February 2022 Louisiana Agent

A MONTHLY PUBLICATION OF THE INDEPENDENT INSURANCE AGENTS & BROKERS OF LOUISIANA

LOUISIANAAGENT FEBRUARY 2022

Read more from Jeff Albright on page 6

What can agents do to get hurricane claims paid faster?

By Ben Albright VP of Strategic Initiatives Page 10

Are YOU the Future?

Carey Wallace Agency Focus Page 12

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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

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

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

RHONDA MARTINEZ Director of Insurance Programs rmartinez@iiabl.com (225) 236-1352

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

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

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CONTENTS TABLE OF CONTENTS & FEATURED STORIES

02 IIABL STAFF At your service!

17 BECOME AN IMS SUB-PRODUCER Independent Market Solutions

20 A DARKER WEB By: Rob Berg, Executive Director, ACT

26 10 PREDICTIONS FOR 2022

From Industry Experts By: Kim Hendrick, CPCU, CIC, Enterprise Sales at ePayPolicy

31 ALL WORKERS WILL MAKE THIS BIG CHANGE IN 2022

According to a Standford Economist who studies Remote Work

35 ANOTHER 'ABOVE AVERAGE' HURRICANE SEASON

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2022 LOUISIANA LEGISLATIVE SESSION

By Steve Hallo

38 HOMEOWNERS' INSURANCE & FIREARMS

By Patrick Wraight, Director of Insurance, Insurance Journal's Academy of Insurance

43 HOW TO MAKE YOUR AGENCY FUTURE READY IN 2022 Dealing with capacity after a year of hurricanes

46 180 DAY 'LIMITATION' IN THE

COMMERCIAL PROPERTY POLICY

By Chris Boggs

GET HURRICANE CLAIMS PAID FASTER

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48 CONTRACTUAL RISK TRANSFER CAN

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ARE YOU THE FUTURE?

TAKE OVER & RUIN YOUR DAY

By Chris Boggs

51 CATALYIT CORNER Website ADA Compliance

52 IIABL EDUCATION UPDATE 51 ADVERTISER INDEX 18153 E. Petroleum Drive Baton Rouge, LA 70809 Ph: (225) 819-8007

www.iiabl.com

55 INDUSTRY PARTNERS 56 IIABL BOARD OF DIRECTORS

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By Jeff Albright, IIABL CEO The Republic, especially the insurance industry, is not safe! The 2022 Regular Session of the Louisiana Legislature starts on Monday, March 14th!

After two historic years of hurricanes, the Louisiana property insurance market is in tatters, policyholders and legislators are frustrated, and the result is a very dangerous legislative session.

Policyholders and legislators want to pass legislation to require insurance companies to pay claims more efficiently after a hurricane.

Insurance companies are not sure they want to continue writing property insurance in Louisiana.

Improvements need to be made in catastrophe claims response, but if the Legislature requires more from insurers than the carriers think they can reasonably provide…the already awful property insurance market could get much, MUCH worse!

IIABL has been working diligently for months preparing for this legislative session. We have met with legislators to explain the need for positive reforms, but the dangers of brutalizing insurers.

IIABL has prepared several bills for introduction into this legislative session to help improve catastrophe claims response without blowing up the property insurance market.

HB 521 is a bill by House Insurance Committee Chairman, and longtime IIABL member agent, Mike Huval. The bill requires insurers to maintain detailed catastrophe response plans that address how they will handle catastrophe claims. The plan must address how many adjusters they will need, how they will provide the necessary adjusters, how they will handle the logistics of maintaining adjusters in the field, how they will provide sufficient communications resources This is the most DANGEROUS legislative session for policyholders and agents, etc. in my 34 years at IIABL. There are a large number The Commissioner of Insurance must of bills that could do significant harm to the approve the plans and has Louisiana insurance industry. We ALL need to enforcement authority to ensure that work together to educate legislators as to the insurers are prepared to pay claims extreme difficulty in the property market, the after future storms. IIABL is working need for new insurance companies and new very closely with Insurance capacity in the market, and the danger of Commissioner Donelon, and HIC overzealous legislative reforms that could reduce Chairman Huval to pass this insurance markets in our state. important legislation.

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LEGISLATIVESESSION SB 163 by Senate Insurance Committee Chairman, Kirk Talbot, will require Commissioner Donelon to promulgate a standard policyholder catastrophe claim disclosure that insurers must provide to claimants at the time of the loss. Unfortunately, policyholders do not read their policy, the statutory policy disclosure, or explanations that their agent may provide about their insurance coverage. Until they have a claim, they don’t care!

Providing information to the policyholder at the time of the claim will manage their expectations and prepare them to deal with their claim. The disclosure will explain how the claims process works, how they should minimize loss and document their claim, their rights under the law, how windstorm deductibles work, the difference between replacement cost and ACV, how to make supplemental claims, and how to file a complaint with LDI if the claim is not handled properly. IIABL and Commissioner Donelon are working closely with Chairman Talbot on SB 163.

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Continued from page 6 Louisiana has dealt with hurricanes and difficult property insurance markets for many years. One problem that has arisen in the last two years, that we have never had to deal with in the past, is insurance companies nonrenewing policies on properties that were damaged in the storm before the policyholder has been able to repair damages.

In some cases, the non-renewals have come before the claim was even paid! Damaged properties are uninsurable in the private insurance market, and although Louisiana Citizens can insure some of these damaged properties, Citizens cannot insure all the damaged properties from the past two years.

IIABL asked SIC Chairman Kirk Talbot to introduce SB 162 which would prohibit insurance companies from nonrenewing or cancelling insurance policies on properties damaged in a hurricane until 90-days after repairs are completed. There are some safe harbors in the bill

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LEGISLATIVESESSION for insurers which would allow them to cancel or non-renew if the premium is not paid or the policyholder unreasonably delays repairs.

Some insurers are pushing back against this bill because they want complete freedom to “manage their books of business” after a storm. While we appreciate their desire to manage their business, that should be a long term effort not an in-and-out process, and the whole purpose of the property policy is to allow policyholders to rebuild. They can’t do that if they can’t maintain coverage on the damaged property. We believe that limiting insurers’ ability to cancel or non-renew policies (only those properties that are damaged and only for the period that it takes the policyholder to rebuild) is a reasonable restriction that allows them the flexibility to manage most of their exposure and charge adequate rate while protecting the policyholder from becoming uninsurable. IIABL is working with various insurers to explore possible amendments to this

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Continued from page 7 bill to address their concerns while maintaining coverage for policyholders.

These are three important bills that IIABL developed to address the concerns of our agents and their policyholders. There are lots of other important bills that IIABL will inform you about in the coming days. Stay tuned!

WHAT CAN AGENTS DO TO GET HURRICANE CLAIMS PAID FASTER? Ben Albright IIABL Vice President of Strategic Initiatives If you are in Louisiana, and you have not been living under the proverbial rock, you know that people are not happy with how slowly hurricane claims have been paid over the past two years. Policyholders are frustrated, legislators are frustrated, agents are frustrated, and do you know what: insurance company people are frustrated too. Most of the blame gets laid at the feet of the insurers, and rightly so in many cases.

Responding to a catastrophe the size of the recent hurricanes is an incredibly difficult task, and many insurers were not prepared for that challenge. There is plenty of blame to go around. Policyholders are legally responsible, under Louisiana law, for reading and understanding the insurance contract that they sign, but it is rare to find a policyholder that has actually read the policy language.

And (I know this is shocking to our agent-centric audience) agents haven’t been perfect, either!

So, what can agents do to help the company pay claims faster? After all, companies have been

disintermediating agents from the claims process steadily for years.

Gone is the agent’s claims draft authority. Gone are the local claims offices where an agent might call an adjuster that he knows personally at the company. In most cases, companies encourage the policyholder to report directly to the carrier’s 1-800 number, rather than contacting the agent to file a claim at all. So, agents have been pushed to the sidelines in the claims process. All that is left for agents is to educate your clients about the claims process, advocate on their behalf when a company is not living up to their end of the bargain, and otherwise, wait and hope: completely at the mercy of the company’s adjusters to deliver on the promise you sold to the policyholder.

The biggest thing that agents can do to speed the claims process occurs long before the storm even makes landfall. Get good, updated renewal information! Too often, agents renew everything “as expiring” for years on end without updating the

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HURRICANECLAIMS applications, underwriting information, and contact information. This outdated information can cause huge problems when a claim occurs. Companies and brokers have told IIABL that two of the drivers delaying claims are caused by outdated information: 1. Outdated contact information a. Make sure that your insured updates their contact information on a regular basis.

When you make the ask, put it in terms of a potential claim: “is this the best number for the company to contact you in the event of a claim?” b. Get cell phone numbers and email addresses. After a storm, many people are forced out of their homes and offices. The landlines have suddenly been rendered useless. While some people are hesitant to give out their cell numbers and emails in an age of perpetual spam, it is important for an agent to push to get mobile numbers and email addresses, so that the company can reach the policyholder when processing a claim after a storm.

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Continued from page 10 1.

2. Updated loss payee information a. Mortgages are sold frequently in today’s financial market. It is rare for a mortgage to terminate with the same company that initially made the loan on the house.

Virtually all home mortgages are conglomerated into packages financed by big national banks. b. When the claim comes, if the loss payee information has not been updated, the check will be cut listing the wrong mortgagee. The insurer will require proof that the mortgage was sold or paid off in order to make a change before they can reissue a check to the policyholder.

Regularly checking the loss payee information on renewal apps with your insured is crucial to ensuring a timely payment in a claim.

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Carey Wallace Agency Focus

Independent Insurance Agency Consulting Helping you grow your agency!

Keeping and retaining talent has been on the minds of agency owners from the day I entered this industry.It has remained in the top 5 concerns of agency owners in literally every survey I have ever read. With the current movement in our workforce, my guess is this topic will remain at the forefront for the foreseeable future. When this topic comes up, there is a great deal of focus placed on what current owners are doing to attract and retain great talent, but what about the other side to this conversation. I believe that in order to create a meaningful career and future within an agency, the responsibility lies with both the owner and the potential future owners. If you are a hungry, smart,

energetic leader who sees the incredible opportunity that exists in our industry to become a business owner, my question to you is, what are you doing to build your pathway to ownership?

Opportunity is everywhere According to the latest Agency Universe Study, there are 36,000 agencies across the United States. Over 49% of those agencies have owners that are 56 or older, which means that half, 18,000 agency owners, will be at or past retirement age in the next 5-10 years and thinking about transitioning ownership in their agency.

According to the

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THEFUTURE same study, the majority of agency owners want to transition internally to a current partner, employee, or family member. There will never be a better time to position yourself as a future agency owner. In addition, independent insurance agencies are incredibly strong businesses – seriously, name another industry where 85-90% of your revenue typically renews. I am not suggesting that there aren’t challenges but, as far as opportunities go, this industry is rich! In fact, I still think it is one of the best kept secrets! So, the question is, with all of this opportunity, what are you doing to position yourself as a future owner?

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Continued from page 12

commitment by making a difference and being innovative. The issue is, at our core, these perceptions and behaviors conflict. Having an awareness and ability to move past your own tendencies and meet people where they are is a skill that is incredibly important for leaders to possess. It is important in every relationship that we have, so having an appreciation for the different perceptions that we all have can go a long way in bridging this generational divide and demonstrating your leadership abilities. Small changes like being present or meeting in person when discussing important topics can go a long way. Seeking out advice and taking the time to Bridging the generational divide consider and incorporate that advice into your I think we all talk about how to communicate with approach builds mutual respect and shows that the next generation, but have you considered what you value their opinions and shows your ability to you are doing to connect with the generations that relate to all different types of people. came before you? Baby Boomers are wired to view hard work and commitment based on hours and Broadening your view time while that is far less important to GenX and Have you ever heard that you should dress for the Millennials who demonstrate their worth and position you want, not the one you have? Using

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THEFUTURE that same logic, you should think like the position you want not the position you have. Far before you have the title of owner, you can think like one by broadening your view and considering all aspects of the business not just your perspective. When a problem arises, ask yourself how the problem impacts all roles inside the agency, your customers and your partners. Ask questions about the business, and participate in creating solutions.

Make the shift from sharing problems to sharing solutions.

Leaders have to make some difficult and sometimes unpopular decisions, and it is incredibly valuable when others are able to rise above their own viewpoint and see the bigger picture. What are some ways you can do this and support the current owner? By taking this approach, the current owner will be able to picture you in a leadership role more easily.

Find your mentor and value their guidance If you want to set yourself up for success, one of the best things you can do is surround yourself with people who are smarter than you, have different experiences and hold different viewpoints. We all have blind spots, so seeking out a diverse group of people who can make you think is powerful. They will be able to maintain a more holistic view of both the opportunities and challenges inside our industry. The industry is full of people who are willing to share and mentor each other, however, I would just caution you from surrounding yourself only with people who look, think and talk like you. The best predictor of the future is the past, except when you learn from it. The knowledge that many veterans in our industry posses can go a long way in helping you shape the future.

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Continued from page 13 If you want to set yourself up for success, one of the best things you can do is surround yourself with people who are smarter than you, have different experiences and hold different viewpoints. We all have blind spots, so seeking out a diverse group of people who can make you think is powerful. They will be able to maintain a more holistic view of both the opportunities and challenges inside our industry. The industry is full

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THEFUTURE of people who are willing to share and mentor each other, however, I would just caution you from surrounding yourself only with people who look, think and talk like you. The best predictor of the future is the past, except when you learn from it.

The knowledge that many veterans in our industry posses can go a long way in helping you shape the future.

Planning for change Often times young leaders are rich with energy, grand ideas, and aggressive goals – it is what makes you so incredibly attractive and, in many ways, frightening. For someone that has all of that energy, the current owner can feel like an anchor.

For you, the inaction is discouraging and for the current owner the ready, fire, aim approach is frightening. The truth is your energy and approach may remind them of themselves twenty or thirty years ago. As with everything, the right path forward most likely lies somewhere in the middle. I would suggest sharing ideas with a thought-out plan that encompasses as many aspects as possible including time, cost, training, and supporting data to support your plan. Share ways to measure the success or failure of the idea and a process to implement. The more comprehensive and well thought out, the more trust and confidence you will instill that your ideas have merit, and you are going to be thoughtful in your approach.

Financial commitment In addition, if you want to be a future owner, are you preparing financially? Are you prepared to purchase an agency? In order to secure a loan, you will need sound credit and the ability to put 10% down. Becoming an owner will require taking on both the financial risks and rewards of the agency, so the more you can do to gain an understanding of the business and all that is involved with running the agency, the better prepared you will be to become an owner. This topic is sensitive, but expressing an interest to learn and understand how the business works will speak volumes. Don’t expect to get full access to the inner workings of the business the first time you inquire, start small and be patient. This process is a marathon, not a sprint and with the right mindset and expectations everyone involved wins.

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Continued from page 14 Change takes patience, trust and often times is a winding road with lots of twists turns. For those who are willing to be thoughtful and participate in building a pathway to a future that meets both their needs and instills confidence in the current owner – there are endless opportunities and a very bright future ahead. Remember a great deal went into building the business that exists today, and the thought of trusting someone else with your life’s work is incredibly difficult. There are many ways to ease those fears and instill confidence that their legacy will be in good hands.

So many agency owners are looking to find the right person to trust with all that they have built and provide them with the same opportunity as that given to them. To many, it feels like that person may be a unicorn. My advice to you is - be that unicorn! For more information visit www.agency-focus.com.

FEBRUARY 2022

BECOME AN IMS SUBPRODUCER Independent Market Solutions

Your association helps agencies gain access to useful insurance markets through its investment in Independent Market Solutions (IMS). This members-only program allows agents to quickly connect with carriers and find insurance products suitable for their clients’ needs.

IMS offers very competitive terms, and there is no cost to join. To start taking advantage of this exclusive member resource, you must complete IIABL’s market access application. Before you begin the application, please make sure you have quick access to the following, which you’ll need to complete the process: Agency and individual agent license numbers Agency Federal Employee ID Number (FEIN) NOMADIC

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IMSSUB-PRODUCER

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Agency E&O policy information Policy count information Premium volume information Agency and individual agent license numbers. Copies of the licenses will be required to upload.

Please include a copy of all individual agent licenses (in one uploaded file) who would like access to the carrier’s quoting system.

A sub-producer agreement will also be required as part of the IMS sign-up process. After uploading the application, a link to the sub-producer agreement document will appear in your application confirmation email. Once you complete both steps, you will receive a copy of the application and subproducer agreement.

Applications must be submitted separately for agencies that have branches with separate FEINs. To learn more about IMS and how to sign-up in your state, click here.

A DARKER WEB

Ron Berg, Executive Director, Agents Council for Technology

There's never been a better time to be an independent insurance agent. With the plethora of technology and workflow solutions to create the most efficient tech array possible, independent agents are now able to serve consumers the way they want, when they want—and agencies can greatly increase their geographic reach in the process.

The volume of functionality is amazing: management systems, customer relationship managers, lead and prospecting tools, quoting platforms, mobile apps, chat, website, marketing, VoIP and so much more. Agencies have more options than ever to customize their operation.

And yet, with every tech implementation, there are countless cybersecurity concerns. Gone are the days of quickly opening any email without closely scrutinizing it or freely sharing identifications and passwords. An agency can no longer get away with not having an in-depth cyberattack prevention plan.

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DARKERWEB Bad Actors What's even more concerning? Gone are the days when we could kid ourselves that the nefarious cybercriminals are more focused on hacking a big box store than a local independent agency. The U.S. is the focus of more cyberattacks than any other country, and the insurance industry is one of the top targets. Risk-Based Security's “2021 MidYear Breach Report" revealed that the insurance industry is now the second-most targeted, accounting for 16.93% of all breaches (see bar chart).

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Continued from page 20 intrusions. Ransomware attacks increased 151% in the first half of 2021 compared to the same period in 2020, with 3.47 million attempted attacks, according to a SonicWall report. Add to this the rise of social engineering attacks, primarily via phishing and other email ploys, which rose 270% in 2021, according to SlashNext Threat Labs.

The bad actors gain access with ransomware or by introducing an initial system compromise through a virus or Trojan horse. They then establish a foothold by using their access to escalate their And if just under 17% of all breaches doesn't sound administrative privileges to further search like much, consider that in the first quarter of computers and networks for valuable information, 2021, there were 18.88 billion records lost to such as personally identifiable information (PII). breaches, according to Risk-Based Security's After expanding their presence, they complete report. None of us needs to do the math to their mission of extracting the stolen information. understand that 17% of 18.88 billion is a Keep in mind, this can be months after the initial significant number—but if you're curious, it's 3.21 hack. On average, it takes a business 212 days to billion. identify a breach, according to IBM's “Cost of a Data Breach Report 2021."

Ransomware holds the spotlight for cyber

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DARKERWEB Beyond the potential of losing clients because of the reputational damage, data breaches carry a high cost. One of the major costs is response and remediation. Small business data breaches cost an average of $180 per record of customer PII, according to IBM's report.

The costs associated with a breach can be mitigated by carrying cyber liability insurance, but there are still costs to businesses. And postbreach, if any business is found not complying with state and federal cyber regulations, there can be civil penalties, which vary by state.

Know the Rules The volume and complexity of data breaches are driving the growing number of cybersecurity acts and laws. It started with the Gramm-Leach-Bliley Act (GLBA) and now includes the New York Department of Financial Services (NY DFS), the California Consumer Privacy Act (CCPA) and the NAIC Model Law, which was adopted by 11 states as of December 2021.

To understand the laws applicable in your state go to Mintz Matrix (mintz.com/mintz-matrix), which details statutes in every state, its definition of a data breach, procedures, breach notification regulations and potential penalties for noncompliance with the regulations before and after a breach.

Based on the size and gross annual revenue of your agency, you may be able to file for a regulatory exemption, so be sure to understand your state's regulations.

However, even you qualify for an exemption, some steps still make sense to pursue, such as a vulnerability assessment and data encryption.

The laws create a maze of regulations that agencies must comply with, but we must do everything we can to protect our customers' valuable PII and our businesses.

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Continued from page 21 Are You Covered?

Understanding your customers' cyber coverage needs is key. The Big “I" offers a partnership with Coalition, a leading technology-enabled cyber insurance solution, to give agents access to cyber and technology errors & omissions insurance markets. Coalition provides an online quoting process as well as ongoing monitoring. Learn more at bigimarkets.com/coalition-cyber.

To protect your business, your agency needs cyber liability insurance. Several companies sell cyber liability insurance, and your agency may already work with some of these. But be aware that the cyber liability market is hardening and rates are rising thanks to the growing volume of breaches and increasing breach financial impact.

On average, rates have doubled since the surge in ransomware attacks began, and rising reinsurance costs will drive further rate hikes. As a result, the coverage is in demand. In 2020, the U.S cyber insurance market expanded to $4.1 billion in direct written premium, an increase of 29.1% over the previous year, according to the NAIC. Taking all this into account, it is critical to obtain cyber liability insurance for your agency—and now is the time.

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Prep Steps What are the internal and external How can your agency mitigate cyber risks? A vulnerabilities? thorough information cybersecurity risk What happens if those vulnerabilities are assessment is the first step. It's no small task, but it exploited? How likely would this be? sets your agency up for success and lays out a clear What cyberattacks, cyber threats or security path for a robust cybersecurity plan. The primary incidents could impact the ability of the purpose of a cyber risk assessment is to keep business to function? stakeholders informed and support proper What is the level of risk the organization is responses to identified risks. The risk assessments comfortable taking? also provide an executive summary to help executives and directors make informed security What Next? decisions.

After your agency has assessed its risk, the next steps include developing a Written Information The assessment answers the following questions: Security Plan (WISP) and a response plan in the event a breach has been confirmed, as well as What are the organization's most valuable continuous staff security training. information technology assets?

What data breach would have a major impact That last component cannot be stressed enough. on the business—whether from malware, social A business may have all the protection possible engineering or human error? One very implemented in the form of firewalls, antivirus common answer is customers' PII. programs and real-time intrusion detection, but What is the level of the potential impact of all can be lost if a staff member opens an email and each identified threat? clicks on a malicious link. This applies to the frontline customer service representatives all the

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DARKERWEB way up to agency ownership.

5 Big 'I' Resources Resources are available for independent agents from Big “I" national and state associations. The Big “I" Agents Council for Technology (ACT) provides free resources for all Big “I" agent members across many types of technology and workflow topics.

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Continued from page 23 4) Remote Work Security Guide. The coronavirus pandemic demonstrated that every agency must be fully prepared for remote work and the cybersecurity challenges it presents. Go to independentagent.com/act/pages/planning/remote workguide/remote-work-guide.aspx to access the Remote Work Security Guide.

5) Cybersecurity providers. Check out the matrix of Here are five resources you should take advantage of cybersecurity providers in ACT's Agency Cyber before it's too late: Guide 3.0. These are providers that agencies can partner with to assist assessment, planning and 1) “Agency Cyber Guide 3.0." ACT's “Agency Cyber implementation. However, don't fall into “analysis Guide 3.0" (independentagent.com/ACTCyber) paralysis." Immediate action is critical. Know that breaks down the trends and provides a “12-Step the Big “I" and ACT have your back on cybersecurity Compliance Roadmap." It lays out areas of planning and execution. You can always find help on compliance, such as completing a risk assessment, the Big “I" (independentagent.com) and ACT and direction on how and where to get started. (independentagent.com/ACT) websites.

The “12-Step Compliance Roadmap" includes more details on the following 12 cyber regulation steps as laid out by the GLBA and the NAIC:

Ron Berg is the executive director of the Agents Council for Technology.

This article will be published in the February edition of 1. Risk assessment Independent Agent magazine.

2. WISP 3. Incident response plan 4. Staff training and monitoring 5. Vulnerability assessment and penetration testing 6. Access control protocol 7. Written security policy for third-party service providers 8. Encryption of non-public information 9. Designation of a chief information officer (CIO) 10. Audit trail 11. Implementing multi-factor authentication (MFA) 12. Procedure for disposal of non-public information

2) Agency Cyber-Readiness Self-Assessment. It can be difficult to know where your agency currently stands. ACT created an easy-to-use Agency CyberReadiness Self-Assessment (independentagent.com/ACTCyber). By answering eight questions, you can determine your next strategic steps in your cybersecurity plan.

3) WISP. A Written Information Security Plan (WISP) is a document that details policies and procedures for ensuring confidential data is protected, how it is being protected and who is ensuring it is protected. A WISP includes both administrative and technical safeguards that an agency or small business has in place. ACT also provides a downloadable WISP (independentagent.com/ACTCyberPolicy).

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10 PREDICTIONS FOR 2022 FROM INDUSTRY EXPERTS

By Kim Hedrick CPCU, CIC Enterprise Sales at ePayPolicy As the new year gets underway, we begin to see trends emerge in the world of insurance. By understanding what is likely on the horizon, insurance professionals have a chance to prepare and adapt, ensuring they’re in the best position to thrive.

Digital transformation hasn’t been quick in the insurance industry.

However, it became a necessity due to the situations created by the pandemic. Shelter-inplace orders and social distancing requirements altered the landscape dramatically.

If you want to make sure you’re ready for what’s to come, here are ten insurance industry predictions for 2022 from industry experts.

Kim believes that digital transformation will continue moving forward, even if it was initially a slow start.

“Digital transformation has taken longer in the Insurance Industry, but we are making great strides,” said Hedrick.

(1) Digital Transformation Moves Forward

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10PREDICTIONS “Regardless of the segment you are in – carrier, wholesale, MGA, specialty or retail – your team is more productive today by relying on digital tools that were not even an option just a few short years ago.

“The pandemic pushed us all out of our comfort zones, and we were forced to adopt certain technology quickly that we may have been resistant to before. For me, becoming proficient in six different virtual meeting platforms and mastering online grocery shopping was never a goal, but now that I have, I won’t be going back to doing things the old way.”

(2) Increasing Digital Payments As Kim mentioned above, digital transformation is increasingly the name of the game. While the impact on internal operations is significant, it will also affect how customers engage with insurers.

Just like insurers won’t move away from some of

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Continued from page 26 the technologies they’ve embraced during the past two years, “I think the same holds true for the Insureds that paid their premiums and signed their applications electronically for the first time,” Hedrick stated. “I believe they will continue to expect this type of convenience moving forward even when the pandemic is far behind us.”

“As our industry is adapting to digital transformation and providing Insureds with secure and convenient options for managing and paying their premiums, I think we will continue to see an increase in digital payments.”

(3) Rising Rates Will be the Norm Scott Howell - Owner of iProtect Insurance Services, co-host of The Insurance Guys Podcast Rates increase based on several market factors.

Along with repair and replacement costs, an increasing number of incidents and the rising severity of events can all be factors.

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10PREDICTIONS “Auto and Home rates will continue to trend upwards based on weather-related losses combined with an increase in the cost to repair both home and auto claims,” Howell stated.

“Commercial and Business Auto will in some cases see significant increases depending on the type of risk and geography.”

(4) More Embedded Insurance at Points of Sale Another area that’s seeing growth is embedded insurance at points of sale. Along with being positioned as a convenience for customers, they can bolster the bottom line of companies looking to overcome pandemic-related hardships or other industry challenges.

According to Howell, “the industry will see an increase in embedded insurance at the point of sale as Vehicle Manufacturers and other industries continue to move towards creating another revenue stream to assist with their overall financial performance.” Insurance is a potential profit-driver, making it an attractive target. As a result, insurers should anticipate an expansion in this area, allowing them to adapt to the shifting climate.

(5) Insuretechs Look Beyond Service and Claims Jason Cass - Owner of Agency Intelligence Initially, insurtech concentrated on the service and claims business areas, and with good reason. Those systems supported a range of everyday operations, making them prime targets.

However, remaining competitive requires more than effective service and claims management.

“Insurtechs have catered to the companies on service and claims,” said Cass, “but now they realize that giving agent tools for marketing and sales will help everyone.”

Essentially, during 2022, expect expanding toolsets that focus on areas beyond service and claims, especially capabilities that focus on business expansion and customer retention.

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(6) Workers' Compensation Losses Will Continue to Have an Impact Gabe Nix CIC, AU - Enterprise Sales at ePayPolicy Workers’ compensation costs relating to the pandemic were incredibly high. Considering that COVID-19 was an unprecedented event, the insurance industry couldn’t prepare for such an incident in advance. Additionally, making adjustments to certain policies wasn’t practical at the height of the pandemic, leading to a long-term challenge for those operating in the space.

“Industry estimates for workers’ compensation losses as a result of the pandemic range from $500-$750 million in claims for workers’ compensation carriers,” said Nix. “Profitability for workers’ compensation will take a hit until premium increases take effect.”

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10PREDICTIONS (7) Cyber Re/insurance Prices Will Rise S&P Global

As a side effect of increasing digital transformation, the number of cyber incidents is anticipated to rise.

According to research from S&P global, pricing in the industry will increase in response.

“The trend toward digitalization will inevitably lead to a higher likelihood of cyber incidents,” said S&P Global.

“Prices in the cyber re/insurance market could therefore rise sharply over 2021-2023, even doubling in some cases.”

(8) Automation Is Becoming Commonplace McKinsey & Company

As part of the broader digital transformation trend, AI and machine learning-supported automation is on the rise. According to research by McKinsey & Company, “more than half of claims activities [will be] replaced by automation” by 2030.

(9) Tech-Savvy Talent Will be the Key to Growth William Trainer - Strategic Partnerships at ePayPolicy

Premium growth is expected to continue in 2022. As a result, finding ways to enhance the customer journey will be essential. According to William Trainer, “the lingering 3-year pandemic has only enhanced the need for more insurtech solution development and further digital transformation in the industry which allows insurance professionals to work remotely, and provides customers a pleasant online journey.”

However, that doesn’t mean the transition will be seamless. “One of the greatest challenges for the insurance industry in 2022 will be the ability to find and hire enough insurance tech-savvy talent to effectively manage the growth,” William Trainer stated.

Essentially, without tech-savviness, adapting to emerging solutions becomes challenging. In turn, this can result in impeded growth. By making techsavviness a talent acquisition priority, embracing new systems come naturally, accelerating growth significantly.

(10) Insurance Demand Skyrockets

Jerome Haegeli, Swiss Re Group Chief Economist Research conducted by Swiss Re indicates that insurance demand is increasing and could be poised to break premium records this year.

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Continued from page 28 “Market conditions suggest that positive pricing momentum will continue across all lines and regions,” said Swiss Re group chief economist Jerome Haegeli noted when discussing the research. “Inflation-driven higher claims development in all lines of business, continued social inflation in the U.S. and persistently low-interest rates will be the main factors for market hardening.”

Want More Insurance Industry Tips to Help You Thrive in 2022?

At ePayPolicy, we understand the importance of staying on top of emerging trends and shifting market conditions. That’s why we focus on remaining informed, allowing us to pass valuable information on to independent agents like yourself.

If you’re looking for more tips that can help your independent agency thrive in 2022, we’ve got you covered. Follow us on Facebook for more tidbits, tricks, and insights.

A STANFORD ECONOMIST WHO STUDIES REMOTE WORK SAYS HALF OF ALL WORKERS WILL MAKE THIS BIG CHANGE IN 2022 IT WILL BE NICE TO FEEL SETTLED, WON'T IT? By: Bill Murphy Jr. www.BillMurphyJr.com @BillMurphyJr Economists who study remote work and productivity used to have a big problem: finding groups of workers to study.

To do it right, you needed to identify people who did the exact same job and divide them into two cohorts, with group one working from home and the other working in an office.

A Stanford University economics professor named Nicholas Bloom and a graduate student named James Liang, who was CEO and co-founder of the biggest travel agency in China, came up with a solution. They used Liang's employees for research, studying 250 call center employees who worked from home, and 250 who worked in an office.

I wrote about their study back in 2017. In short, the work-from-home employees were more productive than the in-office ones. But at the end of the study, half of the work-from-home cohort decided that they missed the office, and came back at least part-time.

Thanks to the pandemic, it's no longer hard to find subjects for these kinds of "work from home" studies. And Bloom has kept up his research.

In fact, he wrote recently that we can now predict exactly how the big, pandemic-induced workplace changes we've seen over the last two years will settle during 2022. He says employees will be divided into three distinct groups: (1) Employees who can't work from home (50 percent).

First, Bloom says about 50 percent of all employees simply won't be able to work from home. They'll have to come to an office or other workplace.

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REMOTEWORK If you're running a business that involves retail, or manufacturing, or healthcare -- or most service businesses -- chances are that your employees will fall into this category.

Frankly, these are largely the lowest-paid workers, as Bloom wrote in Baron's, summarizing his projections. Moreover, they're "often angry and upset" that they've had to keep showing up inperson, during the pandemic, while others skipped their commutes and pared their work wardrobes down to a single "Zoom shirt."

Most employers realize they'll have to pay these employees more and perhaps offer some creative flexibility to make up for the lack of ability to work remotely. As an example, maybe you can move employees (if they want) from an eight-hour, fiveday-a-week work schedule to a 10-hour, four-day workweek.

(2) Employees who can work remotely, indefinitely (10 percent)

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Continued from page 31 The second category, which Bloom estimates works out to about 10 percent of workers, are those who can work remotely for good. He predicts that these will be workers who share three characteristics: First, they're highly skilled and working in service roles. The examples he gives include IT support, finance, payroll, and editing.

Second, they haven't seen any real reduction in productivity while working from home; in fact, they may have become more productive.

Finally, for the most part, they're not the workers who have to manage or lead big teams.

Worth noting: the employees in the study that Bloom and Liang did a few years ago involving Liang's company would fall into this category.

(3) Employees who will work under a hybrid model: some remote work, some in-office (40 percent)

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REMOTEWORK Finally, Bloom says that the remaining 40 percent of workers will fall into a hybrid category: These workers who can do a significant amount of their work remotely, but will still need to be in office for some structured, reliable, and significant part of their time.

Bloom pegs them as working perhaps three days out of the average week in the office, and two remotely or at home. These employees' shared characteristics include: Professionals and executives who have university degrees and credentials.

Workers who either have to lead teams or who are part of teams, and "who need face-to-face contact to be productive," as he puts it.

But also, workers who have come to value the benefit of having at least some significant chunk of their week to work from home, thus enjoying fewer commutes and "quiet time."

In short, they enjoy this freedom and are likely to demand it or at least seek out jobs that offer it.

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Continued from page 32 True remote workers, for that matter, can relocate anywhere they want. Already, we're seeing more rural states like Vermont, Virginia, and Oklahoma offering financial incentives to remote workers who will consider moving there (and bringing their jobs, spending power, and tax dollars).

Heck, even foreign countries have been waiving visa requirements for remote workers. Want to live in Barbados, Bermuda, or Costa Rica, for example? They all have programs.

Working from home is going to continue to be a big business in and of itself: technology, culture, and best practices will be big opportunities for growth.

As for offices themselves, well, I'm sorry to say that open offices are now the true wave of the future. It's simply a lot harder to justify private office spaces for people who will only use them 50 percent of the time.

Plus, if the whole point of having people in the What other changes? office is to improve communication and Now, if roughly 50 percent of the U.S. workforce is teamwork, I think hear a lot of talk about not either going to work from home or work in a hybrid letting there literally be walls between them. model for the long-term, you can begin to imagine the second-and third-order effects this could have on a lot of our society.

For one thing, as Bloom points out, we're already seeing a "donut effect" in real estate in which hybrid workers are leaving city centers and close-in suburbs for the more exurban areas around them.

They're willing to endure a longer commute (it's only two or three days a week), if it means a bigger house and yard, for example.

ANOTHER 'ABOVE AVERAGE' HURRICANE SEASON EXPECTED IN 2022 BY: STEVE HALLO This news follows two-consecutive years of higherthan-average named storms.

When Pacific waters are warmed by El Nino there tends to be fewer hurricanes in the Atlantic, CSU research indicated. Additionally, El Nino generates increased vertical wind shear, which can further reduce hurricane activity in the Atlantic. La Nina has the opposite effect. (Credit: NOAA) Indicators are pointing to a higher-than-average hurricane season for 2022, according to an early forecast from the Colorado State University (CSU) Tropical Meteorology Project.

This year’s storm period has a 40% chance that ocean temperatures in the North Atlantic will be above average, which can lead to a more intense hurricane season, according to CSU researchers.

Further, no El Nino will occur this year. When Pacific waters are warmed by El Nino there tend to be fewer hurricanes in the Atlantic, CSU research indicated. Additionally, El Nino generates increased vertical wind shear, which can further reduce hurricane activity in the Atlantic. La Nina has the opposite effect.

The 2022 forecast comes on the heels of the third most active hurricane season on record for named Seasons with above-average activity typically have storms, according to the Insurance Information 13-16 named stores, 6-8 hurricanes and 2-3 major Institute (Triple-I). The 2021 season had 21 hurricanes, the researchers reported. named storms, including seven hurricanes. The

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HURRICANESEASON period saw four major hurricanes (category 3-5) and trailed only 2020 (30 named storms) and 2005 (28 named storms).

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Continued from page 35 Hurricane Ida was the most damaging of the past season, which was projected to be in the top five of most costly tropical storms on record, in terms of insureds’ losses, according to Triple-I. Widespread wind and flood damage in the midAtlantic and Northeast U.S. were major drivers of storm-related losses.

“As the nation’s financial first responders, insurers helped their customers recover economically from the impacts of another very active hurricane season in 2021,” Triple-I CEO Sean Kevelighan said in a release. “The widespread damage the United The CSU Tropical Meteorology Project will States experienced across many regions release its first formal 2022 hurricane season highlighted the importance of being financially forecast on April 7, 2022. protected from catastrophic losses and that includes having adequate levels of property insurance and flood coverage. In fact, we not only saw historic levels of flooding in coastal areas this year but throughout inland communities, as well.”

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HOMEOWNERS' Patrick Wraight

INSURANCE AND FIREARMS

Once again, we find ourselves in the deeply political and emotional debate about guns, the second amendment, gun control, and safety.

This is not the place for my feelings about gun control, so I'm not engaging in it.

However, it is important to clear up some misconceptions about guns, insurance, and the place of the insurance industry. We may have to deal with some misinformation from a popular (and growing) insurance company. Rather than referring to guns, handguns, rifles, etc. I will use a term that seems a little less inflammatory. I will refer to firearms.

Question #1: Is the firearm covered for loss or damage?

Let's start from a property standpoint because when you boil it down, firearms are personal property. When an individual owns a firearm and keeps it in their home with the rest of their property, the homeowners' policy applies. What's covered on the HO-3?

Director of Insurance Insurance Journal's Academy of Insurance

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HOMEOWNERS'FIREARMS Coverage C – Personal Property, 1. Covered Property We cover personal property owned or used by an “insured" while it is anywhere in the world.

That's the broad statement of coverage. Now we have to look for exclusions and limitations on this coverage that would apply to a firearm.

3. Special Limits of Liability $2,500 for loss by theft of firearms and related equipment.

Now we have a limitation based only on the (otherwise) covered peril insured against, theft.

Looking through the rest of the exclusions and limitation on the HO-3, I haven't found any other exclusions or limitations. Different carriers may have filed different coverage forms and for those, you would have to refer to the carrier to find out what changes they have made to this form.

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Continued from page 38 Without diving into the other perils insured against, we find that firearms (and related property) are treated like other personal property on the homeowners' policy. If they are destroyed in a fire or hurricane, there is no limit on coverage.

Question #2: Is there coverage if someone uses the firearm in a way to injure someone?

This gets a little blurry so let's get into some policy language and maybe some situations. Like before, we have to find out what coverage might apply related to a firearm. Let's start with the broad situation where someone was injured or property was damaged by an insured using a firearm.

Coverage E – Personal Liability If a claim is made or a suit is brought against an “insured" for damages because of “bodily injury" or “property damage" caused by an “occurrence" to

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HOMEOWNERS'FIREARMS which this coverage applies, we will: pay up to our limit of liability for the damages for which an “insured" is legally liable….and Provide a defense at our expense by counsel of our choice…

Just like any other liability issue, there must be a claim or suit brought against an insured. Broadly, we could say that as long as there is bodily injury or property damage caused by an insured, there is coverage at this point. Before we look for exclusions, we have to discuss the definition of insured. If you're familiar with the homeowners' policy, you're aware that the definition of insured includes any resident relatives, or people under 21 and in the care of a resident relative. It also extends that definition to students enrolled in school full time living at the school until they reach 24. Now that we've spoken to that issue, we need to look for applicable exclusions.

Expected or Intended Injury

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Continued from page 39 his shotgun and he accidentally injures someone.

This doesn't fall under the expected or intended injury exclusion because it's an accident.

Something happened that wasn't planned, and bodily injury was the result. This policy anticipates that this might happen and provides coverage.

A homeowner is awakened by noises at the front door. She gets out of bed, grabs her handgun and a flashlight to find out what's going on. In the living room, she finds someone has broken into her home. The burglar lunges at her and she uses her handgun, injuring him. This fits into the exception to the expected or intended injury. She expected (and arguably intended) that someone would get hurt when she discharged her firearm. Yet, we find that she was using her firearm to protect herself and her property. It could certainly be argued that she used reasonable force in this manner. This policy anticipates that this might happen and provides coverage.

“Bodily injury" or “property damage" which is expected It's worth noting that different jurisdictions define or intended by an “insured" even if the resulting “bodily injury" or “property damage" is of a different kind, quality or degree than initially expected or intended; or is sustained by a different person, entity or property than initially expected or intended.

However, this exclusion does not apply to “bodily injury" or “property damage" resulting from the use of reasonable force by an “insured" to protect persons or property; So, there is this possible exclusion that we have to deal with, but to do that, we have to set aside the insurance language and put some street clothes on this scene. Consider what appears to be the expected situation that liability may be assessed when it comes to firearms. A person buys a firearm and is using it, whether in practice, for sport, or home or personal defense. The homeowners' policy expects this exposure and provides for it.

The owner of the firearm is hunting in an area where people normally hunt and trips, setting off

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HOMEOWNERS'FIREARMS

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Continued from page 40

reasonable force differently. This is where we meet terms like the “castle doctrine" or “stand your ground." Some states require that you make an attempt to escape before using deadly force.

Other states don't require this. Some states have written their laws such that if you are on your private property, you have the right to defend it and yourself without warning or seeking to escape a situation. Again, it's not our purpose to debate any of these, just to introduce them.

Response: This is just meant to be inflammatory. It doesn't help and it really doesn't fit into the context of the post. It is set aside and backlinked so that it can be tweeted and retweeted by fans of their product and that sort of language use.

Question #3: What is the insurance industry's place in this conversation?

Response: That's partially accurate. I've reviewed their filed policy forms. Their forms mimic other ISO-based forms and the ISO homeowners' program. They do have a special coverage limit of $2,500 for firearms, but it is limited to theft, not damage. For other covered perils insured against, they have no limitation.

People get emotional when they talk about this subject. It makes sense. People have gotten hurt in some horrible situations. Other people get emotional because they perceive any regulation of firearms as an infringement upon their personal liberty. Personally, having served in the US Army, and having lived in the home of two hunter safety instructors, I know what can happen. I know how accidents occur and I know what happens when we are careless. I also know what it looks like when people use firearms in anger and fear.

I believe that the insurance industry doesn't have much place in this conversation. I don't think that a company should come out publicly and say anything. If they want to do something, here's what I recommend. Nothing. Insurance companies already have the data on bodily injury losses related to the use of firearms. They know that the risk is already manageable. I also think that companies that openly write blogs on the subject before they've done anything are only looking for attention. Beside that, I think insurance companies often work best when we work in the background.

Question #4: What do you mean, “misinformation"?

After the Las Vegas incident, Lemonade wrote a blog post about firearms. I'd like to pull some quotes from their post and offer some commentary.

Quote #1: “But while we respect gun ownership, we're not into gun worship."

Quote #2: “[O]ur policies limit the amount we will pay out for the damage or theft of firearms to an entirely adequate $2,500. …They seem to all offer additional coverage. We don't.

As to the idea that other carriers offer additional coverage and they don't, that's just not true.

Again, in reviewing their filings (which anyone can do), I found that they have filed two forms worth noting here.

Form #1: Coverage C Increased Special Limits of Liability. This form amends the Special Limits of Liability, including the limit for firearms. This form doesn't provide any restriction on the amount that these limits can be raised to. So, no Lemonade, it does appear that you will provide a higher limit.

Form #2: Scheduled Personal Property Endorsement. This form provides open perils coverage for any personal property that is scheduled on the form. Line 13 allows the insured to enter a specific type of property, a description, and an amount of insurance. So, it also appears that you will provide broader coverage, like your competitors will.

You might wonder what their underwriting guidelines say. I looked there, too. All I found in their underwriting guidelines is the rate per $100 in value for increased limits on firearms. So it appears that they will allow higher limits, contrary to their public image. This doesn't speak of transparency and trust to me.

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HOMEOWNERS'FIREARMS Quote #3: “Our policy already excludes coverage for any illegal guns or gun use, but in our next version we plan to add more protections around firearms: … exclude assault rifles altogether, … add requirements that firearms be stored securely and used responsibly…"

Response: Yep. Homeowners' policies exclude the illegal use of anything and illegal property can't be insured on any policy. I'm concerned about the term assault rifles or military-grade weapons. I will hold off the rest of my judgment until I see how their policy defines those terms. As to the requirements that firearms be stored securely and used responsibly, I can't argue with that.

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Continued from page 41 This article is an update of an article originally published on Insurance Journal's Academy Journal Blog here.

Patrick Wraight is director of Insurance Journal's Academy of Insurance. During his career he has taught insurance topics ranging from underwriting basics to understanding insurance policies to catastrophe claims orientation.

Wraight writes a weekly blog on insurance coverage issues and other items of interest to the insurance community and is a contributor to other insurance blogs. He holds the CIC, CRM, CISR, AU and AINS designations.

Here's where my argument comes in. This blog post was written in October 2017 and we are well into 2018. I searched and haven't found any filings with these updated requirements. Maybe they were busy getting filings for new states ready and they didn't have time to create and file those revised rules and forms to exclude the firearms they stand against. I don't know.

This isn't the end of this conversation, but if I may I'd like to make one more observation. Let's keep talking about it, but let's do it in a civilized way. I recommend the return to civil discourse, rather than the style of the day, where both sides yell at each other across widening ideological chasms.

That's the only way we are going to fix issues. It wouldn't hurt if we stopped writing and speaking for tweets and sound bites.

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ACT MEMBER EXCLUSIVE

HOW TO MAKE YOUR AGENCY FUTURE READY

As the end of 2021 approaches, many independent agents and brokers are taking time to evaluate growth strategies and consider how to get ahead in 2022.

One way to make your agency future-ready is to embrace the technology available to you, either through your own digital marketing efforts or tools provided by your preferred insurance carriers.

Optimize social media, website

By Ana Robic, COO Personal Risk Services Chubb North America

With nine out of 10 Americans on the internet and seven out of 10 using some type of social media, it makes sense for agents and brokers to maximize their use of online and social media platforms as well.

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FUTUREREADY To increase interest in your website’s content, keep the design simple and straightforward, with a header on each page, a clear description of the services provided, easy to find contact information and a prominent call to action.

Since nearly all (95%) of people reportedly read reviews and 7 in 10 will hold off on making a purchase until they’ve read reviews, you may want to include a review section on your website as well, where you can encourage satisfied clients to leave a few positive words about your assistance and service.

To help search engines like Google, Bing or Safari find your website — and place it at the top of their list when a consumer runs a search — you’ll need to work closely with your website’s programmer to ensure that all the right data is included behind the scenes. Search engines also prioritize websites that include links from other websites, so you may want to reach out to real estate agents, financial advisors or others in your network and ask them to include a link to your website on theirs.

Leverage social media platforms to reach the intended audience. Rather than trying to have a presence on every platform, choose one to three platforms where your audience is most likely to consume content. To build a following organically, communicate consistently and link to your social media pages on your website and email blasts. It may also be helpful to supplement your social media followers by investing in paid ads. You can go directly to the social media platform, like Facebook or LinkedIn, to find guidelines for running paid ads, or if you have the budget, hire an agency to help you decide where and when your ads should appear.

Taking advantage of timely information is also important in building a social media presence.

Consider posting educational information such as seasonal home maintenance and catastrophe preparedness tips, client claims testimonial stories, or insights and trends that relate to your clients’ passions, such as wine, classic cars, or fine art. Keeping content professional and concise, with compelling visuals and a clear call to action can help drive responses as well.

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Continued from page 43

Maximize carrier-provided digital tools Insurance companies spend millions to give their best agents and brokers a leg up on the competition. Many provide agent portals, digital tools and mobile apps to help agents and brokers better manage their business, find prospects, or quote policies faster and easier than ever. And these resources are often free to agents and brokers who partner with them.

Insurance companies regularly update agent portals to provide enhanced functionality and convenience. While learning new technologies may not always come easy, it’s important to stay up to date on an insurer’s latest digital enhancements. For example, using a carrier’s latest online quoting functions that prefill applications, automatically produce multiple quotes and set user preferences can help save time and enable agents and brokers to spend more time providing advice and expertise to their clients. Or using a digital tool that monitors

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FUTUREREADY catastrophes, like Chubb’s CAT Tracker, can allow agents to see a map of where client properties are in relation to an advancing storm or wildfire, and then help solidify their relationships by reaching out proactively in a time of need. A tool like that can also help agents find potential clients for a specific type of insurance or service, such as cross-selling flood insurance in an area that was hit by a recent rainstorm or reaching out to clients in a wildfire zone to encourage them to sign up for protection services.

Mobile apps can be invaluable for those who are on the road or want to access information while working remotely. The best agent mobile apps will mimic the carrier’s agent portal, providing much of the same information that agents could get online using a computer, such as clients’ policy details and documents, claim forms, home inspection reports, marketing collateral, and alerts.

If you’re not sure how to use your carrier’s technology, whether an agent portal, mobile app or other digital tool offered, investigate education or training programs offered by the insurer. They will likely provide extensive and constant training opportunities to allow you to make the most of their digital assets.

Get to know predict-and-prevent tech

Technology also has come a long way in helping predict and prevent issues and losses from happening in the first place. More clients are adopting these smart loss prevention devices because they are convenient and provide peace of mind. But the evolving technology can also be confusing. Clients are turning to their insurance agents to ask which technology to select and if it will provide a discount on premiums. To best service their clients, agents and brokers will need to be a step ahead and understand what’s available, how they work, and how they are viewed by insurance companies.

Four years ago, water shut-off devices cost thousands of dollars to buy and install. Today, the predict-andprevent IoT (Internet of Things) universe has expanded to include easy-to-use, cost-effective water shut-off devices, water sensors for high rise buildings, and temperature/humidity sensors for food storage, wine cellars, and more — all to help prevent damage and inconvenience for homeowners. Our evidence shows that these devices are proven to save clients’ money, time, and hassle. This in turn can help improve an agency’s loss ratios with their insurer partners.

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Continued from page 44 Installing IoT sensors to prevent loss can also lower insurance premiums, as many carriers are now providing credits for these devices. If you’re not comfortable talking about IoT devices or are unsure about which device to recommend, speak to your insurance company contacts — carriers have experts who can help you understand these technologies, so you can speak confidently about them to your clients.

With so much of our world happening online these days, embracing the technology available to you is a great way to build your business, increase your productivity, and solidify your client relationships. In addition, by putting a simple digital marketing strategy in place for your agency and taking advantage of the technology your insurance company partners provide, you can help make your agency future-ready for 2022 and beyond.

Ana Robic (arobic@chubb.com) is chief operating officer of Personal Risk Services at Chubb North America.

This article was published in Property Casualty 360 (https://www.propertycasualty360.com/).

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d e s u f n o C & d e Daz 180 Day 'Limitation' in the Commercial Property Policy:

Within ISO's Building and Personal Property Coverage Form (CP 00 10), a 180-day limitation applies to three situations: Within the Additional Coverage – Debris Removal. Simply stated, debris removal expenses, up to the eligible limit, are paid only if they are reported within 180 days of the direct physical loss.

Within the Additional Coverage – Pollutant Clean-up and Removal. Like coverage for debris removal, the forms states that is pays for eligible expenses only if reported in writing to the carrier within 180 days of the date of the Covered Loss.

As part of the requirements of the Optional Coverage – Replacement Cost. This use of the 180 day “limitation" in the ISO form is the subject of this article.

ISO Coverage Form Language

“…actual cash value basis…": What does the “you" or the named insured get to decide? The named insured is given the option to make a claim on an actual cash value (ACV) basis rather than on a replacement cost basis as allowed when the insured choses this optional coverage.

“In the event…": Means, “If." “…you may still…": The you/named insured has the option to change his/her/its mind. “…notify us…": If the you/named insured changes his/her/its mind, the insurance carrier must be notified. “…within 180 days after the loss or damage.": Although the you/named insured has a right to change his/her/its mind regarding ACV versus Replacement Cost, that right expires 180 days after the loss.

What does this mean? Simply, the INSURED (not the insurance carrier) has the option to settle the To begin this discussion, let's review the relevant “180-day" wording found within the Replacement property loss on an ACV basis rather than a replacement cost basis when this optional Cost provision of ISO's CP 00 10: coverage is chosen. However, this provision gives c. You may make a claim for loss or damage covered by the INSURED (not the insurance carrier) the right this insurance on an actual cash value basis instead of to change its mind and seek recovery on a replacement cost basis – provided the insurance on a replacement cost basis. In the event you elect to carrier is notified of such intention within 180 have loss or damage settled on an actual cash value days of the loss. basis, you may still make a claim for the additional coverage this Optional Coverage provides if you notify All decisions within this provision are those of the us of your intent to do so within 180 days after the INSURED. None of these decisions are given to loss or damage. the insurance carrier.

Key terms and conditions within this language What This Provision Does NOT Allow must be reviewed to understand how this Insurance carriers misapply this provision provision applies: regularly, and in many unique ways. This provision “You…": The very first word of this provision does NOT allow: points to WHO gets to make what decision.

The “you" is the named insured. From the beginning it is clear that the named insured is making a decision.

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FUTUREREADY The insurance carrier to deny replacement cost if the damage is not discovered until more than 180 days after the loss occurred. Note again that all the decisions within this provision lie with the insured and NOT the insurance carrier. If, upon discovery of the damage, the named insured makes it known that repair or replacement is desired, the insurance carrier owes replacement cost. The only caveat to this may be the insured initially stating that they have no intention to repair or replace and changing their mind later. Past the 180 days, the insured does not have the ability to flip-flop on the ACV vs. Replacement Cost decision. But again, if it's stated up front that replacement cost is desired, it doesn't matter how long after the loss the damage is discovered, replacement cost is owed. (See “Replacement Cost and the 180 Day Limitation Myth") The insurance carrier to deny replacement cost because repairs or replacement took longer than 180 days. Nowhere in this provision is there a specified time limit for repairs. The only requirements for payment on a replacement cost basis are: 1) Adequate coverage amounts; 2) The Replacement Cost optional coverage has been chosen; and 3) Actual repair or replacement of the damaged property. While the policy does state that repair or replacement must be completed “as soon as reasonably possible," the policy does not place a time limit on what this phrase means.

There are times when a damage may not be discovered for more than 180 days (i.e., hail damage). Nothing in this provision allows the carrier to avoid paying replacement cost. Time to repair or rebuild often takes more than 180 days, especially for a major loss. If the carrier was able to deny replacement cost simply because the repair/replacement took more than 180 days, replacement cost coverage in the commercial property policy would be almost illusory (sometimes it takes longer than 180 days just to dig the first hole for the replacement building.

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Proper Application of the 180-Day “Limitation" for Replacement Cost

First, note who gets to make what decision. The named insured (not the insurance carrier) gets to decide whether or not he/she/it wants coverage on an ACV or replacement cost basis. Second, IF the “you" initially chooses ACV rather than replacement cost, that same “you" has the ability to change its mind and chose replacement cost – if such choice is made within 180 days of the loss. Lastly, if the named insured chooses replacement cost within the specified time period, there are adequate coverage limits, and repairs or replacement actually occurs, the insurance carrier owes replacement cost.

Nothing within the 180-day “limitation" allows the insurance carrier to make any decisions or take any action; it only allows the insurance carrier to respond to decisions made by the insured.

All this provision does is allow the insured to change its mind!

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CONTRACTUAL RISK TRANSFER CAN TAKE OVER AND RUIN YOUR DAY By: Chris Boggs Insurance is the slave of contractual risk transfer. The contracts your insureds sign, generally before giving you the opportunity to review them, create requirements to which the insurance policy must respond – if it can.

Understanding contractual risk transfer is a key requirement for staying out of trouble when you insure contractor risks. But even if you don't insure construction-type operations, you will be subject to contractual risk transfer language at some point, you can count on it.

Following are seven of the most frequently asked questions related to contractual risk transfer.

Though brief, the answers give us a glimpse at the complicated issues emanating from contractual risk transfer.

What is contractual risk transfer? Contractual risk transfer (CRT) is a non-insurance risk transfer mechanism that accomplishes the goals of risk financing and risk control. In essence, CRT allows the upper tier / upstream contractor to tap into the finances of the lower tier / downstream party. The lower tier can finance the requirements of the contract in one of two ways: 1) some or all costs can be paid out of their own pocket (from savings or other accounts; or 2) the lower tier can purchase an insurance policy to finance that part of the contractually agreed to risk. Sometimes both sources are in play.

From a risk control perspective, CRT allows the upper tier to avoid the activities that could lead to injury to another party and make that party directly liable for the results. This dovetails with the risk transfer aspect of CRT. Why is contractual risk transfer necessary? The most simplistic answer is vicarious liability. The upper tier contractor (could be the GC or another contractor who subcontracts work to another party) can be held liable for the actions of the party to whom they subcontracted the work. The GC is ultimately

PAGE 49

RISKTRANSFER responsible for the entire job site. Responsibility for any injury or damage occurring on the site or resulting from the construction activities falls on the GC. CRT allows the GC to transfer that burden to others resulting in the ideal use of CRT. What is the ideal use of contractual risk transfer?

CRT places the financial burden on the party closest to and best able to control the chances that loss will occur. Who is better able to control the risks that could arise from wiring the building? Is it the electrician or the general contractor? Since the electrician is doing the work, it is better able to control the risks associated with the work; thus, any injury resulting from the electrician's work should be paid for by the electrician.

Is contractual risk transfer ever misused? Without a doubt CRT is ripe for misuse. Three key areas of CRT misuse include: 1. The use of an exculpatory contract. A contract is exculpatory when the upper tier attempts to use the contract to absolve themselves of all liability.

Contracts cannot be used to transfer or avoid a statutory duty, criminal penalties or sole negligence in torts. However, some exculpatory clauses are allowed if they are reasonable and legal.

2. The contractual provision violates the law. The amount of responsibility contractually transferable to a lower tier is often limited by statute or common law. The three levels of allowable contractual transfer are: a. Limited transfer: only the upper tier's vicarious liability for the work of the lower tier can be transferred to the lower tier; b. Intermediate transfer: joint liability of the upper and lower tier can be contractually transferred to the lower tier; and c. Broad transfer: the lower tier can be contractually responsible for all liability arising out of its own actions, the actions of the upper and lower tier jointly, or the actions of the upper tier acting alone.

If state law allows only limited transfer but the contract is broad transfer, the contract violates the law.

LOUISIANAAGENT

Continued from page 48 3. Transferor violates its own contract. Most construction contracts contain a provision stating that all contractually-required insurance provisions must be proven prior to beginning operations. Such requirement is reasonable, if the contract is signed before the work begins and all insurance requirements are reviewed by the upper tier prior to work beginning. However, many times the contract isn't signed until after work has already begun, violating the upper tier's own contractual requirement.

A common example is the angry Friday afternoon phone call from your subcontractor client stating that they are trying to get paid but can't until you provide a certificate of insurance (COI) stating that the policy contains all manner of requirements that can't be done and certainly can't be completed that afternoon. Suddenly, it's your fault.

When you dig deeper you discover that the project was a little behind schedule and the GC subcontracted your insured to do whatever it is they do and put them on the job site the next day. Two weeks later the contract is finally signed. When the

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RISKTRANSFER sub submits his first invoice, the GC refuses payment until the contractually-required COI can be produced.

Based on the concept of estoppel and the application of equitable estoppel, the GC legally waived its right to hold the sub to the insurance requirements. The contract required proof and evidence of insurance prior to beginning work, the upper tier waived this requirement by putting them to work before asking for, requiring and reviewing such proof, thus they are legally estopped from requiring it later – and especially from holding up payment for lack of proof.

The problem is, few if any subcontractors want to challenge this in court because of money and the fear of losing other contracts with this GC. It's all about the economics.

LOUISIANAAGENT

Continued from page 49 fight the battle associated with long lists of additional insureds. Some requests are ridiculous, and some additional insured requirements cannot be met – and that becomes your fault rather than the person who agreed to the contract.

Additionally, construction contracts often contain the requirement that coverage be provided on a primary and noncontributory basis.

Although this is an antiquated requirement, it's still a requirement with which you must contend.

Certificates are also affected by contract wording. Many if not most construction contracts attempt to dictate the information required in a certificate of insurance. Sometimes these requirements cannot be met due to statute or other reasons.

Contractual risk transfer can run and ruin your Is contractual risk transfer enforceable? In short, yes. day if you let it; and it should scare you.

Courts generally prefer to not alter or overturn Unfortunately, you are forced to deal with it if you contracts because the right to contract is viewed want to write contractor risks. as a private right valued by the courts. As long as the contract is written in compliance with state law This is but a high-level review of CRT; a more and is not considered exculpatory, courts don't detailed analysis and discussion of contractual interfere with them. risk transfer, additional insureds and the primary and noncontributory requirement happened on How does insurance respond to contractual risk July 19 when the VU presented Contractual Risk transfer? Remember, insurance is a slave to the Transfer, Additional Insureds, and the Primary contract. The contract sets the course and the and Noncontributory Requirement. All those who insurance policy provides the financing, if what registered for the webinar received the webinar was agreed to is covered by the policy. The insured recording and a transcript of the class. The can contractually agree to almost anything, but transcript is the best part because it allows you to that does not mean the policy will or can respond. research the topic anytime without having to reThe policy only responds when the injury or listen to the entire webinar to find the information damage transferred falls within the coverage you want. grant.

What other areas are affected by contractual risk transfer requirements? Beyond triggering the commercial general liability, business auto, work comp and other insurance coverages, CRT plays a major role in who is shown as an additional insured. Additional insured status generally arises from the contract. Because of CRT, agents have to

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PAGE 52

LOUISIANAAGENT

IIABL EDUCATION MARCH 2022 CALENDAR OF EVENTS SUNDAY

MONDAY

TUESDAY

WEDNESDAY

27

28

March 1 2

6

7

8

9

13

14

15

16

20

21

22

23

27

28

LIVE WEBINAR! 1-2p Insurance Issues for the Commercial Tenant

LIVE WEBINAR! 12-3p Nailed It: Understanding Insurance Requirement sin Construction Contracts

29 LIVE WEBINAR! 10a-12p How to Understand Commercial Property Underwriting & COPE

LIVE WEBINAR! 1-3p Workers' Comp: 5 Mistakes Every Agent Makes

30

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LOUISIANAAGENT

& EVENTS THURSDAY

FRIDAY

SATURDAY

3

4

5

10

11

12

LIVE WEBINAR! 12-3p Agent's E&O: Defenses & Preventions for the Insurance Professional

17

18

19

LIVE WEBINAR! 1-2p Condos & How to Insure Them

24

25

26

31

Apr 1

29 2

LIVE WEBINAR! 8-11a Autos, Garages & Dealers - Oh My! 10a-12p ISO's 2022 Homeowners' Changes

12-3p Commercial Property Direct vs. Indirect Damage

IIABL CE ON DEMAND E&O Risk Management Ethics Flood Commercial Lines Courses Personal Lines Courses Professional Development

OTHER EDUCATIONAL RESOURCES

PAGE 54

LOUISIANAAGENT

ADVERTISER INDEX COMPANY

PAGE

COMPANY

PAGE

Accident Fund Insurance Company of America Agile Premium Finance Allied Trust Insurance Company Amerisafe AmTrust North America AmWINS Access Home Insurance Company Berkshire Hathaway GUARD Insurance Company Burns & Wilcox Ltd. Commercial Sector Insurance Brokers EMC Insurance FCCI Insurance Group Foremost Insurance Group Forest Insurance Facilities The Gray Insurance Company Homebuilders Self Insurers Fund Imperial PFS Iroquois

28 23 29 7 21 9 42 32 49 16 22 45 33 36 15 25 39

Lane & Associates, Inc. LCI Workers' Comp Lighthouse Property Insurance Group LUBA LWCC National General Progressive RISCOM RLI RPS/Risk Placement Services SafePoint Insurance Stonetrust Summit United Fire Group UPC Insurance Wright Flood

47 51 8 11 37 44 19 18 54 24 30 14 34 27 5 40

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LOUISIANAAGENT

IIABL 2021-2022

BOARD OF DIRECTORS & OFFICERS PRESIDENT, DONELSON P. STIEL David H. Stiel, Jr. Agency - Franklin PRESIDENT-ELECT, MICHAEL SCRIBER Scriber Insurance - Ruston SECRETARY-TREASURER, ARMOND K. SCHWING Schwing Insurance Agency, Inc. NATIONAL DIRECTOR, JOHNNY BECKMANN, III Assured Partners - Metairie PAST PRESIDENT, BRENDA CASE Lowry-Dunham, Case & Vivien - Slidell YOUNG AGENT REPRESENTATIVE, BRITTNI LAGARDE Southern Insurance Agency - New Orleans ANN BODKIN-SMITH Thomson Smith & Leach Insurance Group - Lafayette MATTHEW DEBLANC Continental Insurance Services - Marrero ROB W. EPPERS Risk Services of Louisiana - Shreveport MATT GRAHAM Lincoln Agency - Ruston CHRISTOPHER S. HAIK Haik Insurance Holdings, LLC - Lafayette STUART HARRIS McClure, Bomar & Harris, LLC - Shreveport ROSS HENRY Henry Insurance Service, Inc. - Baton Rouge BRET HUGHES Hughes Insurance Services, LLC - Gonzales CHARLES H. LEBLANC Bourg Insurance Agency, Inc. - Donaldsonville LYDIA MCMORRIS Alliant Insurance Services - Baton Rouge A. EUGENE MONTGOMERY, III Community Financial Insurance Center, LLC - Monroe JOE KING MONTGOMERY Thomas & Farr Agency, Inc. - Monroe HARTWIG "ROBBY" MOSS, IV Hartwig Moss Insurance - New Orleans PAUL R. OWEN John Hendry Insurance - Zachary ROBERT LOUIS PALMER Insurance Underwriters, Ltd. - Metairie MARTIN "TEENY" PERRET Quality Plus - Lafayette ROBERT G. RIVIERE Riviere Insurance Agency - Thibodaux ROBERT STONE Stone Insurance, Inc. - Metairie