Your Next Great Employee
Agency Management Systems & E&O Claims
Free Flood Seminars
IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com
Your Next Great Employee
4
Free Webinars for IIABL Members
5-6
Agency Management Systems and E&O Claims
6-8
Is there Auto Coverage??
10-11
10 Trends in P&C Market for 2017
11-14
IIABL March Board Meeting
15-18
115th Annual IIABL Convention
25
Kim Jackson Education & Membership kjackson@iiabl.com
Free Flood Seminar
33
Karen Kuylen Director of Accounting kkuylen@iiabl.com
Ask Mike
19-31
E. Lee Mowe Marketing Representative lmowe@iiabl.com
Commissioner’s Corner
33-35
Francine Berendson Director of Communications & Events fberendson@iiabl.com Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com
Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant lyoung@iiabl.com
IIABL Calendar
26
Rate & Rule Filings
27
Tech Tips IIABL Partners
15-18
38 Louisiana Agent 3
Your Next GREAT Employee May Be At ULM The University of Louisiana at Monroe (ULM) has an outstanding Risk & Insurance Program under the direction of Dr. Christine Berry. Currently, there are 130 bright and energetic young students enrolled in the Risk & Insurance Program. Recently, IIABL board members Mike Scriber, Byram Carpenter and Joe Montgomery, along with IIABL CEO Jeff Albright attended the ULM Risk & Insurance Talent Search to recruit students into IIABL member agencies. We were very impressed with the interest and capabilities of the students looking for careers in insurance. These students are looking for opportunities to build a career, and most are willing to move almost anywhere in Louisiana for the right opportunity.
Many agencies are desperately looking for great young talent. Your next great employee may be studying risk and insurance at ULM right now! Are you looking for great employees with background in insurance? ULM has them! The University of Louisiana at Monroe’s Risk Management and Insurance department has developed a resume book listing their students who will be graduating within the next two years. A $100.00 donation to this program provides you with the ULM Resume Book with dozens of potential employees. To order your ULM Risk & Insurance Resume Book, please complete the ULM Resume Book Order Form and mail it to the IIABL office with your $100 check made payable to: ULM Risk & Insurance Program. IIABL will email you the Resume Book upon receipt of your payment.
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Free Webinars for IIABL Members Several months ago, IIABL introduced a new service to members called 24/7 Agency Solutions. If you are not familiar with this product it is the independent agent solution to “Hi this is Jake from State Farm.” In today’s elec“I am a new agent & through 24/7 tronic, instant Agency solutions I found a great information and company to build my website that is now proudly representing my agency. feedback world, I would recommend it to everyone independent that wants their agency to stand out” agents need to Priscilla Vann compete with the President of Hometown Insurance captive agents. Consumers looking for insurance on the internet is growing by leaps & bounds. We need to be competitive!! Below are 3 webinars that will explain the three services offered through 24/7 Agency Solutions:
site Builder
Web-
Click here for the recorded webinar This webinar will focus on the Advisor Evolved Website Builder, one of the products within 24/7 Agency Solutions program. Chris Langille, founder and CEO of Advisor Evolved, will discuss the importance of having a modern and attractive Website in addition to features and plans Advisor Evolved offers.
Mobile App with Insurance Agent
Click here for the recorded webinar This webinar will focus on the Insurance Agent Mobile App, one of the products within 24/7 Agency Solutions program. Matt Aaron and Kiki Johnson, founders of Insurance Agent Mobile App, will discuss the importance of proving a mobile app to your customers and demo the mobile app's features.
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Answering Service Click here for the recorded webinar After-hours phone center with Insure Response
This webinar will focus on the Insure Response Answering Service, one of the products within 24/7 Agency Solutions program. Sandra Hunter-Lewis, client relation representative of Insure Response, will discuss the importance of proving an Answering Service for you consumers at any time of the day or night and the scope of service they offer. It's time to revolutionize your brand and meet the challenges of the future. IIABL is here to help you become a 24/7 agency - get started today!
Check out the 24/7 Agency Solutions website: www.247agencysolutions.com For questions regarding this new service contact Ewa Telenga etelenga@247agencysolutions.com or 888-275-8911
How Agency Management Systems Can Help Defend An E&O Claim By John Nesbitt
Electronic communication is nothing new. But too many errors & omissions claims still result in a he said/she said credibility dispute. Documenting all interactions with customers and carriers as well as every insurance transaction can be critically important in defending an E&O claim. Without time-stamped documentation, an agency will be left with little more than its employees' memories of conversations that may have taken place years earlier—and your E&O carrier may recommend you settle your claim. Agency management systems provide many benefits, not least of which is contemporaneous documentation. Electronic documentation more definitively establishes what occurred than handwritten or paper files. Documenting a customer's file through a management system gives you more credible evidence because the automated
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system creates a record of the date and time of the entries, which cannot be manipulated later. All employees should make electronic notes documenting every conversation with customers, carriers or anyone else with whom they discuss coverage. Electronic documentation of specific coverages both offered and declined can be very persuasive evidence during an E&O claim. Many systems also integrate with other agency applications, such as email and word processing systems. This can ensure immediate placement of documents such as applications, quotes, change endorsements, rejections, checklists and other correspondence in the customer's electronic file. If your system does not do this automatically, staff should scan such documents and route them to the system. Many systems document emails forwarding a copy of the policy to the customer or even just forwarding a link to the policy on the carrier's website, which can confirm that the customer received a copy of the policy. Staff
should also automatically enter every certificate of insurance the agency issues for an insured as an activity into the AMS. Some systems will even synchronize with the agency's phone systems to send voicemail messages to the file. When consistently and properly used, a management system can increase an agency's efficiency—and serve as an invaluable ally in successfully defending E&O claims that arise. Quality First While quantity and consistency of documentation is important, so is the quality. Each entry about a conversation should include: • Who: names and roles of the contact person at the client and the agency • What: specific topics discussed and actions or decisions reached • When: date and time of the conversation, deadlines and next steps • Why: reason the conversation took place • Where: place you are in the process—if possible, close the activity Continued page 8
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• How: phone call, email, in-office visit or on location? —J.N. Case Study Consider the following example in which electronic notes or a time-stamped letter in the file would have helped defend an E&O claim. An agent procuring a new policy neglected to have his customer complete a required form. After realizing the mistake, the agent called the customer and asked her to come sign the form, but the customer did not do so—and later had an uncovered claim. If the agent had documentation that he gave the customer an opportunity to sign the form but she failed to do so, that would help defend the resulting E&O claim. The agent said he had a log where he keeps that kind of information, which the E&O claims handler thought might establish that the agent gave his customer an opportunity to correct
the initial oversight—shifting at least some of the responsibility for lack of coverage to the customer. But the log the agent sent the claims handler to review turned out to contain handwritten notes, which did not provide proof of when the agent made them. Without any other documentation that the agent informed the customer of the need to come sign the document, the claim became a simple swearing match between the customer's version of events and the agent's, on a claim in which the agent had admittedly neglected to have the customer sign in the first place. The E&O claims handler recommended settling. —J.N.
John Nesbitt is an assistant vice president, claims specialist with Swiss Re Corporate Solutions and works out of the Overland Park office.
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Is There Auto Coverage for Dealer Loaner Autos, Rental Cars, and Test Driving Vehicles? Bill Wilson, CPCU, ARM Consider these four claim scenarios: A personal lines customer puts his Cadillac in the shop for servicing and gets a loaner Caddy from the dealer which he totals to the tune of a $37,000 physical damage loss. The dealer’s insurer covers the damage above a $500 deductible but wants its money back from the negligent customer.
were on the hook for outstanding amount. In the case of the $37K Cadillac claim, the agent was able to use their influence to get the PAP carrier to respond to the claim but, to my knowledge, the other PAP carriers did not, resulting in the agencies’ personal lines customers incurring out of pocket expenses of several thousand dollars. In the last claim, the very large national carrier cited this exclusion in their proprietary (non-ISO) auto policy:
This insurance does not cover certain losses or situations…. It does not cover a non-owned car while being used or maintained in any auto business by anyone.
A personal lines customer placed his Acura in the shop for maintenance and was provided with a loaner car which was struck while parked and unoccupied. The damage was $6,500 and the dealer’s insurer expected the customer’s auto insurance to pay.
According to the carrier, the auto was being “used” IN an auto business by someone, so the exclusion applied. This seems to be a rather restrictive interpretation but the carrier insisted it was designed to exclude losses involving loaner cars and could be applied to test driving or even rental cars.
A personal lines customer is test driving a car from a used car dealer and hits a deer. The dealer’s insurer pays to repair the damage but subrogates against the driver.
Note that the “auto business” exclusion above is non -ISO language. ISO’s “auto business exclusion” applies only to insureds:
A personal lines customer is test driving a new car and has an at-fault accident resulting in damage to another vehicle and to the dealer’s auto being driven. Each of these is an actual claim where the customer turned the claim in to his personal auto policy (PAP) insurer and the claim was denied. In the first three cases, the Other Insurance clause was cited so that only excess coverage was provided. Using the current ISO PAP as the model, this clause says:
However, any insurance we provide with respect to a “non-owned auto” shall be excess over any other collectible source of recovery including, but not limited to: 1. Any coverage provided by the owner of the “nonowned auto”; 2. Any other applicable physical damage insurance; 3. Any other source of recovery applicable to the loss. The PAP insurers relied on this language making their coverage excess and would only pay for the deductibles on the dealers’ policies. The insureds
While employed or otherwise engaged in the “business” of…selling…repairing…servicing…storing… or parking vehicles designed for use mainly on public highways. Clearly, the ISO language would not apply to this claim since the insured is not the person engaged or employed in the auto business. However, the proprietary language could arguably apply to the claim to preclude coverage. Regardless, the ISO Other Insurance clause (and the clause in the non-ISO policy) clearly provide coverage only on an EXCESS basis. So, what is the solution? With regard to the “auto business” exclusion applied in the last claim, there’s nothing you can do except, as the agent did in this claim, lobby the carrier to change the exclusion to something more reasonable like the ISO language. The alternative is to not use that carrier’s auto policy. With regard to the Other Insurance clause making coverage excess, the solution probably lies in revising the commercial auto policy of the auto business to make an exception in their subrogation clause (“Transfer Of Rights Of Recovery Against Others To Louisiana Agent 10
Us”) similar to that in the ISO PAP subrogation clause (“Our Right To Recover Payment”) which says:
However, our rights in this Paragraph (A.) do not apply under Part D, against any person using “your covered auto” with a reasonable belief that that person is entitled to do so. In other words, revise the business auto policy (BAP) or provide an optional, perhaps premium-bearing, endorsement that disallows subrogation against a permissive use of a dealer auto such as a loaner vehicle or while test driving an auto. Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, InsuranceCommentary.com Bill@InsuranceCommentary.com or InsuranceCommentary@outlook.com
Com•men•tar•y … an expression of opinions or offering of explanations William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years. He is the former Director of Education & Technical Affairs for the Insurors of Tennessee and, prior to that time, he was employed by In-
ue to bring more new technologies and business models leading to evolving risks.
Here are 10 trends that are likely to affect you and your insurance business in 2017: 10. Increased employer and workers' compensation complexities. Barring a major catastrophic event, the workers’ compensation market is expected to favor buyers from a risk transfer premium and rate perspective. But that will not eliminate or fully offset many of the challenges employers will face in 2017. In 2017 and beyond, as the “gig” economy expands and technology further develops, we'll see a continued shift away from the traditional workday and fixed employment locations to part-time, on-demand, and independent contractor arrangements. For an employer, this increases complexities around the implementation of proper safety procedures and the delivery of
10 Trends Expected To Shape The Casualty Insurance Market In 2017 by: Jayleen R. Heft, PROPERTYCASUALTY360.COM There's little doubt that it’s a time of intense change for the casualty insurance marketplace. Rapid advances in interconnected technologies and drones, InsurTech disruption, changing workplace dynamics along with industry profit pressures are expected to shape the casualty market in the year ahead. In their annual look at the state of the casualty insurance market, Marsh's U.S. Casualty Practice takes a look at the key developments they expect to influence buyer and insurer behavior in 2017. Based on discussions with insurers and their own observations, New York City-based broker Marsh predicts 2017 will continLouisiana Agent 11
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timely and quality medical care to injured employees. 9. Increased purchases of excess liability limits. Insureds make buying decisions based on many parameters: Risk quantification, safety and claims handling expertise, likelihood of catastrophic loss, and budgets. These are logical and practical reasons — until there’s an underinsured loss. Hindsight creates second guessers asking why additional coverage wasn’t purchased for a minimal expense.
that purport to translate sensor inputs into data will lead to commercial insurance sensor applications improving both property and casualty loss profiles.
Increased purchases of excess liability limits are expected in 2017. The present soft excess market provides low-cost access to contingent capital. Sophisticated analytical tools exist to quantify the likelihood of a loss greater than the current excess liability limit purchased.
Those insurers without a drag from legacy liability and that look to grow market share will once again ensure clients enjoy a soft casualty market in 2017. Legacy writers will need to “sweeten the pot” with flexible terms on coverage, collateral, and service delivery to help retain their business.
“Nuclear verdicts” in the automobile liability and product liability arenas are in the headlines. At the same time, the soft market leaves some room in most insurance budgets. 8. More underwriting scrutiny from a coverage perspective. We'll see more underwriting scrutiny from a coverage perspective in 2017. Differentiation in program choices will be more about coverage than price as unknowns increase and carrier positions begin to diverge. These differing approaches will occur as clients have access to more analytical data and information to help them better analyze coverage differences. Different cyber, punitive damage, and dispute resolution mechanisms will carry more weight in 2017 than ever before. 7. Sensor technology explosion. Technology advancements, coupled with the ability to digest vast amounts of data and arrive at actionable recommendations, will allow the insurance industry to improve loss ratios, analytics, claims handling and workplace safety. The key to unlocking these technologies’ potential benefits rests with the translation of data points into actionable information. Investment in wearable devices, other sensors, and dashboard technologies
6. A push for higher casualty rates. Insurers’ margins are under pressure and shrinking due to competition, new market entrants, and downward rate pressures. A need to expand margins will lead to insurers trying to push for higher casualty rates in 2017.
5. Progress in the consolidation of personal and commercial automobile insurance and products liability. Autonomous vehicles will change historical automobile loss dynamics. The conversion to autonomous vehicles will not be completed in 2017, but we will see stepping stones in the consolidation of personal and commercial automobile insurance and products liability. Time will tell what the future underwriting requirements will be for driverless vehicles. 4. Focus back to growth. Since 2008, insurers generally have increased underwriting discipline. With limited investment income opportunities, insurers have largely focused on underwriting profitability rather than premium growth. In 2017, however, this strategy may lose ground. The marketplace appears to be getting more aggressive despite indications that underwriting results are deteriorating and inflationary claim trends will not be offset by rate. This could lead to greater-than-expected volatility for various product lines or industry segments.
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New entrants and incumbent insurers are competing for market share and growth at a time when insurers are reporting increases in medical costs, automobile damage, and claim settlement values. In the long run, rising medical costs, an organized and aggressive plaintiff’s bar, and larger verdicts will likely impact more product lines. For the foreseeable future, however, new carrier entrants and expanding insurer appetites will bring the industry’s focus back to growth.
3. Ongoing InsurTech disruption. The insurance industry is converging with the technology sector. Capital is looking for a home in disruptive technologies aimed at the insurance industry’s inefficiencies. The insurance industry’s sluggish response to the sharing economy has left a major crack through which InsurTech disruptors could gain a foothold. Further expansion into other parts of the value chain could follow. Slow movement by traditional insurers to become more efficient will attract disruption to different parts of their value chain. Initial niche success will lead to broader expansion for the successful InsurTech companies of the future. 2. Transfer of risk of the unknown to specialty product lines. Over the last two years, the Insurance Services Office (ISO) and insurers have created a number of cyber exclusions for commercial general liability (CGL) policies. Largely, these exclusions seek to eliminate some combination of intangible property damage, nonphysical damage, and advertising or personal-related liabilities that were not originally contemplated by CGL policies.
Self-driving cars. 3D printing. Genetically modified organisms (GMOs).
Meanwhile, insurers will make individual underwriting decisions based upon better identification of the root causes of claims. Insurers will also seek to clarify coverage intent with regard to traumatic brain injury and other emerging exposures. 1. More unintended consequences from the Internet of Things (IoT). As interconnected technologies take greater hold and autonomous vehicles, drones, 3D printing, and other new risks emerge, the insurance industry will need to address the blurred lines between specific forms of coverage, including general liability, product liability, cyber insurance, and auto liability.The level of interconnectedness magnifies the potential frequency and severity of adverse events as the impact of an individual loss can ripple through an entire connected system. This possibility directly contributes to insurer aggregation fears. In 2017, expect to see more unintended consequences from the IoT, leading insurers to look at risk aggregation and possibly change the way they provide coverage for risks associated with connected devices.
In 2017, insurers will likely continue to create policy language and endorsements that clarify how commercial and personal lines policies address a number of evolving risks, including:
The sharing economy. Drones. Louisiana Agent 14
IIABL MARCH BOARD MEETING
The IIABL Board of Directors met on March 10, 2017 at the Crowne Plaza Hotel in Baton Rouge. Following is a report on the board meeting. IIABL Secretary-Treasurer, Johnny Beckmann, presented the 2017-2018 IIABL Budget with the board. Revenues continue to decline as a result of the soft market and mergers and acquisitions of independent insurance agencies. The board discussed various ways to increase revenues and decrease expenses. On a motion by David Perry with a second by Armond Schwing, the board referred the budget to the IIABL Finance Committee for additional modifications without objection. IIABL board member, Paul Owen, led a discussion about agent concerns about the Louisiana automobile market. Several automobile insurers have left the Louisiana market, and others have restricted underwriting. Underwriting results are negative for the entire industry countrywide, but Louisiana re-
sults are worse than the national average. Contributing factors include increased driving due to cheap gasoline, an epidemic of distracted driving (particularly involving cell phones), and the increased cost to repair vehicles. Louisiana has a particularly difficult problem with litigation. Louisiana accident rate and property damage liability claim rate is just slightly higher than the national average. However, our bodily injury claim rate is twice the national average. The board discussed the need for tort reform. Unfortunately, the political consensus is that tort reform is not possible as long as John Bel Edwards is Governor. The board made a commitment that IIABL will lead a push for consumer advocacy to support tort reform at the appropriate time, when the business and insurance industries see the political opportunity to make a concerted effort for tort reform. IIABL CEO, Jeff Albright discussed plans for the 2017 Regular Session of the Louisiana Legisla-
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ture. Legislators will be limited to 5 regular bills during this fiscal legislative session, so fewer insurance bills are expected. The Louisiana Department of Insurance is expected to have 1520 bills. IIABL’s top legislative priority will be to pass legislation which will clarify a law passed in 2013 to clearly permit agency fees on individual health insurance. Representative Mike Huval will introduce the bill. IIABL will work with PIA, HAFA, LAHU and NAIFA agent associations to pass HB 407. IABL will also work with LDI to make LA Citizens resident agent requirements reciprocal with other states. Agents from states like Mississippi, who prohibits LA agents from accessing the Mississippi wind pool, will be prohibited from accessing LA Citizens. States like Texas, who allow LA agents to access the Texas wind pool, will be allowed to access LA Citizens. The board also discussed concerns by the Louisiana Surplus Lines Association (LSLA) about R.S. 22: 44.1 which requires all insurance companies to report any reductions in coverage on a renewal policy to the policyholder. LSLA would like to exempt surplus lines insurers. The IIABL Board
agreed to try to work with LSLA to accommodate their concerns, but want to protect policyholders and agents with some type of notice when coverages are reduced on renewal. IIABL will work with LSLA to try to amend R.S. 22: 44.1 so that insurers who deliver quotes or policies directly to policyholders will notify policyholders (with a copy to the agent) and insurers who deliver quotes or policies to agents will notify agents. Jeff Albright reported to the board that LDI Regulation 105, which would have prohibited insurance companies from filing for rate increases more often than once every twelve months was rejected by the Senate Insurance Committee. Jeff Albright has notified Commissioner Donelon of IIABL’s objections to reducing the commercial forms deregulation threshold in Regulation 72 from $200,000 to $10,000. Commissioner Donelon agreed to discuss this matter with IIABL further if any changes were made to Regulation 72.
Commissioner Donelon sent IIABL a letter in response to our concerns about Zenefits, a group health insurance “disrupter� out of California. Commissioner Donelon advised that LDI fined Zenefits for licensing violations. Paul Owens, Jeff Mohr and Jeff Albright met with the LA Contractors Licensing Board about problems with certificate of insurance. The conversation was very productive. Some of the problems agents experience are a result of old legacy computer systems. The Contractors Licensing Board agreed to work on several solutions to resolve problems with agent filings of certificates of insurance.
National Director, Lee Schilling, reported on the IIABA National Legislative Conference, which will be held the first week in May. Over 1000 Big I member agents will be on Capitol Hill lobbying Congress on important issues. NFIP Reauthorization in September is the top priority. The next IIABL Board meeting will be held at the convention in June.
IIABL Secretary-Treasurer, Johnny Beckmann, reviewed the January 2017 financial statement with the board.
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IIABL Director of Education, Mike Edwards is your source for technical questions. Contact Mike at medwards65@aol.com or 678.513.4390
Subject: Can Ordinance or Law Coverage in HO & CP Pay to Elevate a Building as Required Under a Local Building Code? Q. I had lunch yesterday with a friend who works for our local Parish government. She raised an interesting question about Ordinance or Law coverage in Homeowners and/or Commercial Property forms. It deals with the requirement to elevate buildings in certain flood zones. At first I thought she was asking about Increased Cost of Compliance in the NFIP flood policy. As it turns out, she said the local Parish government was exploring other ways to help homeowners find sources of financing outside of the flood policy. So her question was about the O&L coverage in HO or CP, where the damage was due to a covered peril, and one of the many building code requirements that might apply to repair/ reconstruction was the requirement to elevate the building.
A. Very interesting question, and in some cases,
the answer is “yes.” For the discussion which follows, comments and excerpts are based on ISO (Insurance Services Office) forms and endorsements. Proprietary forms may be different.
HOMEOWNERS COVERAGE
HO 00 03 05 11 age
Homeowners 3 – Special CoverSection I – Exclusions
A. We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or
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affects a substantial area.
1. Ordinance Or Law law:
Ordinance Or Law means any ordinance or
a. Requiring or regulating the construction, demolition, remodeling, renovation or repair of property, including removal of any resulting debris. This Exclusion A.1.a. does not apply to the amount of coverage that may be provided for in E.11. Ordinance Or Law under Section I – Property Coverages;
Section I – Additional Coverages 11. Ordinance Or Law a. You may use up to 10% of the limit of liability that applies to Coverage A for the increased costs you incur due to the enforcement of any ordinance or law which requires or regulates: (1) The construction, demolition, remodeling, renovation or repair of that part of a covered building or other structure damaged by a Peril Insured Against;
(2) The demolition and reconstruction of the undamaged part of a covered building or other structure, when that building or other structure must be totally demolished because of damage by a Peril Insured Against to another part of that covered building or other structure; or (3) The remodeling, removal or replacement of the portion of the undamaged part of a covered building or other structure necessary to complete the remodeling, repair or replacement of that part of the covered building or other structure damaged by a Peril Insured Against. b. You may use all or part of this ordinance or law coverage to pay for the increased costs you incur to remove debris resulting from the construction, demolition, remodeling, renovation, repair or replacement of property as stated in a. above. c. We do not cover: (1) The loss in value to any covered building or other structure due to the require-
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ments of any ordinance or law; or
(2) The costs to comply with any ordinance or law which requires any "insured" or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, pollutants in or on any covered building or other structure. Pollutants means any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste. Waste includes materials to be recycled, reconditioned or reclaimed. This coverage is additional insurance. Comments: (1) In Section I – Exclusion A.1. [above], there is no coverage for a loss due to any Ordinance of Law (O&L). For example, following direct damage by a covered peril (fire, windstorm, etc.), local or state building codes may require that certain materials, equipment, or design changes be used in repairing the damage, which
were not a part of the home prior to the loss. Such increased cost to comply with any building code or related ordinance or law is excluded. (2) At the same time, building codes are not usually triggered by minor repairs or upgrades. Non-compliant features of the home are normally discovered where the damage is substantial, and building permits are needed to effect repairs, with the accompanying inspections, to verify code compliance. (3) Additional Coverage 11 – Ordinance or Law [above], provides an automatic limit of 10% of Coverage A. This amount can be increased with endorsement HO 04 77 Ordinance or Law Increased Amount of Coverage. (4) Direct damage by an excluded cause, such as flood, earthquake, termites, etc., do not trigger the O&L coverage. However, some insurers will endorse flood and or quake to their proprietary coverage forms, in which case there would be O&L coverage for those perils, also. But O&L coverage only applies for damage by a covered peril.
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(5) A note of caution: Not all insurers include the 10% automatic amount of coverage. There would be no coverage in that policy unless added by attachment of HO 04 77. In fact, the 10% automatic coverage in Additional Coverage #11 was not added by ISO until 1994. Prior ISO HO policies provided no coverage without HO 04 77. But adverse case law (including E&O) following Hurricane Andrew in 1992 was a factor in some limited amount of O&L coverage (10% of Coverage A) being automatically included, with an option to purchase higher limits. COMMMERCIAL PROPERTY COVERAGE
All three Causes of Loss Forms (CP 10 10 – Basic Form, CP 10 20 – Broad Form, and CP 10 30 – Special Form) exclude any loss caused by the enforcement of any ordinance or law.
CP 10 30 10 12 Causes of Loss – Special Form B. Exclusions 1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded re-
gardless of any other cause or event that contributes concurrently or in any sequence to the loss. a. Ordinance Or Law The enforcement of or compliance with any ordinance or law: (1) Regulating the construction, use or repair of any property; or (2) Requiring the tearing down of any property, including the cost of removing its debris. This exclusion, Ordinance Or Law, applies whether the loss results from: (a) An ordinance or law that is enforced even if the property has not been damaged; or (b) The increased costs incurred to comply with an ordinance or law in the course of construction, repair, renovation, remodeling or demolition of property, or removal of its debris, following a physical loss to that property. Continued page 24
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Comments: (1) The O&L exclusion in Commercial Property forms is essentially the same as the one in Homeowners forms. [See discussion above.] (2) Likewise, there is a limited amount (10%) of automatic coverage for O&L coverage, which is included in the CP 00 10 – Building and Personal Property Coverage Form.
CP 00 01 10 12 Building and Personal Property Coverage Form A. Coverage
4. Additional Coverages e. Increased Cost Of Construction (1) This Additional Coverage applies only to buildings to which the Replacement Cost Optional Coverage applies. (2) In the event of damage by a Covered Cause of Loss to a building that is Covered Property, we will pay the increased costs incurred to comply with the minimum standards of an ordinance or law in the course of repair, rebuilding or replacement of damaged parts of
that property, subject to the limitations stated in e.(3) through e.(9) of this Additional Coverage. (3) The ordinance or law referred to in e. (2) of this Additional Coverage is an ordinance or law that regulates the construction or repair of buildings or establishes zoning or land use requirements at the described premises and is in force at the time of loss. (4) Under this Additional Coverage, we will not pay any costs due to an ordinance or law that: (a) You were required to comply with before the loss, even when the building was undamaged; and (b) You failed to comply with. (5) Under this Additional Coverage, we will not pay for: (a) The enforcement of or compliance with any ordinance or law which requires demolition, repair, replacement, reconstruction, remodeling or remediation of property due to cont Continued page 28
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I spoke to a long time member today in regards to live continuing education courses. He mentioned that he really gets so much out of going to live courses but that we were not offering as many as we had in the past. My response...Waves of Change. The on-line CE market has forced us to scale back our live education seminars. The next thing he said to me was that he could go to the convention to get live CE courses and that he has never been. I seized the moment to explain to him the value of attending the IIABL Convention.
IIABL All Day Tailgate on the Beach
Rock it out with The Tip Tops
Download the following forms: 2017 IIABL Convention Registration Form 2017 IIABL Convention Exhibitor Registration Form 2017 IIABL Convention Sponsorship Form 2017 IIABL Company & Broker Reception Form 2017 IIABL Tentative Convention Program
Oceans of Opportunity
1) Quality CE program with outstanding instructors 2) Updates from the Commissioner of Insurance 3) IIABA representative to keep us up-to-date on the national scene 4) So many opportunities to network with companies, brokers, vendors, fellow agents and the list goes on
If you have never attended the IIABL convention I encourage you to make a priority this year! Our outstanding program this year includes:
Ron White-Triple Your Memory, Triple Your Business
Virginia Bates: Serious Insurance Games Improving Your Revenue Stream
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Webcasts E&O Risk Management May 2, May 13th, May 18th, June 6th, June 10th, June 15th
Ethics May 8, May 16, May 26, June 6, June 19, June 21
Available on Demand
Available on Demand
Flood May 17th, June 16
Available on Demand
Commercial & Personal Lines Courses Click above title for courses & dates for 2017 Available on Demand
Seminars IIABL Fall Education Conference October 19 Shreveport Convention Center
2017 Flood Classes 5/9—Bossier City 5/9—Monroe 5/10—Lafayette 5/11—Kenner 5/11– Covington
Events Trusted Choice Make A Wish Bowling Fundraiser
IIABR Charity Golf Tournament May 4, 2017
Young Agents @ The Races May 17, 2017
IIAGNO 39th Annual Seafood Soiree’ May 19, 2017
April 28th—Shreveport, Monroe, Lafayette, Baton Rouge
Carter Plantation
Louisiana Downs Bossier City
Southport Hall New Orleans
Environmental Strategists (eS) Becoming a certified environmental Strategist™ (eS) will equip you with the knowledge to identify, manage and transfer environmental exposures impacting everyday business.
Cyber Risk Manager (cyRM) Completion of the Cyber Exposures & Insurance – Training for Agents & Brokers course qualifies you to register for the cyRM certification for FREE.
On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.
CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.
Pre-Licensing Online prelicensing 3 optional study packages available Click here for additional information Louisiana Agent 26
Company
Coverage Type
Overall % Impact:
Overall $ Impact:
Number of Policyholders:
Changes
Direct General Ins Co Right Choice Program
19-Private Passenger Auto
+9.1%
+$173,332
748
No effective date provided
Direct General Ins Co Right Choice Advantage Program
19-Private Passenger Auto
+9.9%
+$90,962
292
No effective date provided
American Home Assurance Co Commerce & Industry Ins Granite State Ins Co Illinois National Ins New Hampshire Ins Co Ins Co of the State of Pennsylvania AIG Assurance Co AIG Property Casualty Co
16 – Workers Comp
-8.10%
-$4,720,243
335
New: 5/1/2017 Renewal: 5/1/2017
Oak River Insurance Co Berkshire Hathaway Homestate Redwood Fire & Casualty Ins
16 – Workers Comp
-9.8%
-$1,676,189
83
New: 5/1/2017 Renewal: 5/1/2017
Continental Casualty Co
Prof E&O Liability Accountants Prof Liability Program
-3.6%
-$40,417
422
New: 5/1/2017 Renewal: 5/1/2017
All Savers Insurance Co
Excess Stop Loss – Employer(s) Plan
18.3%
$503,346
41
New: 10/1/2017 Renewal: 10/1/2017
Allstate Property & Casualty
19_Private Passenger Auto, LA Trailer Program
30.0%
$516,903
4,999
New: 6/26/2017 Renewal: 6/26/2017
Louisiana Agent 27
Ask Mike continued from page 24
tamination by "pollutants" or due to the presence, growth, proliferation, spread or any activity of "fungus", wet or dry rot or bacteria; or (b) Any costs associated with the enforcement of or compliance with an ordinance or law which requires any insured or others to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of "pollutants", "fungus", wet or dry rot or bacteria. (6) The most we will pay under this Additional Coverage, for each described building insured under this Coverage Form, is $10,000 or 5% of the Limit of Insurance applicable to that building, whichever is less. If a damaged building is covered under a blanket Limit of Insurance which applies to more than one building or item of property, then the most we will pay under this Additional Coverage, for that damaged building, is the lesser of $10,000 or 5% times the value of the damaged building as of the time of loss times the applicable Coinsurance percentage. The amount payable under this Additional Coverage is additional insurance.
(7) With respect to this Additional Coverage: (a) We will not pay for the Increased Cost of Construction: (i) Until the property is actually repaired or replaced at the same or another premises; and (ii) Unless the repair or replacement is made as soon as reasonably possible after the loss or damage, not to exceed two years. We may extend this period in writing during the two years. (b) If the building is repaired or replaced at the same premises, or if you elect to rebuild at another premises, the most we will pay for the Increased Cost of Construction, subject to the provisions of e.(6) of this Additional Coverage, is the increased cost of construction at the same premises. (c) If the ordinance or law requires relocation to another premises, the most we will pay for the Increased Cost of Construction, subject to the provisions of e.(6) of this Additional Coverage, is the increased cost of construction at the new premises. (8) This Additional Coverage is not subject to
the terms of the Ordinance Or Law Exclusion to the extent that such Exclusion would conflict with the provisions of this Additional Coverage. (9) The costs addressed in the Loss Payment and Valuation Conditions and the Replacement Cost Optional Coverage, in this Coverage Form, do not include the increased cost attributable to enforcement of or compliance with an ordinance or law. The amount payable under this Additional Coverage, as stated in e.(6) of this Additional Coverage, is not subject to such limitation. Comments: (3) This Additional Coverage is titled “Increased Cost of Construction” (ICC), since its provisions are meant to be set apart from the O&L exclusion. [A.4.e.(8)] (4) In order for this ICC to apply, Replacement Cost is required to be included in the policy. [A.4.e.(1).] (5) A very important restriction for ICC is that coverage does not apply to any ordinance or law the insured was required to comply with prior to the current loss, but failed to do so. [A.4.e.(4)(a) (b).] Assume the insured had previously done some renovations, upgrades, repairs, etc., and did not comply with certain building code requirements he was required to meet in conjunction with such work. In a subsequent loss, the ICC coverage (as well as the O&L coverage provided under CP 04 05) would not cover the expense of upgrading this prior work to current code. (6) Coverage under the ICC provision is limited to $10,000 or 5% of the coverage limit on the building. [A.4.e.(6).] (7) The Ordinance or Law endorsement (CP 04 05) is available for higher O&L limits, and has some unique differences with the Homeowners endorsement (HO 04 77).
CP 04 05 10 12 Ordinance or Law Coverage [Excerpts only – the endorsement runs 4 pages.] B. Application Of Coverage(s) The Coverage(s) provided by this endorsement applies only if both B.1. and B.2. are satisfied and are then subject to the qualifications set forth in B.3. Continued page 30 Louisiana Agent 28
2.a. The building sustains direct physical damage that is covered under this policy and as a result of such damage, you are required to comply with the ordinance or law; or b. The building sustains both direct physical damage that is covered under this policy and direct physical damage that is not covered under this policy, and as a result of the building damage in its entirety, you are required to comply with the ordinance or law. c. But if the building sustains direct physical damage that is not covered under this policy, and such damage is the subject of the ordinance or law, then there is no coverage under this endorsement even if the building has also sustained covered direct physical damage. 3. In the situation described in B.2.b. above, we will not pay the full amount of loss otherwise payable under the terms of Coverages A, B, and/or C of this endorsement. Instead, we will pay a proportion of such loss, meaning the proportion that the covered direct physical damage bears to the total direct physical damage. Comments:
(8) In certain circumstances, such as a severe thunderstorm, it is quite possible that there will be damage from covered (windstorm) and excluded (flooding) causes of loss. Where the combined damage from both contribute to trigger the threshold for O&L coverage, the amount payable for O&L will be prorated in proportion that the covered damage (windstorm) bears to the total damage. [B.2.b. and B.3.] This assumes that the threshold for triggering the requirement to comply with the current code was damage done “from any cause,” or “regardless of the cause of the damage,” or words to that effect. That is, the combined damage reached the threshold (often 50%).
(9) Conversely, in other situations, where there was windstorm and flood damage, the excluded cause of loss alone (flood, in our example) could be sufficient to trigger the requirement for code compliance. Contrasted with the building code wording in (8) above, this code might require compliance “where damage from flood” exceeds the threshold (often 50%) for floodplain compliance. In that situation, there is no O&L coverage at all, for windstorm or flood damage. [B.2.c.] BUILDING CODES For additional information on the Louisiana build-
ing code, see TA #259 New Building Codes – No Pain, No Gain. Most state and local building codes are based on a series of model codes prepared by the ICC: International Code Council. At present, there are about a dozen different code manuals, including the International Existing Building Code (IEBC), which would be an important reference when O&L issues arise after damage to existing buildings. These materials are intended for educational purposes only and should not be relied upon as legal advice. Please consult a qualified attorney
Are You Insurance ALL the Right People? 2pm—3:30pm Central Time CE is not offered on this webinar Cost: $69.00 Register Here!
Who qualifies as an insured in the commercial general liability (CGL) policy and the business auto policy (BAP)? More importantly, how should the insured be listed on the policy? You must be careful who you list as and how you list an insured. Get this wrong and there may be NO coverage (an E&O nightmare). Only attend this session if you are interested in learning:
Who is granted insured status in the CGL and BAP; Who you can and should extend coverage to in these forms; Who is not and should not be included; and The weird requests additional insureds often make.
Louisiana Agent 31
Louisiana Agent 30
FREE FLOOD COURSES EXCLUSIVELY FOR IIABL MEMBERS Presented by: Gregg Porter w/Selective Flood REGISTRATION & LOCATIONS □ May 9, 2017 8am – 11am
Bossier City – Hilton Garden Inn 2015 Old Minden Rd
□ May 9, 2017 2pm – 5pm
Monroe - Courtyard Marriott 4915 Pecanland Mall Drive
□ May 10, 2017 8am – 11am
Lafayette – Hilton Garden Inn 2350 W Congress St
□ May 11, 2017 8am – 11am
Kenner – Crowne Plaza 2829 Williams Blvd.
□ May 11, 2017 2pm – 5pm
Covington – Staybridge Suites 140 Holiday Blvd.
Download Registration Brochure
Commissioner’s Corner
Louisiana’s Opioid Addiction and Its Effect on Insurance Over the past several years Louisiana has become part of a growing and alarming problem in our country: the increase of opiate substance use disorders. I warned of this issue last fall following a study from the Workers Compensation Research Institute reporting that one in six injured workers in Louisiana was identified as having longer-term use of opioids, the most prevalent out of the 25 states included in the two-year study period. According to the U.S. Department of Health and Human Services, the rate of overdose deaths nationally involving opioids including
prescription pain relievers and heroin nearly quadrupled between 1999 and 2014. This is an issue making headlines around the nation with several studies pointing to rising death rates due to drug overdoses. In one study reported by The New York Times, the rising death rates for young white males have made them the first generation since the Vietnam War to experience higher death rates in early adulthood than the previous generation. There are an estimated $55 billion in health and social costs related to prescription opioid abuse each year and another $20 billion in emergency department and inpatient care for opioid poisonings across the country. The Centers for Disease Control and Prevention estimates that the problem is especially acute in Louisiana which has an overdose death rate exceeding the national average. We see the devastating effect of these substance
use disorders in our premiums for both health care and workers’ compensation insurance. Abuse of these drugs can lead to lost time from work and possible disability and death. Opioid addiction can be especially insidious because many users first encounter the drug as prescribed by a doctor and those of us most susceptible to addiction are often struggling with another medical problem such as chronic pain. In our “on the go” society, opioids can help mask the signs that patients have not allowed themselves sufficient time to heal after surgery or an injury thus extending the length of time opioids are needed to manage pain. Pain can be a huge burden and opioids can and do have a part to play in pain management. There is a balance in allowing medical practitioners to prescribe the course of treatment that best fits a patient’s needs while also considering quality of life and future outcomes. However, as we become more acutely aware of the dangers of opioid addiction, we must be vigilant at every
point in the pain management process to ensure that these drugs aren’t falling into the wrong hands and that we aren’t creating more victims. A recent study in the Annals of Surgery found that providing guidelines to surgeons on the amount of opioid pills to prescribe to patients after a specific surgery cut the number of pills prescribed by 53 percent and many patients didn’t consume all of the pills they were prescribed. Judicious prescribing of opioids at the time of care and careful monitoring for chronic pain conditions is necessary. However, once patients are determined to no longer need opioids for pain management, smart and planned withdrawal is needed. For those patients that have developed a dependency, there needs to be judgementfree help and resources. For the majority of patients that will not experience dependency, vigilance is still necessary. According to the authors of that recent study in the Annals of Surgery, illegal users consume as much as 71 percent of legitimately prescribed opioids. In fact, 80 per-
Louisiana Agent 34
cent of the global opioid supply is consumed in the United States. And they are finding those pills in the medicine cabinets of family, friends and neighbors. National Prescription Drug Take Back Day provides a safe, convenient and responsible means of disposing of expired or unused prescription drugs while also educating the general public about the potential for abuse. Created by the Drug Enforcement Agency, the event offers an opportunity for consumers to safely and securely remove drugs that can contribute to accidental poisonings and overdoses.
scriptions than residents this problem has already reached epidemic proportions. By removing them from our homes and public spaces, we can begin the difficult process of freeing our family members, friends and communities from the clutches of this unforgiving addiction.
The Take Back Day has removed millions of pounds of prescription drugs from homes and allowed them to be safely disposed of without polluting our environment and water supplies. This year’s event will be held on Saturday, April 29. I encourage all Louisiana families to check their homes, automobiles and offices for unused or expired prescription drugs and to turn them in on Take Back Day. In a state with more opioid pre-
Young Agents Afternoon at The Races May 17, 2017 3:30pm—7:30pm
Come join young agents, company & broker friends for an afternoon at the races. A suite has been reserved for this event from 3:30pm—7:30pm at Louisiana Downs in Bossier City. . There will be appetizers, beer, wine & cocktails available. Each registrant will be given 2 drink tickets.
Online registration available via the IIABL website under Education & Events Calendar.
Louisiana Agent 35
GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL
AMERISAFE
AMERICAS INSURANCE
BANKERS INSURANCE
CNA INSURANCE
FCCI GROUP
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
LANE & ASSOCIATES
LUBA WORKERS’ COMP
MAISON INSURANCE
MARKEL FIRST COMP
RPS COVINGTON
SUMMIT CONSULTING
EMC INSURANCE
Louisiana Agent 37
IIABL 2016—2017 BOARD OF DIRECTORS & OFFICERS Richard D. Jenkins President Moore & Jenkins Insurance—Franklinton Neil Record President Elect Record Agency, Inc.—Clinton
John L. Beckmann, III Secretary/Treasurer J. Everett Eaves—New Orleans H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite David Dethloff Past President Dethloff & Associates—Shreveport Derek Canchola Young Agent Representative Blumberg & Associates—Baton Rouge Byram H. Carpenter, III Moreman, Moore & Co—Shreveport Brenda Case Lowry-Dunham, Case & Vivien—Slidell Joseph Cunningham, Jr. Cunningham Agency—Natchitoches Donna DiCarlo Riverlands Insurance Services—LaPlace Morris Funderburg Reeves, Coon & Funderburg—Monroe
Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe Joseph A. O’Connor, III The O’Connor Insurance Group—Metairie Paul Owen John Hendry Insurance Agency-Zachary Martin Perret Quality Plus—Lafayette David T. Perry Arthur J. Gallagher RMS—Baton Rouge Robert Riviere Riviere Insurance Agency—Thibodaux
Armond Schwing Schwing Insurance Agency—New Iberia Michael D. Scriber Scriber Insurance Services—Ruston Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin
Louisiana Agent 38