December 2018 LA Agent by Independent Insurance Agents & Brokers of Louisiana

A publication of the: Independent Insurance Agents & Brokers of Louisiana

LOUISIANA AGENT DECEMBER 2018

LOUISIANA AGENT DECEMBER 2018 IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com Francine Berendson Director of Communications & Events fberendson@iiabl.com Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com Karen Kuylen Director of Accounting kkuylen@iiabl.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

In this issue:

Mike Edwards, CPCU, AAI Retires After 22 Years with IIABL After 22 years of serving IIABL members as Director of Education, Mike Edwards will retire on December 31, 2018. Please help us express our appreciation by emailing Mike a personal note at Medwards65@aol.com. Mike Edwards started his insurance education career teaching for the Big I of Florida. Current Florida Big I Education Director, David

Thompson remembers, “I started my insurance career in 1986 in a family-owned insurance agency. My Dad told me, “Go to every class you can to learn this business.” Over the course of my 10 years in the agency, I probably took classes from Mike Edwards a dozen times. He had a great talent of making the subject understandable and even fun. I remember sitting there saying to myself, “This guy is really good.” With Mike’s retirement, our industry will lose another icon of insurance.” In 1996, IIABL hired Mike Edwards away from the Florida Big I to be the IIABL Director of Education. For many years, Mike traveled the state of Louisiana teaching seminars on a wide variety of subjects. With a tremendous understanding of insurance coverages, and a great

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analytical mind, Mike educated many IIABL members over the years. One of Mike’s special gifts was the ability to use case studies bring the insurance theory to life for many of us. The student evaluations for all of Mike’s classes were always outstanding, and when he finally quit traveling and teaching, our most common request was, “Bring back Mike!”

er and director of the Big “I” Virtual University for over 17 years. Bill had this to say about Mike Edwards. “Mike has been a colleague across three decades. When it comes to insurance coverage analysis, he has few, if any, peers. His policy language analytical skills are unsurpassed, as is his ability to communicate difficult concepts.”

When Mike and his wife, Gloria, moved to Atlanta to help care for aging parents, Mike continued to serve IIABL members by organizing and managing our education programs, writing the monthly “Ask Mike” insurance coverage articles in the Louisiana Agent newsletter, and publishing Technical Advisories on important issues facing agents. But perhaps his biggest service to agents has been answering questions and helping agents with problems in their agency. Every month, Mike received hundreds of requests from agents, researched the best answers and provided solutions to IIABL members.

Chris Amrhein worked with Mike in Florida and had this to say about Mike. “I first worked with Mike Edwards almost 38 years ago. At that time, he was one of the best insurance instructors I’d ever seen. (And as a road partner, his exquisite taste in pork skins and Diet Coke was truly superior!) Who knew that he would just keep getting better, as well as add outstanding insurance writer to his arsenal? And now I hear he’s retiring. Enjoy your plethora of accolades — they are well earned, my friend!"

In recognition of his lifetime of achievements in insurance education, and his 22 years of services to IIABL members, Mike Edwards will be awarded the 2019 IIABL Lou Daniel Award, the highest honor IIABL bestows, at the IIABL Convention in Destin in June. Mike Edwards is a self-confessed “Insurance Nerd.” For many years, he has worked on the faculty of the Big I Virtual University “Ask the Experts.” Perhaps the best measure of Mike’s outstanding accomplishments is the respect and admiration of his colleagues (fellow insurance nerds). William C. “Bill” Wilson, Jr., CPCU, ARM, AIM, AAM retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Associate VP of Education and Research and was the found-

IIABL CEO, Jeff Albright, praised Edwards, “Mike Edwards has been a tremendous resource for IIABL member agents. He will be impossible to replace and we will miss his valuable contributions. We want to thank Mike for all his outstanding work over the years and wish him a long and happy retirement.” Mike—what will we do without our annual birthday cards and cartoons from you!! You will be missed my friend...Francine, Karen & Rhonda We want to thank Mike for all his outstanding work over the years and wish him a long and happy retirement. IIABL members may continue to refer questions and agent concerns to IIABL CEO, Jeff Albright by email at JAlbright@IIABL.com or by phone (225) 236-1366. Louisiana Agent 6

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IIABL Director of Education, Mike Edwards, CPCU, AAI is your source for technical questions. Contact Mike at medwards65@aol.com or 770.402.1011

Subject:

Personal Auto Coverage Issues in the Workplace

Q. I read your recent article on hired & non-owned auto situations in the Business Auto policy and the Commercial General Liability policy. I was curious about what coverage the employees had under their personal auto insurance for these and other situations that arise while using autos related to business.

A. There are certainly some situations where employees would need to seek coverage under their own auto insurance, either as excess over the employer’s insurance, or where the employee might not be covered by the business auto policy. For the discussion below, assume that Smithco, Inc. is owned by Jill Smith, and that Jennifer and Jack are employees. Coverage form excerpts and comments are based on forms developed by the Insurance Services Office (ISO). Proprietary forms may be different.

Situation #1: Smithco rents a box truck for a couple of weeks, in conjunction with moving some inventory and office furnishings to their satellite store. Jill designates Jennifer to drive the truck, since she drove trucks during her time in the Army. Comments: (1) Smithco’s Business Auto Policy [BAP] (CA 00 01 10 13) covers permissive users of an auto that Smithco owns, hires, or borrows. (2) Jennifer’s Personal Auto Policy [PAP] (PP 00 01 09 18) covers her for the “ownership, maintenance or use of any auto or trailer.” (3) However, her PAP excludes business use, except for “the maintenance or use of a private passenger, pickup, or van,” (coverage includes a trailer attached to any of these three types of vehicles.) (4) ISO offers no endorsement in the PAP to buy back coverage for business use of any vehicles other than a private passenger, pickup, or van.

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There are certainly some situations where employees would need to seek coverage under their own auto insurance, either as excess over the employer’s insurance, or where the employee might not be covered by the business auto policy. For the discussion below, assume that Smithco, Inc. is owned by Jill Smith, and that Jennifer and Jack are employees. Coverage form excerpts and comments are based on forms developed by the Insurance Services Office (ISO). Proprietary forms may be different.

10 13) covers permissive users of an auto that Smithco owns, hires, or borrows. (2) Jennifer’s Personal Auto Policy [PAP] (PP 00 01 09 18) covers her for the “ownership, maintenance or use of any auto or trailer.” (3) However, her PAP excludes business use, except for “the maintenance or use of a private passenger, pickup, or van,” (coverage includes a trailer attached to any of these three types of vehicles.) (4) ISO offers no endorsement in the PAP to buy back coverage for business use of any vehicles other than a private passenger, pickup, or van. Situation #2: Jill allows Jennifer to use the rented truck over a weekend, while Jennifer is moving into a new house. Comments: (1) Since Jennifer has permission to use the rented truck over the weekend, she is still covered Continued page 12

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under Smithco’s BAP. The fact that the truck is not being used for Smithco’s business over the weekend does not change the coverage for Smithco or Jennifer. (2) Jennifer is covered in her PAP for the nonbusiness use of the rented truck. The PAP does not define the word “auto,” so she would be covered driving a rented box truck, motor home, etc. (3) However, some proprietary forms do define “auto.” For example, one proprietary form defines “auto” as “a four-wheel private passenger vehicle

“Renting Motor Homes, UHaul Trucks, and Trailers” “Renting Motor Homes on Vacation” Situation #3: Jack occasionally uses his Ford F350 pickup truck to run office errands. Comments:

or dual rear wheel six-wheel pickup truck with a gross vehicle weight (GVW) of less than 10,000 pounds.” Another defines “auto” as “a land motor vehicle of the private passenger, pick up, or van type which is designed for use mainly on public roads.” Yet another defines “auto” as “a land motor vehicle of the private passenger, pickup body, or cargo van type, designed for use on public roads, and with a gross vehicle weight of 12,000 pounds or less.”

(1) Smithco’s unendorsed BAP would not cover Jack, since permissive users are insureds only for autos Smithco “owns, hires, or borrows.” The majority view is that there must be some degree of supervision or control in order for something to be “borrowed.” In a well-known 1991 case, the Louisiana Supreme Court held that borrowing

“What Is An ‘Auto’?”

(La. 1991).]

“connotes the acquisition of temporary possession, dominion or control of a thing, not merely the receipt of some benefit from its use by another person.” [Schroeder v. Board of Supervisors of Louisiana State University, 591 So.2d, 342

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(2) Smithco’s BAP could provide coverage for Jack if the Employees As Insureds endorsement (CA 99 33 10 13) was attached. The coverage is provided in one sentence: “Any employee of

yours is an "insured" while using a covered auto you don't own, hire or borrow in your business or your personal affairs.” (3) Jack’s PAP provides coverage for the business use of “a private passenger, pickup, or

van.”

Situation #4: Jennifer borrows Jack’s pickup truck to go get the large Christmas tree Smithco will set up in the lobby. Comments: (1) Since Smithco did not “borrow” Jack’s pickup truck, Jennifer is not an insured in the BAP while driving Jack’s truck on Smithco business. (2) If the CA 99 33 10 13 is attached (see Situation #3), Jennifer is an insured in Smithco’s

BAP.

(3) Note, however, that a literal reading of the CA 99 33 seems not to cover Jack as an insured (for his vicarious liability) when Jennifer is using his pickup. Coverage appears to apply only to the employee who is “using” an auto on Smithco business. Some experts believe this might be an oversight by ISO. But one general principle of contract interpretation is that “the contract stands as written,” unless there is compelling and persuasive evidence to the contrary. (4) Jennifer’s PAP provides coverage for the business use of “a private passenger, pickup, or van.” Note that coverage applies whether or not Jennifer owns the vehicle. Some proprietary forms cover business use for owned autos only. Other proprietary forms coverage business use if the policy is rated for business. And some proprietary forms exclude all business use. (5) One problem Jennifer might have is that Jack’s F-350 has a GVWR of around 13,000 lbs. Some proprietary auto policies exclude the use of any vehicle (rented, borrowed, or just driving

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around the block) over 10,000 lbs GVWR. The ISO PAP does have a restriction for pickups and vans over 10,000 GVWR, but only if they are a “Newly Acquired Auto.” Therefore, her ISO PAP provides liability coverage for her while driving Jack’s truck on company errands.

(6) Depending on the type of business Smithco is in, there is an additional business exclusion that might apply. Specifically, Jennifer’s PAP excludes coverage if she is an employee of a business engaged in “selling, repairing, servicing,

storing, or parking vehicles designed for use mainly on public highways.” However, this exclu-

sion does not apply if she is using her own auto while an employee of any of these types of auto -related businesses. But if Smithco falls into one of those categories, then her PAP would not cover her while using Jack’s F-350 on Smithco business. If Jack has an ISO PAP, she would be covered as a permissive user of his truck. If Jack has a proprietary auto policy, she may or may not be covered in his policy.

“PAP & the 10,000 lb. GVW Limitation” Situation #5: Jennifer and Jack fly to Orlando for a business conference. Jennifer rents a car using her personal credit card, and will be reimbursed by Smithco when she turns in her expense report. The Rental Agreement (RA) is in her name, and she adds Jack as a driver. Comments: (1) Employee-rented autos present a conundrum which has been around for many years. In fact, when I began my insurance career in 1980, I remember that this was a subject of controversy. The key issue is whether or not Smithco actually rented the car, since it will reimburse Jennifer. Some insurers determined that from a practical standpoint, Smithco essentially did rent the car. Others held the view that an employee did not have the legal authority to bind Smithco in a contract. That is important, since the BAP covers permissive users of an auto Smithco “owns, rents, or borrows.” If Smithco

Continued page 14 Louisiana Agent 13

2019 Insurance Producer Licenses Renewal Process The 2017 Legislative Session brought changes to the insurance producer license renewal process.

Beginning in 2019 all licensed insurance producers whose license number ends in an odd number will be required to renew their license prior to the last day of their birth month.

An additional change is that you now can renewal your license up to 90 days in advance of your renewal. Your license renewal is valid for all lines of insurance that you are licensed for.

Changes to Appointment Renewals New procedures shorten the timeframe between invoice date and renewal and eliminated the need for supplemental renewals.

The appointment renewal date remains 4/30; however the invoices will now be generated at the end of March instead of in January.

Producers that are newly appointed after the generation of the invoice will have appointments expire the following year. There will no longer be a need to re-appoint to avoid expiration.

The fee to renew your license is as follows: 1) $50.00 to renew one line. 2) $55.00 to renew two or more lines.

Although you may have renewed your license in 2017 or 2018 you will have to renew your license again in 2019 (if your license number ends in an odd number) and have the necessary continuing education credits.

Producer license application fees will no longer be based on lines of authority.

Any questions regarding these changes can be directed as follows:

Lorie Gasior 225.219.7784 lgasior@ldi.la.gov

Producer Licensing 225.342.0860 producerlicensing@ldi.la.gov

The application fee will be $75.00 with the exception of Surplus Lines and Portable Electronics.

â&#x20AC;˘

Surplus lines application fee remains $250.

â&#x20AC;˘

Portable Electronics remains $200.

Adding a line to an active license will be $50.00. No change to fees for Claims Adjusters.

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is considered to have rented the car, then Jennifer and Jack are insureds in Smithco’s BAP. If not, they would have to rely on their own auto insurance for coverage. (2) In 1999, ISO introduced the Employee Hired Autos endorsement [CA 20 54 10 13 (current edition)]. Key provision: “An "employee" of yours is an

"insured" while operating an "auto" hired or rented under a contract or agreement in an "employee's" name, with your permission, while performing duties related to the conduct of your business.” Both

Jennifer and Jill are covered for liability in Smithco’s BAP with this endorsement. (3) In earlier editions of the Employee Hired Autos endorsement, the only employee who was an “insured” in the endorsement was the one whose name was on the rental agreement, which would be Jennifer in this situation. Subsequent editions of the endorsement (see excerpt in (2) above) provide “insured” status to any employee, so long as the rental agreement was in the name of “an” employee. “Who Rented This Car – Employer or Employee?

Situation #6: Jill’s daughter Jillette plays softball on a local municipal team. As her schedule permits, Jill helps transport some of the team and equipment in her Ford Expedition. Jillette is also a volunteer with Meals on Wheels, and occasionally drives Jill’s Expedition. Comments: (1) While neither of these activities is directly related to Smithco, a question often arises about the use of personal autos for transporting people and/or goods, and at what point do certain PAP business-type exclusions apply. Two of the problematic issues are compensation vs reasonable reimbursement, and whether the transportation service restricted to a select group of individuals, or available to the public at large. The exclusion for “public or livery conveyance” must be analyzed in each situation.

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(2) For decades, through various editions of the PAP, there has been an exclusion for the “public or livery conveyance” exposure, applicable to Part A – Liability, Part B – Medical Payments, Part C – Uninsured Motorists, and Part D – Damage to Your Auto. At the same time, there has been an exception for a “share-the-expenses car pool.” In the new 2018 PAP, a second exception to the “public or livery conveyance” exclusion was added for “volunteer or charitable purposes.” (3) The applicability of the “public or livery conveyance” exclusion is frequently debated where an insured is involved in transporting people or goods on a voluntary basis. Many community groups depend on volunteers to provide transportation services to the elderly or infirmed for trips to the doctor, or deliver meals, etc. According to Meals on Wheels America, there are more than 5,000 community-based programs, with more than 2 million staff and volunteers across the country, that are dedicated to addressing senior isolation and hunger.

Girl Scout cookies, and so forth.

(5) By adding a specific exception to the public or livery conveyance exclusion for volunteer or charitable purposes, ISO has done a very good deed for community volunteers everywhere. “Insuring Volunteers – Personal Lines” “Coverage for Transporting Kids to School Athletic Events” Transporting Clients of Nursing Homes & Social Services Agencies” “PAP Coverage for ‘Meals on Wheels’ Deliveries”

These materials are intended for educational purposes only and should not be relied upon as legal advice. Please consult a qualified attorney for legal advice.

(4) In addition, countless parents and teachers transport kids to sports events, field trips, deliver

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The Hottest Unconference in the Industry is coming to NOLA! The opportunity to join 800 liked-minded independent agents is coming to Louisiana. Elevate 2019 comes to New Orleans on March 24-26, 2019. Comments by independent agents who attended previous Elevates conferences are: “Hands down the BEST conference I have EVER been to. I was blown away by what people in our industry are doing.” “This is quickly going to become the only insurance conference agents need to attend….your one stop shop.” Featured speakers are: Donald Miller with StoryBrand, an NYT best seller that has helped businesses quadruple in revenue. Billy Williams with Williams Family Investment Group will share his business development secrets that enabled him to take agencies from $2—$10 million to $30 mil. Phil Nottingham is an internationally renowned video strategist at Wistia and will walk you through HOW to use video for marketing, sales and servicing. Matt Sapaula with PHP Agency & Smart Money Guy is a high profile podcaster and is going to help you with recruiting all-stars. Join the CEO’s from Applied System, Vertafore and top carriers to gain insider insights. 26 sessions led by agents for agents sharing their secrets to success. Hand picked exhibitors & sponsors to network with at Elevate 2019. Use promo code: IIABL-Elevate19 for your exclusive IIABL members only discount.

www.elevateconference.com

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“One Word”

The ISO CGL policy has an “auto” exclusion that begins:

Bill Wilson, CPCU, ARM, AIM, AAM

“‘Bodily injury’ or ‘property damage’ arising out of the ownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured….”

An insurer uses this ISO CGL policy, BUT adds one word: “’Bodily injury’ or ‘property damage’ arising out of the ownership, nonownership, maintenance, use or entrustment to others of any aircraft, “auto” or watercraft owned or operated by or rented or loaned to any insured….” [emphasis added] Contrary to popular opinion that “the CGL policy

doesn’t cover autos,” there is quite a bit of coverage in the ISO CGL policy for autos as long as they are not “owned or operated by” or “rented or loaned to” an insured. The nonowned auto liability coverage under the ISO CGL policy is significant for any insured with a traffic exposure, from construction worksites to shopping centers. That coverage is removed in the non-ISO example by the addition of a single word “nonownership.” If you were an agent of this insurer, would you be aware of this variation on ISO language or understand the potential significance, especially if an insured had no Symbol 1 or 9 auto liability coverage? The example above comes from a recently published IRMI article written by risk management consultant Jim Mahurin, CPCU, ARM. He found this when reviewing coverage forms for a client while

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evaluating their insurance program.

words.

In my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes,” I write about how seemingly insignificant changes in wording can introduce huge changes in policy coverage, illustrating once again why insurance is not a commodity differentiated only by price. The following is an excerpt from pp. 117-120 in the book:

But the point is that very minor differences in policy language can make a major difference in coverage and this is why insurance is not a commodity. This is particularly important for those insurance practitioners who consider themselves well versed in ISO standardized forms but a claim involves a form that is very similar to an ISO form except for what appear to be very minor differences.

One Word Before moving from semantic to syntactic ambiguities (and learning about the fascinating Adventures of Semi-Colon Man), let me address one more issue involving the lexicology or meaning of words. The previous chapter ended with a listing of 10 interpretive “doctrines.” Doctrine #2 was “RTFP!,” or “Read The…Policy.” In determining coverage for a real claim, you must not only “read” the policy, you must read it very, very carefully. Why? ONE WORD, a single word (or even a punctuation mark, as we’ll see below), can make a difference in coverage. Sometimes it’s TWO words. Sometimes THREE

For example, here are excerpts from the definition of “coverage territory” in, respectively, an ISO and a non-ISO proprietary general liability policy [emphasisadded]: “Coverage territory” means…All other parts of the world if the injury or damage arises out of… Goods or services made or sold by you in the territory described in a. above; “Coverage territory” means…All other parts of the world if the injury or damage arises out of…

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Goods or services made and sold by you in the territory described in a. above;

One word. But it’s easy to see how vastly more

restrictive the second definition is for someone with an international products liability exposure. Unless this difference was pointed out, would the typical insured catch this? Not a chance. Would the typical agent recognize the difference? Highly unlikely. In fact, it was an agent who asked one of my mentors, John Eubank, CPCU, ARM, to compare the two policies since he was considering moving a customer with an Asian market to the second policy above. An astute policy coverage wonk might catch this, but few agents likely would. Another example…ISO’s current (as of this publication date) CG 00 01 policy has several exceptions to its contractual liability exclusion including: Contractual Liability …This exclusion does not apply to liability for damages:

That the insured would have in the absence of the contract or agreement; or Assumed in a contract or agreement that is an “insured contract”, provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement…. Here is a proprietary non-ISO form that has ALMOST identical language except that it adds two words [EMPHASIS added]: Contractual Liability …This exclusion does not apply to liability for damages:

That the insured would have in the absence of the contract or agreement; or Assumed BY YOU in a contract or agreement that is an “insured contract”, provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement….

Two words. “You” is defined as the named in-

sured in both policies. Is it possible that the ex-

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ception in the second policy that is conditioned by the phrase “by you” only applies to contracts entered into by the named insured and not other insureds (officers, managers, etc.) at the business? If so, that would significantly reduce coverage for some insureds. That’s what the court considered in NPS Energy Services, Inc.,

an employee of the “named insured” (as compared to an exclusion that denied coverage for injuries to an employee of “any insured” or “the insured.” One court, in Endurance Am. Specialty Ins. Co. v. Century Sur. Co., 630 Fed App 6, 8 (2d Cir 2015), seemed to enjoy the distinctions, rejecting an argument that the term “named insured” was synonymous with “the insured”:

2001), a case worthy of your perusal after a web search.

This logic would apply if the Action Over Exclusion clause used the language “the insured” rather than “the named insured.” In that scenario, the provision would be read to replace “the insured” with “Hayden,” because Hayden is seeking coverage. But here, the Action Over Exclusion clause states “the named insured.” In analogous circumstances, where, for example, employee exclusions have altered the language “the insured” to language expressing a different intent, such as “any insured,” courts have held that the insurance policy precludes coverage of injuries to any employee, whether employed by the insured seeking coverage or not, because to do otherwise would render the unambiguous language referring to any insured a nullity…

et al. v. National Union Fire Insurance Company of Pittsburgh, PA, et al., 264 F.3d 365 (3rd Cir.

What about three words? That’s something we briefly examined in Policy Interpretation Doctrine #8 in the last chapter, so I won’t belabor the point here or with four words or more. Throughout the remainder of this book, you’ll find illustrations where a difference between using “an” rather than “the” can significantly gut the coverage in an insurance contract. Words

do matter. Added words. Missing words. Different words. Before we move on, consider an “Action Over” exclusion that removed coverage for injuries to

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Here, like the language “any insured,” the language “the named insured” evinces that the Action Over Exclusion clause specifically excludes coverage for bodily injury to employees of the named insured, Pinnacle. Hayden, in contrast, is not a named insured; rather, it is an additional insured. See J.A. 456 (defining who is an additional insured in the Policy); see also Kerrigan v. RM Assocs., Inc., 68 A.D.3d 659, 660, 892 N.Y.S.2d 350 (N.Y. 1st Dep’t 2009) (explaining that named insureds and additional insureds are distinct mutually exclusive categories of insureds). Indeed, the Action Over Exclusion clause replaced and explicitly modified the previous employee liability clause to change the words “the insured” to “the named insured.” Compare J.A. 418 with J.A. 463. Thus, the district court erred in reading “Hayden” into the words “the named insured” in the Action Over Exclusion provision. ‘Tis the season for giving. I hope you’ll consider ordering copies of my book (print or ebook) for your staff. 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 Insurance Services Office, Inc. He is a graduate of the Illinois Institute of Technology with a B.S. degree in Fire Protection & Safety Engineering.

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Steve Anderson

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CoverWallet for Agents: Your Online Access to the Small Commercial Market? You may have heard of CoverWallet as a new insurance technology startup that offers small business insurance coverage direct to consumer. Most traditional insurance agents consider CoverWallet as the enemy trying to take their business. While that may still be the case, last week CoverWallet announced a new service for insurance agents allowing them access to CoverWallet’s technology platform. The platform is called CoverWallet for Agents.

one application and instantly receive quotes from top carriers that are ready to be purchased and bound in real time. The platform is currently integrated with Chubb, Starr, CNA, and AmTrust, with more expected to be added shortly. Yes, the list is short right now because they are only using insurance carriers that can provide a real-time rate, quote, bind, and payment process. They also have several unique lines of business available on the platform such as Event Insurance. Some additional benefits to using the platform include:

I had an opportunity to preview the platform and hear details of how the service will work. Following is a bit more information so you can decide if this is an opportunity worth exploring or a continued threat to your business. A Look at CoverWallet for Agents

•

Financing integrated at checkout with a click of a button for customers who prefer to pay annual insurance over time, with multiple forms of accepted payments including credit cards, debit cards or bank account

Just like CoverWallet’s direct to business owner platform, CoverWallet for Agents is an easy way for agents to get quotes, bind coverage, purchase policies, and to service customers online. This is a dedicated platform for insurance agents. Through the technology platform, agents benefit from a fast, simple, and efficient way to provide commercial insurance to businesses, with a single point of entry to access to top carriers for multiple types of policies.

•

A dynamic and searchable online appetite guide that indicates how likely an account is to get an instant quote based on its location and class of business

•

Automated risk analysis, benchmarking, and data analytics to see what coverage will cost and the policies businesses in a specific industry typically purchase

•

A simple document management system and instant online generation of certificates of insurance

•

Automation for adding additional insureds to policies

•

Predictive analytics for coverage recommendations, as well as peer risk comparisons and claims support

It will function as a small commercial comparative rater for your agency. Inaki Berenguer, CEO and co-founder of CoverWallet, stated: “Today there are 40,000 insurance agencies in the U.S., and we are on a mission to make it easy for agents to harness the power of data, design, and technology to serve more clients better and faster than ever before.” CoverWallet for Agents provides agents with instant quotes, online bindable policies, and real-time proof of coverage. A dynamic online application that uses data and analytics allows agency staff to complete

My observations: •

CoverWallet is actively seeking out the online small commercial business owner. I know very few agents who are actively selling small Louisiana Agent 28

Company Ohio Security Ins Co Revised Rate Only

Coverage Type Commercial Pkg. Custom Protector Program

Overall % Impact:

Overall $ Impact:

0.8%

$101,492

Number of Policyholders: 1977

Changes New: 7/1/2019 Renewal: 7/1/2019

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•

commercial insurance at all, much less through an online channel. Opening their platform to agents allows them to leverage their technology investment better. This service provides an option to the agency that wants to go after the online small commercial market. This allows that small group to rent the technology instead of building a proprietary platform.

•

Don’t want to sell online? Then you can use their platform to streamline your internal quoting process.

•

It just seems like an exciting potential opportunity that many agents should explore.

•

They have a very competitive commission schedule. Because their technology platform takes significant friction out of the process of quoting, binding, paying, and issuing a small commercial policy, they can pass the savings on to you, the agent, so you make more.

•

CoverWallet knows that agents continue to control a large segment of the small commercial business.

Please understand that these are my initial impressions. I reserve the right to change my mind later. If interested, do your own homework. Talk to them. Carefully read the contracts. I know this service will not be right for many. I also suspect for the few who see ahead that this could be an opportunity to finally make a move online.

In answer to at least some of your questions, here is what I was told by Michael Konialian, the new Vice President and General Manager of CoverWallet for Agents. •

The agent will own their expirations.

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A Nearly 200-Year-Old Agency Takes Steps to Preserve Its Independence

Summary: Chase, Clarke, Stewart & Fontana, one

of the oldest and largest insurance agencies in Springfield, Massachusetts, faced a dilemma: how to stay independent when two of its partners were retiring. Could the agency afford to buy out both partners at the same time? As it turns out, it could, thanks to timely financing from InsurBanc, a division of Connecticut Community Bank NA. Chase, Clarke, Stewart & Fontana is a full-service insurance agency in Springfield, Massachusetts, with a history that dates back to 1827. Over the years, CCSF has grown through the acquisition of smaller local agencies, always keeping its roots in the community and maintaining its independence. In 2017, CCSF found itself at a crossroads. Two of its five partners were nearing the agency’s mandatory retirement age of 66, and CCSF’s bylaws required that they retire their shares in the company. As partner Ray Lukas explains, “We had been able to buy out retiring partners before, either through bank financing or an internal buyout, but we had never been faced with two retirements. We weren’t sure we could do it. How would we handle the partners’ clients, and could we afford to do a buyout?” At the same time, CCSF knew there were large national brokerages which expressed interest in purchasing smaller agencies, and the multiples were attractive. While selling to a larger firm would allow the partners to maximize their earnings, CCSF also wanted to explore options that could keep the agency independent. Prior to starting his own agency, which merged with CCSF in 2004, Lukas worked for a large financial services company in Boston. “I knew what it was like to work in a cubicle, where the only thing that matters are the numbers, you don’t have an identity and you aren’t in control of your destiny,” he says. “That weighed on my mind as we discussed the agency’s

future.” In the end, CCSF was able to come up with a perpetuation plan that was favorable to everyone involved. “We raised the acquisition price for an internal buyout to make it more appealing for the retiring partners, plus we offered a two-year brokerage agreement,” Lukas says. “Then we set out to see if we could get the financing.” ‘InsurBanc spoke our language’ Lukas turned right away to InsurBanc. “I had always heard good things about InsurBanc,” he says. “I felt with a commercial lender I’d be spending a lot of time explaining the basics of the insurance business, so I thought InsurBanc was the right place to start.

“From day one, it was just what I thought,” he continues. “InsurBanc knew our business model. They spoke our language, and they saw how our cash flow could generate the funds to pay off the loan. They made it easy and responded in a very timely manner. Scott Freiday, vice president and commercial team leader at InsurBanc, says that once the remaining owners decided they wanted to remain independent, “The loan needed to be underwritten quickly to show the retiring principals that capital was available. This is what we do every day, allowing agencies to maintain an independent legacy rather than selling out to one of the larger brokers. Our extensive knowledge of the agency business permits us to deliver solutions with a minimum of fuss. It’s also a credit to Ray, who was able to readily provide all the information we needed to do our due diligence.” “InsurBanc showed us how we could do the financing and remain independent,” Lukas adds. “It stepped up with enough funding for both buyouts, although we only needed it for one since we Louisiana Agent 32

funded the other one internally. I am certain that if we had used a commercial bank, the process would have taken longer. InsurBanc really understands how agencies work.” Perpetuating a legacy Remaining independent preserved CCSF’s rich history and its close ties to the community. CCSF has been continuously located in downtown Springfield since its inception in 1827. CCSF employees are active on boards and volunteer in local charitable organizations, and the agency sponsors community events and scholarships for local students each year.

rent transition, he hopes to convince a few other independent agents in the area to join the firm as he did. “I’d like to think that we could grow through acquisition and help out some other agents who are solo and may benefit from being part of our organization. We hope to be there for them in the years ahead.”

“Lifestyle was my number one reason for wanting to remain independent,” says Lukas. “Eventually you figure out what’s important in life. The money and stress aren’t worth it compared to the freedom and flexibility that comes with owning an independent agency. The satisfaction of building a team and growing an organization outweighs the ‘big money’ of selling to a national broker.” Lukas and his partners see a bright future for CCSF. Once the agency has emerged from its cur-

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