUSTEDCHOICE

Digital Co-branding: Use of any of the Trusted Choice customizable marketing materials or brand creative that includes the Trusted Choice logo. This includes video production and advertising costs (display ads, social media ads, YouTube etc.)

Traditional Co-branding: Certain traditional advertising options are eligible for reimbursement (billboards, radio, print, client incentives, and some sponsorships), provided they are co-branded with the Trusted Choice logo. Stationary, business cards and other office supplies are NOT eligible for reimbursement We encourage you to seek guidance from a Trusted Choice staff member with questions regarding eligibility via trusted.choice@iiaba.net

Digital Improvements: Reimbursement is available for your agency to make strategic digital improvements for your agency using one of the providers listed on our vendor comparison site as "Preferred Provider”. You can utilize the funds with multiple vendors during the year up to the limit.

Guiding Principals of the Marketing Reimbursement Program

The program allows for any eligible activity involving the Trusted Choice logo in external messaging with consumer impact for members; and for an updated digital presence for members.

The application must provide reasonable documentation that an expense was incurred and paid.

All reimbursements are 50% of the amount spent to the maximum of $1000 reimbursement. To qualify for the full $1000 reimbursement, the member must provide documentation that $2000 was spent.

TRUSTEDCHOICE

Applications for reimbursement can be made all at once, or as expenses are incurred. In no case will a member be reimbursed more than $1000.

The nature of the expense is reasonably correlated to the external messaging and promotes the Trusted Choice brand to consumers or qualifies for digital improvements by a preferred vendor. Reimbursement for a website requires that the Trusted Choice logo be displayed on the website’s home page. Only expenses and invoices incurred in 2023 are eligible for reimbursement.

The MRP will not reimburse ongoing expenses like directory listing, expenses for phone-book type advertising or website hosting/maintenance outside of our preferred vendors

Continued from page 44

Important Application Information

To apply for reimbursement, a member must submit to Trusted Choice:

A completed reimbursement form. Applications can be submitted on our website or emailed to Trusted.Choice@iiaba.net. For applications requesting reimbursement for co-branding, a design proof/sample/picture of each of the materials to be reimbursed (please send in color.)

For applications requesting reimbursement for digital improvements, invoices or receipts showing proof of payment are required Please include a description of the work that was done.

All reimbursements are paid via direct deposit only, so members will also need to submit their W9 and banking information (voided check).

TRUSTEDCHOICE

Applications are considered in the order in which they are received until available MRP funds have been depleted A submitted application is not a guarantee of reimbursement Applications will be accepted through February 2024, however the program may close sooner at Trusted Choice’s sole discretion. Please allow 8 weeks for processing.

Trusted Choice reserves the right to deny any request for reimbursement for any reason including use of the Trusted Choice logo in a manner that is not consistent with the Trusted Choice Brand Style Guide or the guidelines of the MRP. Only the Trusted Choice logo is eligible for reimbursement. If you are unsure about an item or use of the logo, want to get pre-approval of an item, or need to check if your agency is eligible for any reimbursement, please contact us at Trusted.Choice@iiaba.net or call (800) 221.7917.

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