Louisiana Agent February 2018 A publication of the: Independent Insurance Agents & Brokers of Louisiana
Louisiana Agent February 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 Kim Jackson Education & Membership kjackson@iiabl.com
In this issue:
IIABL 2018 January Board Meeting Summary Ask Mike: The Tangled Web: The Insured’s Daughter… Her Fiancé’…the Rental Car… His Company Car…the Wedding
........... 5-9
.......................... 10-17
J.D. Power 2018 U.S. Independent Insurance Agent Satisfaction Survey ................. 18-19
The 2020 Vision—Are Your Team’s Business Skills Ready ............................................. 20 Rate & Rule Filing .................................................. 22 2018 IIABL Convention .......................................... 23 Tech Tips: Microsoft Photo Apps Updates & How to Use In Your Agency ............ 25-26 ACT Releases Texting Resources ...................... 26-27
Karen Kuylen Director of Accounting kkuylen@iiabl.com
Big Bad VooDoo Data ....................................... 28-33 Education & Events Calendar ................................ 30 We Make Insurance Human .................................. 36
Ed O’Brien Marketing Representative eobrien@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
IIABL Partners ........................................................ 37 IIABL Officers & Board .............................................. 36
On the cover: Historic Jackson Square, originally known in the 18th century as “Place d’Armes,” and later renamed in honor of the Battle of New Orleans hero Andrew Jackson, is a timeless attraction in the heart of the French Quarter of New Orleans.
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IIABL 2018 JANUARY BOARD OF DIRECTOR MEETING SUMMARY The IIABL Board of Directors met on January 12, 2018. Board members present included Johnny Beckmann, Byram Carpenter, Brenda Case, Joseph Cunningham, Donna DiCarlo, Morris Funderburg, Stuart Harris, Ross Henry, Bret Hughes, Richard Jenkins, Harry Kelleher, Philip “Phe” McMahon, Joe Montgomery, Joey O’Connor, Paul Owen, Teeny Perret, David Perry, Neil Record, Robert Riviere, Lee Schilling, Armond Schwing, Mike Scriber, Don Stiel, Donnie Stiel.
Trusted Choice / TrustedChoice.com Sydney Roe with TrustedChoice.com made a report to the board on the Search Engine Optimization (SEO) Program that IIABL has invested in for the benefit of member agencies. Sydney explained that Trusted Choice is the Big I consumer brand that promotes the advantages of independent agents over other insurance distribution channels. TrustedChoice.com is the internet portal where consumers can find Big I member agencies. Networking all Big I members together on TrustedChoice.com allows for better search engine results than individual agencies can achieve. By working together, we can better compete with direct online insurance market competitors. By investing $25,000 each year for the last four years in the Search Engine Optimization (SEO) Program, IIABL has substantially improved the search results for member agencies on TrustedChoice.com. The SEO Program targets specific lines of insurance in specific cities and towns in Louisiana. When consumers search for those lines of business in those cities, they are more likely to find TrustedChoice.com and Big I members in their area. This provides IIABL member agencies with important online branding. When a consumer finds member agencies on TrustedChoice.com, they have two options. They can contact the agency directly on their website, tele-
phone, or agency visit. Or, they can complete some basic information on TrustedChoice.com and that information is sent to a local Big I member as a referral. Over 120 leads are referred to IIABL members each month from TrustedChoice.com. Sydney also advised the board that TrustedChoice.com had enhanced the FREE basic profile available to all Big I members through a program called “FREEMIUM”. (Get it? Free + Premium = FREEMIUM.) All Big I members have to do is to log into their FREEMIUM account and complete their agency profile. TrustedChoice.com is providing the enhanced profile for free because they are trying to improve the quality of consumer referrals by matching consumers with agencies that provide what the consumer is looking for. Better profiles create better matches. Of course, if you want the best agency profile and preferred access to customer referrals, you can always sign up and pay for an Advantage Subscription at https:// solutions.trustedchoice.com/advantage-profile/
LA Producer of Record Statute IIABL board members Joey O’Connor and Paul Owen raised concerns about the failure of some wholesale brokers and insurance companies to comply with the Louisiana Producer of Record Statute (RS 22:1564).
IIABL has received numerous reports from our member agents that some wholesale brokers and insurance companies refuse to accept producer of record letters. Some claim that their computer systems will not handle the change in producer of record. Others say that their company procedures do not allow for midterm changes in producer of record, or will not allow for the transfer of a policy from a “preferred producer” to a producer who is not preferred. Some surplus lines brokers or insurers Continued page 7 Louisiana Agent 5
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claim that the statute does not apply to surplus lines. (Since there is no exemption for surplus lines in the statute, we assume that it does apply.) The IIABL Board of Directors voted unanimously to ask Insurance Commissioner Jim Donelon to issue an advisory letter to the industry directing them to comply with the statute.
2018 Legislative Session IIABL Legislative Chairman, Mike Scriber, IIABL CEO, Jeff Albright, and IIABL Contract Lobbyist, David Tatman, led a board discussion about the upcoming 2018 Regular Session of the Louisiana Legislature. Albright and Tatman reported that their reconnaissance indicated that the Louisiana Department
of Insurance would have at least 24 bills this session. LDI has not released their legislative agenda, so details are not available. However, Commissioner Donelon has stated publicly that he intends to introduce the new NAIC Cyber Security Model Act. The Cyber Model Act would place significant new requirements on everyone in the insurance business, and give the Commissioner broad authority to regulate cyber breaches in the insurance industry. The Cyber Model Act was very controversial in the NAIC debates, and the entire insurance industry (including the Big I) has very serious concerns about passage. Ten national insurance trade associations (including the Big I) got together and compiled an extensive set of amendments to make the Cyber Model Act more workable for the industry. In addition, IIABL believes that two additional amendments are absolutely necessary to make Continued page 9
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the Model practical for agents. The NAIC Model makes agents responsible for cyber breaches of confidential personal information collected by the agent, even if the breach occurs in third party systems. For example, if an agent collects information which is stored in a cloud based agency management system, is uploaded to an insurance company, and the credit scored by a credit company…the agent is responsible to the Commissioner of Insurance for breaches of the agency management system, insurance company or credit company. After extensive discussion, the IIABL Board of Directors voted unanimously to try to work with LDI to adopt the industry trade amendments and IIABL amendments to eliminate responsibility for third party breaches. If the bill is not amended to make it reasonable for independent agents, the board voted to oppose passage of the bill. The board voted to support passage of a bill to allow the Louisiana Citizens Property Insurance Company Board of Directors to manage the depopulation process in order to avoid excessive “cherry picking” and to minimize the risk of assessment to policyholders statewide. The American Insurance Association (AIA), which is made up of large, national independent insurance companies, has proposed legislation to allow for electronic (email) cancellation of insurance policies. After extensive discussion, the IIABL Board of Directors expressed objections to the concept because of possible agent E&O exposures related to the failure of policyholders to receive the email cancellation notice. IIABL will try to work with AIA if possible, but will oppose such legislation unless agents are protected.
IIABL President’s Report – Neil Record IIABL President, Neil Record, encouraged board members to build relationships with their legislators and encourage other IIABL members to do the same, and reminded them that grassroots support is critical to our success in the legislature. He also reported that part time marketing representative, Lee Mowe, was retiring from IIABL, and commended his outstanding work. Former IIABL employee and Deputy Insurance Commissioner, Ed O’Brien, will be joining IIABL again as our part time marketing rep.
IASC President’s Report – Brad Bourg Independent Agents Service Corporation (IASC) President, Brad Bourg, reported on the recent IASC board meeting. IASC is working to expand our Independent Market Solutions market access program. They are also working on a third party credit card and electronic funds payment system that will allow IIABL members to take such payments without processing the payments and fees are paid by the customer. Finally, IASC is trying to develop a turn-key cyber security program for members.
Young Agent’s Committee Report – Donnie Stiel Young Agents Committee Chairman, Donnie Stiel reported that plans are underway for a young agents crawfish boil on Friday, March 23, 2018 at Lakeside Daiquiris in Baton Rouge. Other young agents events for 2018 include A Day at the Races (Shreveport) date TBD and the Young Agents Conference, August 3 – 5, 2018 at the Ritz Carlton New Orleans.
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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: The Tangled Web: The Insured’s Daughter...Her Fiancé...the Rental Car...His Company Car...the Wedding.
Q.
One of my long-term insureds called me earlier today with what originally was a “quick question” on rental cars. His daughter is getting married in June, after she finishes grad school. The wedding is in Panama City, Florida (a beach wedding), and she and her fiancé will rent a car for the week of the wedding. They will turn it in when they fly out for their honeymoon. She emailed her dad to ask if she and her fiancé should buy the supplemental insurance from the car rental company. She scanned the rental car brochure and attached it to her email, which my insured subsequently sent to me. Since she is still a resident of his household, she is an insured under his auto policy. But I reminded my insured that her sta-
tus will change once she gets married, at which time she will need her own insurance. I told my insured that our agency always recommends purchasing the Damage Waiver (CDW/LDW). The other coverages are mostly a matter of personal choice. He said she wanted to know if they should purchase the $1,000,000 supplemental liability coverage, since her fiancé does not have an auto policy. (Oh, joy!) He has a company car for business and personal use, and does not own a car. The discussion with my insured immediately turned to what, if any, auto insurance cover-
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age the fiancé had while driving the rental car. Also, the daughter wanted to know if he would be covered under his employer’s business auto policy when driving her car, and if she would be covered driving his company car, after they were married. I told my insured I would do some research, and get back to him in a day or so about all this. I would appreciate your thoughts on this tangled web.
A. Well, unwinding tangled webs is an im-
portant skill in marriage, so they’re about to get Lesson One. (And as we know, dealing with tangled webs is also a handy talent in insurance!) The comments and excerpts below are based on coverage forms and endorsements from the Insurance Services Office (ISO). Proprietary forms may be different. Assume your insured’s daughter is Jill, her fiancé is Jack, and he is em-
ployed by Smithco, Inc. Issue #1: Dad’s Personal Auto Policy (PAP)
Personal Auto Policy PP 00 01 01 05 Part A – Liability Coverage Insuring Agreement B. "Insured" as used in this Part means: 1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer". 2. Any person using "your covered auto". 3. For "your covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part. 4. For any auto or "trailer", other than "your covered auto", any other person or organization Continued page 12
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but only with respect to legal responsibility for acts or omissions of you or any "family member" for whom coverage is afforded under this Part. This Provision (B.4.) applies only if the person or organization does not own or hire the auto or "trailer". Part D – Coverage for Damage to Your Auto Insuring Agreement A. We will pay for direct and accidental loss to "your covered auto" or any "non-owned auto", including their equipment, minus any applicable deductible shown in the Declarations. C. "Non-owned auto" means: 1. Any private passenger auto, pickup, van or "trailer" not owned by or furnished or available for the regular use of you or any "family member" while in the custody of or being operated by you or any "family member";
Comments: (1) Since Jill is a resident family member with Dad, she is an insured for the ownership, maintenance or use of any auto or trailer. This includes a rental car. Dad is also an insured, for his potential vicarious liability. [Part A – Liability Insured, B.1.] (2) If Jack is driving the rental car, he will not be an insured under Jill’s Dad’s PAP. Coverage for non-family members only applies to any person using "your covered auto". [Part A – Liability Insured, B.2.] The PAP defines “your covered auto” (“YCA”) to include autos that are: (a) declared; (b) newly acquired; (c) owned trailers; or (d) temporary substitutes for YCA. Note, however, that if Jill rented the car because hers was out of service, the rental car qualifies as a “temporary substitute,” and becomes a YCA. Jack would then be covered as an insured in Dad’s PAP. (3) Damage to the rental car is covered under Dad’s PAP, as a “non-owned auto.” Continued page 13
Continued page 13 Louisiana Agent 12
[Part D – Coverage for Damage to Your Auto, A., and C.1.]
“Renter agrees to the following limits on use:
Issue #2: Rental Car Supplemental Coverages and Questions
(a) Vehicle shall not be driven on an unpaved road or off-road.
(1) Damage Waiver. I agree with your view that the Damage Waiver should always be purchased. This recommendation confuses many insureds, in that it appears to duplicate the coverage in the auto policy for “non-owned autos.” And nearly all so-called “consumer experts” have written incessantly that the Damage Waiver is a rip-off, citing the potential redundancy with the auto policy, the high cost of the Damage Waiver, and the fact that most credit cards cover rental cars automatically. You can bet a pot of gumbo that these “consumer experts” have never read an auto policy, a car rental agreement, or the credit card coverage for rental cars.
(b) Vehicle shall not be driven by any person impaired by the use of narcotics, alcohol, or drugs, used with or without a prescription.”
As a quick example, here are a number of “Prohibited Uses” of rental cars found in most Damage Waiver agreements, as well as credit card coverage, none of which, by the way, are excluded in the ISO PAP:
(c) Vehicle shall not be used for any illegal purpose, or in any illegal or reckless manner, or in a race or speed contest, or to push or tow anything.”
(d) Vehicle shall not be used to carry passengers in excess of the number of seat belts provided by the manufacturer. (e) Vehicle shall not be driven or taken outside the states authorized on Page 1. (f) Vehicle shall not be driven by any person other than Renter or ADDs (Additional Authorized Driver).” Continued page 14
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With so many restrictions like these in the Damage Waiver, yet are covered in the PAP, the obvious question is, why buy the Damage Waiver at all? There are several reasons, but the 500-lb gorilla is “diminished value.” The ISO PAP excludes this as a valuation basis, whereas the Damage Waiver covers it. Coincidence? I doubt it. “Rental Cars and Diminution of Value” Here are two comprehensive articles that compare rental car coverage in PAP, the Damage Waiver, and credit cards.
whether or not the rental car handed over to a valet is still in Jill’s “custody.” Absent a definition in the PAP, courts would consider dictionary definitions, jurisprudence, and statutory law. Here is a small sampling:
Louisiana Civil Code, Article 2317. Acts of others and of things in custody.
“Rental Car Damage Waiver...To Buy or Not to Buy, That Is the Question”
“We are responsible, not only for the damage occasioned by our own act, but for that which is caused by the act of persons for whom we are answerable, or of the things which we have in our custody.”
“Rental Cars: Rental Agreement v. PAP v. Damage Waiver v. Credit Card”
Black’s Law Dictionary (9th): “Custody, n. (15c)
(2) Valet Parking. If Jill and Jack valet park the rental car at the hotel, or a restaurant, damage to the rental car is in doubt. First, under the PAP, damage for “non-owned autos” applies only “while
in the custody of or being operated by you or any family member." The sticking point is going to be
1. The care and control of a thing or person for inspection, preservation, or security.”
Webster's Third New International Dictionary, Unabridged. 2018: “Custody, n. 2. Control of a thing or person with such actual or constructive possession as fulfills the purpose of the law or duty requiring it.”
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A substantial body of case law deals with the “care, custody, or control” exclusion in the Commercial General Liability (CGL) policy. Prior to the 1986 ISO Simplification Program, previous editions of the CGL excluded “Property in the
care, custody, or control of the insured or as to which the insured is for any purpose exercising physical control." The 1986 CGL (11/01/85 ed.) revised and narrowed the exclusion to “Personal property in the care, custody, or control of the insured.” Therefore, some case law has attempted to interpret the newer exclusionary wording compared to the prior, seeking the intended scope of “care, custody, or control.”
Most authorities on the subject report that such cases tend to be very fact-dependent. Some courts delve into distinctions between “care,” “custody,” and “control,” while a few distinguish between forms of “control,” such as “possessory control.” A strong argument supporting the view that the rental car is still in Jill’s “custody” is that the car rental agreement holds her legally liable for “any and all damage” to the car.
Aside from the PAP issues of what “custody” means, a second issue with valet parking a rental car is that in the rental car agreement, no supplemental coverage (liability, Damage Waiver, etc.) will apply for use of the car by unauthorized drivers. Despite the fact that Jill and Jack are recognized as designated drivers, a valet is not. Therefore, a literal reading of the Damage Waiver provision could conclude that there is no physical damage coverage for the rental car if damaged while being driven by a valet. While there seems to be scant case law on the issue of valet parking a rental car, a Google search turns up many anecdotal cases from various blogs and travel websites. Most reveal frustrating experiences where a valet has damaged a rental car. A common mistake is the failure to closely inspect the car immediately when the valet delivers the car. Claims made after the fact prove immensely difficult to resolve favorable for the renter. Continued page 16
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“PAP Coverage for Valet Parking” (3) Supplemental liability coverage. According to the rental car brochure you attached to your email, the cost for this add-on coverage is $15 per day for the $1,000,000 limit. While that works out to an annual cost of $5,475 – and is over 20 times more expensive than a $1,000,000 personal umbrella policy – I think the $105 cost for the week is money well spent. Look at the risk factors. Jill and Jack will be driving an unfamiliar car, probably in unfamiliar territory, while they have gazillion things on their minds. In addition, when Jack is driving the rental car, he is not covered under Jill’s Dad’s PAP (or Smithco’s BAP – discussed below). So from that standpoint, the supplemental liability is a bargain. Issue #3: Smithco’s Business Auto Policy (BAP)
Business Auto Coverage Form CA 00 01 10 13 Section II – Covered Autos Liability Coverage A. Coverage
1. Who Is An Insured The following are "insureds": a. You for any covered "auto". b. Anyone else while using with your permission a covered "auto" you own, hire or borrow except: (1) The owner or anyone else from whom you hire or borrow a covered "auto". This exception does not apply if the covered "auto" is a "trailer" connected to a covered "auto" you own. (2) Your "employee" if the covered "auto" is owned by that "employee" or a member of his or her household. Comments: (1) In Smithco’s unendorsed BAP, Jack is an insured only while using (with permission) “a covered auto you (Smithco) own, hire or borrow.” [A.1.b.] Therefore, Smithco’s BAP will not cover him using the wedding rental car, or Jill’s car. (2) For Jack’s use of vehicles other than the company car, he would need to be covered under a Drive Other Car (DOC) endorsement (CA 99 10). Continued page 17
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While the DOC covers spouses automatically for liability, it does not cover “Any auto owned by that
individual or by any member of his or her household.” Therefore, once they are married, the DOC
would exclude their use of Jill’s car. (3) In situations where his employer will not add DOC, Jack needs to procure a Named Non-Owner (NNO) policy, which is a PAP with endorsement PP 03 22 attached. It goes without saying that Jack needs auto coverage in his own name (DOC or NNO) immediately. (4) Since Jack has no auto insurance in his own name, I’m not sure that a rental company will even add him as a driver. (5) Under the Named Non-Owner policy, coverage is excluded for an auto which is furnished or available for Jack’s regular use. This would be his company car, and Jill’s car after their marriage. However, a buy-back option is available from most markets. (6) Before and after their marriage, Jill’s use of Jack’s company car should be avoided until permission is granted by Smithco (preferably in writing). Absent permission, she is excluded as an insured under Smithco’s BAP, since coverage applies only
for permissive users of one of Smithco’s autos. [A.1.b.] (7) In addition, Jill’s PAP excludes her use of any auto which is furnished or available for her regular use. So if Smithco does grant Jill permission to drive Jack’s company car on a regular basis, Jill would be wise to add the Extended Non-Owned (ENO) endorsement (PP 03 06) to her PAP, which would be excess to Smithco’s BAP. 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.
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2018 U.S. Independent Insurance Agent Satisfaction Study
In alliance with the Independent Insurance Agents & Brokers of America we are excited to introduce the inaugural J.D.
Power U.S. Independent Insurance Agent Satisfaction Study.SM Independent agents (IAs) represent the largest and most preferred distribution channel serving insurance consumers in the increasingly competitive P&C market. In this groundbreaking study, the relationships between independent agents and insurance carriers are examined, as well as how carriers can better meet the needs of agents and, by extension, customers. This national study of 1,380 independent insurance agents—involving 1,424 evaluations of personal lines, and 1,217 evaluations of commercial lines— measures their satisfaction with the insurance carri-
ers with whom they work and identifies trends and improvement opportunities. J.D. Power examines a number of topics from the agents’ perspective, including the quoting/ underwriting process, claims process, policy servicing, communications, commission management, product/service offerings, and insurer risk appetite.
This analyst briefing of the 2018 U.S. Independent Insurance Agent Satisfaction Study provides the following:
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Review of the state of the independent agent market
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Understanding of the independent agent’s relationship with P&C insurers and the agent’s role in overall profitability
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Identification of opportunities for P&C insurers to improve the experiences of agents and customers
State of the Independent Agent Market
Independent agents are a force that P&C carriers cannot ignore if they wish to succeed. Key Findings Underlying Improvement Opportunities •
Independent agents are the largest and most preferred channel for customers, writing 83% of commercial and 35.5% of personal lines premiums.1
•
Independent agents’ market share lead is being attacked as the industry becomes more concentrated in larger carriers and direct distribution grows.2 Continued page 19 Louisiana Agent 18
•
To differentiate themselves, independent agents are trending toward quality through specialization3 and view P&C insurers as partners in that process; there is a need to provide a greater risk capacity and flexibility in policies.
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Among surveyed agents, Auto-Owners Insurance (795 on a 1,000-point scale) earns the highest score among personal lines companies, and Liberty Mutual (714) performs highest among commercial lines companies.
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Overall, P&C insurers are not meeting agent expectations, with low levels of satisfaction found across both personal (696) and commercial (686) lines—some of the lowest levels of B2B studies at J.D. Power.
Insurance companies with the highest satisfaction have the highest commissions ratio yet the most profitable operating ratios.
Most Important Opportunities in Order of Key Performance Indicator Improvement
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Improve the ease of doing business with agents to increase sales volumes, customer retention, and overall satisfaction.
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Develop more flexible product options with a broader risk appetite to increase market share as insurance sales increase and the economy continues to improve.
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Significant opportunity exists to increase cross-sell penetration—with upside to both insurer revenues and agent satisfaction and commissions.
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Carriers with the highest independent agent satisfaction are able to offer a competitive agent commission while maintaining expense ratio discipline.
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The independent agent is a vital component of a carrier’s omnichannel strategy so customers can interact with a brand how they want, when they want.
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Agent satisfaction is linked to the number of communications and training received from insurers.
Click Here for the entire J.D. Power’s IA Satisfaction Study.
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The 2020 Vision—Are Your Team’s Business Skills Ready?
in 2017, the word “disruption” became part of our every day – posts, blogs, articles, conferences, etc. Whether it builds fear or intrigue, it certainly creates an awareness that change is constant. We try to envision what the new agency will look like and how automation, rapid advancements in IoT, bots, etc. will impact the skills needed for the new agency service team of the future. We can benchmark these off the universal predictions of the top 10 skills needed for jobs in 2020. This is only two years away!
According to the World Economic Forum – here they are: 1. Complex Problem Solving 2. Critical Thinking 3. Creativity 4. People Management 5. Coordinating with Others 6. Emotional Intelligence 7. Judgement and Decision Making 8. Service Orientation 9. Negotiation 10. Cognitive Flexibility
Get Ready! A value to your team and to your agency is to begin including skill growth and development of some of the skills in the above list. Pick two for 2018 – set them as learning goals. Provide opportunities for the team member to stretch and apply – keep their skills sharp.
Did you know that IIABL is a step ahead? Check out this valuable member resource here!
We know for certain that technology will bring tremendous productivity to business. Although, there will be situations and business circumstances or problem solving that require human to human dialogue. The first five seconds of an exchange, such as a conversation with a customer, can make a lasting impression.
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Company
American Fire & Casualty Ohio Casualty Ins Co Ohio Security Ins Co West American Ins Co
Coverage Type
19 – Commercial Auto
Overall % Impact:
Overall $ Impact:
+21%
$3,196,326
Number of Policyholders:
1,354
Changes
New: 9/1/18 Renewal: 9/1/2018
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IIABL 2018 CONVENTION JUNE 17 -20, 2018 Sandestin Beach Hilton Destin, Florida
Registration is now open for the 2018 IIABL Convention! For online registration, sponsorship, exhibits, etc. click here Download Convention Forms: Convention Registration Tentative Convention Agenda Exhibit Registration Exhibit Information Sponsorship Company & Broker Reception
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Steve Anderson
Microsoft Photo Apps Updates and How Your Agency Can Use Them
Pictures and videos are great tools to use when you are trying to explain difficult concepts or show property and location information. Just about every outside producer now carries a smartphone with a camera and video capability. In addition to the built-in camera and video capability of your smartphone, there is also a myriad of thirdparty apps that extend your phone’s camera capability. I have been using the Microsoft Pix app for a while. It is very capable, and Microsoft continues to expand and develop the program. It is available for both iOS and Android devices. You can read more about its capabilities in a prior TechTips here.
Microsoft has recently updated the Pix app with an exciting new feature. Microsoft Photo Apps: Pix Photosynth Microsoft recently added its previous web-based service Photosynth to the app. I originally wrote about Photosynth in a TechTips way back in 2009. The new upgraded version of Photosynth is now part of the Microsoft Pix app. Photosynth allows you to take multiple pictures of a scene and automatically stitches them together into one photo. This is similar functionality to the built-in Apple panoramic camera view. The difference is Photosynth allows you to take pictures vertically and horizontally, so you can capture the entire scene. Continued page 26
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This new version of Photosynth is also faster and allows for smoother capture. Microsoft Photos Companion App Now that you have taken great pictures, the next task is to smoothly move them off your phone and onto your computer so you can use them in your document. Microsoft has created a new app for smartphones – called Photos Companion — that works with their Windows 10 Microsoft Photos program to make it easier for you to move photos from your phone onto your computer.
Description Photos Companion is a Microsoft Garage project. It transfers photos and videos from a phone to a PC over Wi-Fi. You do need to make sure the phone and PC are on the same Wi-Fi network. You use your phone to scan a code on your computer monitor to start the transfer. I had not played around with the new Windows 10 Photos Program until I was researching this functionality. I found it quite capable. If you are running Windows 10, the latest version of Microsoft Photos is found in the Microsoft Store. Backstory In the fall of 2017, the Microsoft Photos app in Windows 10 was reimagined, with new functionality, to automatically organize media and transform photos and videos into compelling stories and amazing video projects. As part of that rollout, the product team began visiting classrooms in the U.S. and Europe to better understand how educators were currently incorporating video into their lessons and to ask them to give the Photos app a try. What surprised them most was that the biggest hurdle in the classroom wasn’t helping students decide what to include in their videos, or even editing the video itself. The biggest hurdle many classrooms faced was getting the content students had captured with their phones onto their project PCs. Out of that hurdle came the Photos Companion app. The app would enable students to transfer media to their computers easily… or to a shared, project PC … without worrying about network speeds or mobile data charges.
While the Photos Companion was built with students and educators in mind, I think it will be useful to anyone who needs to get photos and video from their phone to an easy editing platform. Let me know what you think of these improvements. What other tools do you use to move photos and videos from a smartphone to your desktop to edit? Email: steve@steveanderson.com
Agents Council for Technology Releases Texting Resources Tools help agents comply with FCC requirements.
The Independent Insurance Agents & Brokers of America’s Agents Council for Technology (ACT), in conjunction with the Big “I” Office of the General Counsel, has released a sample text messaging opt-in form and sample terms and conditions to help agents meet the requirements of the federal Telephone Consumer Protection Act (TCPA). Text messaging gives independent agents a quick and simple way to communicate with clients, on an individual or aggregate basis, regarding policy reminders, new product offerings, and risk management tips. The Federal Communications Commission (FCC) has broadly interpreted the TCPA to regulate nearly all text messaging. The FCC’s interpretation of the TCPA appears to cover all commercial text messages even if they are sent to one person rather than multiple recipients. Additionally, unlike the rules for some other commercial communications, the FCC has ordered that an existing business relationship does not provide an exemption to the TCPA requirements of obtaining prior express written consent before sending commercial text messages. Therefore, agents should ask clients to opt in to text messaging and provide messaging terms and conditions, even if the agency Continued page 27
communicates via text only with existing or prospective clients or when texts are initiated by the client or prospective client. Agents also need to understand the capabilities of their
Alvin Shepherd Big I Charity Golf Classic Friday, March 9, 2018 Audubon Park Golf Club
agency management system for text messaging. “Consumers want to choose how they communicate with their independent agent, and for many consumers texting is at the top of the list,” says Ron Berg, ACT executive director. “We are giving agents the guidance and tools necessary to ensure they comply with the legal requirements for text messaging.”
On line Registration Sponsorship form Registration Form
Big Bad VooDoo Data It’s no secret that I’ve written
Bill Wilson, CPCU, ARM, AIM, AAM
things about the Holy Crusade known as “InsurTech” that are critical or at least suggest caution in climbing aboard the hype and hyperbole bandwagon. InsurTech has been touted as the Holy Grail of industry nirvana with its ability to turn ‘lead’ data into golden predictions:
“Insurtech is the ‘superpower’ for assessing, managing and transferring risks…All the players in the insurance arena will be InsurTech….” One component of this “movement” is something referred to as “big data,” more specifically, the miracle cure for perceived stagnant industry profits known as data analytics and predictive modeling. There is nothing new about the importance and value of data and its wiser big brother, information. Predictability, in the aggregate, is the cornerstone of industry stability and profitability. It’s the foundation of actuarial science. But, to be of value, the data must be credible and the models that use it must be predictive by more than mere correlation. And, to be usable, the data and models must meet legal requirements by being risk-based and nondiscriminatory. That’s where one of my concerns lies. Just how valid and relevant is the data and how is it being used? What prompted this article was a blurb in Shefi BenHutta’s Coverager newsletter [emphasisadded]:
“Certain domain names are associated with more accidents than others. We use a variety of pieces of information to accurately produce a competitive price for our customers.” – Admiral Group in response to research by The Sun that found the insurer could charge users…extra on their car insurance, simply for using a Hotmail email account instead of a Gmail one.” This revelation came just days after The Sun ran an article accusing the UK insurer of charging drivers with non-English-sounding names up to £900
extra for their insurance. I don’t know enough about insurance in the UK to opine about the potential discriminatory nature of jacking premiums on people whose names don’t sound “English,” but my guess is that U.S. state insurance departments likely would not look favorably on this as a rating factor. Historically in the U.S., P&C insurance rates have been largely based on factors that are easily ascertained and confirmed. For example, the “COPE” acronym (Construction, Occupancy, Protection, and Exposure) incorporates most of the factors used in determining a property insurance rate. From the standpoint of the fire peril, frame construction is riskier than fire resistive construction. A woodworker is riskier than an office. Having a fire hydrant 2,000 ft. away from a building is riskier than one 200 ft. away. It makes sense. It’s understandable. It’s provable. The risk inherent in these factors is demonstrable. The factors are understandable by consumers and business owners. It’s easy to identify what insureds can do to improve their risk profile and reduce their premiums. Advice can be given on how to construct a building, install protective systems, etc., in order to reduce risk and insurance costs. Traditional actuarial models are proven commodities and state insurance regulators have the expertise and ability to evaluate the efficacy of rate changes. What these factors are not, in many cases, is inexpensive. Confirming this information may require a physical inspection. Some state laws require or compel such inspections. In my state, our valued policy law says that buildings must be inspected within 60 days of policy inception or the law is triggered and a carrier may have to pay policy face value for a total fire loss. Are the InsurTech startups selling homeowners insurance even aware of this? It is understandable that insurers want to reduce any unnecessary underwriting expenses if there are acceptable alternatives. Doing so may improve profitability and/or make them more competitive by enabling premium reductions. Continued page 29
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This is where Insurtech and technology in general can play a valuable role. Using reliable data on construction and size of buildings, building code inspection reports, satellite mapping for hydrant location, and so forth can have an almost immediate impact on the carrier expense side and potentially the loss component. To large extent, this is actually being done, but the search for something more (or less, if we’re talking about expenses) continues. Enter “big data” and predictive modeling, along with a horde of people who know absolutely nothing about the insurance industry but a lot about deluding gullible people with hip press releases. They tout the salvation of phone apps, AI bots, and “black box” rating algorithms with 600 variables and factors. Factors such as whether someone, according to their Facebook page or other online source, bowls in a Wednesday night mixed league where (speaking from personal experience) the focus is more on beer consumption than bowling and
how that might impact the risk of an auto accident. The $64,000 question is how reliable are these predictive model algorithms and how credible is the data they use? The author of an article entitled “How Trustworthy Is Big Data?” claims that there is typically a lot less control and governance built into big data systems compared to traditional architectures: “Most organizations base their business decision-making on some form of data warehouse that contains carefully curated data. But big data systems typically involve raw, unprocessed data in some form of a data lake, where different data reduction, scrubbing, and processing techniques are then applied as needed.” In other words, there may be little up-front vetting of the information because that takes time and costs money and, when acquired, there is no certainty that the data will ever be used. So, the approach may be to vet the data only when used and, as the article suggests, that can be Continued page 31
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problematic. The article also addresses the ethics of acquiring information on individuals for what may be perceived as nefarious reasons (e.g., price optimization): “Just because something is now feasible doesn’t mean that it’s a good idea. If your customers would find it creepy to discover just how much you know about their activities, it’s probably a good indication that you shouldn’t be doing it.” Going back to The Sun’s Admiral reports, what impression would it make on Admiral’s customers if the insurer advertised, “Pay less if you have an English-sounding name!” Would any insurer proudly and publicly advertise something they’re allegedly doing behind closed doors? It’s like the ethical decision criteria of, what would your mother think if she knew what you were about to do? The right to do something doesn’t mean that doing it is right. Does black-box algorithmic rating enable and potentially protect this practice? I mentioned at the outset of this article, that the Admiral report prompted the article.
What compelled the article was a recent personal experience when I received a $592 auto insurance invoice a little over two months into my policy. The invoice attachments never really said why the carrier wanted additional premium, but a quick review indicated the reason. Our son moved out of the house three years ago and we removed him from our insurance program, including his vehicle. He still uses the same agency (different insurer) I’ve used since 1973 to insure his auto, condo, and personal umbrella. Our insurer learned that his vehicle registration notice is still mailed to our address. With that information, they (i.e., their underwriting model) unilaterally concluded that he still must live here, so they added him back to our insurance program and made him the primary driver of one of our three autos (the most expensive one, of course). I’m not sure what they thought happened to his vehicle. But, of course, no one “thought” about anything. An algorithmic decision tree spit out a boiler-plated invoice. Continued page 32
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I’ve been with this carrier now for four years, loss free, and paid them somewhere in the neighborhood of $20,000 in premiums, yet they could not invest 10 minutes of a clerical person’s time to make a phone call and confirm my son’s residency. Neither we nor our agent received any notice or inquiry prior to the invoice, but my agency CSR (who, thankfully, is still an empathetic human) was able to quickly fix the problem. I have written about my personal experiences with a prior insurer involving credit scores. My homeowners premium was increased by $1,000 and, by law, I was advised that it was due to credit scoring. As it turned out, the credit reports of a Wilson couple in Colorado were used. Two years later, my homeowners premium was bumped $700 based on three “reason codes” which I was able to prove were bogus and the carrier rescinded the invoice. Now I’m being told that my current insurer’s information source tells them that my son has moved back home. I realize that these tales are anecdotal, but three instances in five years? How pervasive is this misinformation? Is this what “big data” brings to the table? Big, BAD data and voodoo presumptive (not predictive) modeling? Who really benefits from this? Anyone? One of the InsurTech buzz words going around is “transparency.” What’s transparent about “black box” underwriting and rating? At a convention last year, I spoke at length to a data scientist who was formerly with IBM and is now an insurance industry consultant. Without naming names, he characterized some of the predictive models he has examined as “Rube Goldberg” constructs, with the worst ones resembling “a bunch of monkeys heading up the Manhattan Project.” Another consultant expressed his concern about some data companies. An NAIC presentation he attended listed some parameters relative to data points being used/allowed by carriers. The presenter expressed confidence that carriers were disclosing all of their data points. He is convinced, however, that carriers are using 25-50% more data points than the NAIC
seems to be aware of. He has written about the abuse of data that lacks an actuarial grounding in risk assessment, again, a requirement of some state laws. Among the many problems with “black box” rating is the fact that no one may be able to explain how a particular premium was derived. No one may be able to tell someone how to reduce their premium. Perhaps most important, regulators may be unable to determine if the methodology results in rates that are unfairly discriminatory or otherwise violate state laws that require that rates be risk-based. Presumably, future rate filings will simply be a giant electronic file stamped “Trust Me.” “Big data” might be beneficial to insurers from a cost, profitability, and competitive standpoint, but it’s not clear how or even if it will impact consumers in a positive way. All the benefits being touted by the data vendors and consultants accrue to insurers, not their customers. In at least one case, if you have a “non-English sounding” name, the impact is adverse. The counter argument from the apostles of big data is that the majority of people will benefit. Of course, that was arguably the logic used when schools were segregated but that doesn’t justify the practice. In the book “Technically Wrong: Sexist Apps, Biased Algorithms, and Other Threats of Toxic Tech,” the author points to an investigation of a correctional facility system that used proprietary algorithms to help decide bail terms, prison sentences, and parole eligibility using various factors, some alleged to be discriminatory (e.g., arrest records of neighbors where the person lived). A Wall Street Journal article, “Google Has Chosen an Answer For You – It’s Often Wrong,” demonstrated how searches often indicated a bias or manipulation by whomever constructed the algorithms being used or by how the search parameters were entered by users. Errors in building replacement cost valuations are often blamed on incompetent and/or untrained data harvesters and users…even when the data is presumed to be accurate, it can be used incorrectly.
Continued page 33
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In 2016, I wrote an article for Independent Agent magazine entitled, “The Six Worst Things To Happen To Insurance In The Past 50 Years.” Number 3 on my list was the growing obsession with data vs. people. When I write about these things, I know I run the risk of being characterized as the old man on his front porch yelling at the “disrupter” kids to get out of his yard, but I don’t think I’m a Luddite. I love and embrace technology.
What’s next, a SnapChat invitation from an AI bot that says, “Welcome to the Insurance Matrix, Mr. Anderson”? Not yet, I hope. * With apologies to one of my favorite bands, Big Bad Voodoo Daddy.
I had a PC before IBM did. I still have the first iPod model. My phone is full of nifty apps. My son is a data scientist in the healthcare industry. I get it. But technology is a tool, not a religion. Far too many people treat technological innovation as sacrosanct and infallible, and anyone who questions or challenges its legitimacy and righteousness is committing heresy.
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SUMMIT CONSULTING Louisiana Agent 37
IIABL 2017—2018 BOARD OF DIRECTORS & OFFICERS Neil Record President Record Agency, Inc.—Clinton John L. Beckmann, III President Elect J. Everett Eaves—New Orleans
Joseph A. O’Connor, III Secretary/Treasurer The O’Connor Insurance Group—Metairie H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite Richard Jenkins Past President Moore & Jenkins Insurance—Franklinton
Stuart Harris McClure, Bomar & Harris—Shreveport Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Harry B. Kelleher, III Harry Kelleher & Company—Harahan Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe
Paul Owen John Hendry Insurance Agency-Zachary
Donnie Stiel Young Agent Representative Stiel Insurance of Acadiana, Inc.
Martin Perret Quality Plus—Lafayette
Byram H. Carpenter, III Moreman, Moore & Co—Shreveport
David T. Perry Arthur J. Gallagher RMS—Baton Rouge
Brenda Case Lowry-Dunham, Case & Vivien—Slidell
Robert Riviere Riviere Insurance Agency—Thibodaux
Joseph Cunningham, Jr. Cunningham Agency—Natchitoches
Armond Schwing Schwing Insurance Agency—New Iberia
Donna DiCarlo Riverlands Insurance Services—LaPlace
Michael D. Scriber Scriber Insurance Services—Ruston
Morris Funderburg Reeves, Coon & Funderburg—Monroe
Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin Louisiana Agent 38