Louisiana Agent January 2018 A publication of the: Independent Insurance Agents & Brokers of Louisiana
IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com
In this issue:
Daniel Learns About Insurance ................................ 5-7 NFIP Reauthorization ................................................. 7
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
Ask Mike: Does HO Policy Cover Neighbor’s Property Stored in My Insured’s Garage? ............................. 9-14 Cyber Security/Cyber Liability ................................... 14 Do You Have Great Google Business Cards? ..........16-19 Insurance Agency Financing Options ....................20-21 LA Citizens Agent’s Advisory Minutes ....................21-25 FEMA Mapping Changes Webinars ............................ 25 Tech Tips: What Technology Will Your Agency Use in 2020 ....26-29 Calendar .................................................................. 28
Karen Kuylen Director of Accounting kkuylen@iiabl.com E. Lee Mowe Marketing Representative lmowe@iiabl.com
Just Because It’s an Auto Doesn’t Mean the CGL Doesn’t Cover It .....................................30-31 Member Benefit: Big I Virtual University .................... 34 IIABL Partners .......................................................... 35 IIABL Officers & Board .............................................. 36
Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com
Cover photo is the Clinton Court House which is a National Historic Landmark. It is also the hometown of IIABL Chairman—Neil Record with the Record Agency.
Lisa Young-Crooks Executive Assistant lyoung@iiabl.com Louisiana Agent 4
Daniel Learns About Insurance: EPL and Lessons from Hollywood Both Prevention and Coverage are Critical written by Daniel Smith, CAE
The amount of sexual harassment claims coming out of Hollywood over the past few weeks has been staggering. Executives, directors, actors and agents, no one has been above the law when it comes to facing responsibility for their actions. Mega-producer and cofounder of The Weinstein Company, Harvey Weinstein, has now been alleged of sexual misconduct by more than 80 accusers. Director, producer and writer James Toback, known for films including Tyson, Bugsy and The Gambler, has been accused by more than 300 women.1
This has clearly been an awakening for many people in Hollywood, and hopefully many outside of the entertainment industry. One entertainment industry attorney has said they have been, "inundated with calls and prospective clients..." since the scandals have become news. These calls have been from both accusers and the accused, and no doubt some of the fallout will include some high profile court trials. Protecting those that have been harassed and creating a harassment free environment has to be a top priority for any business. However, there are still going to be situations where this type of behavior occurs. How can you help insureds and prospective clients be prepared for the fallout from harassment claims and lawsuits?
EPL Coverage is a Must Have Employment Practices Liability (EPL) Coverage is the insurance answer to the question. EPL insur-
ance covers many wrongful acts arising from the employment process, including wrongful termination, discrimination, sexual harassment, and retaliation. In addition, the policies cover claims from a variety of other types of inappropriate workplace conduct, including (but not limited to) employment-related: defamation, invasion of privacy, failure to promote, deprivation of a career opportunity, and negligent evaluation.2 The policies cover directors and officers, management personnel, and employees as insureds. These policies are usually written on a claims-made basis, and often have exclusions for bodily injury (BI), property damage (PD), and intentional/dishonest acts. In addition to coverage; employee handbooks, policies, procedures and training on harassment are something every business should consider. Preventing this behavior is a much better alternative than covering its aftermath.
Your Agency Needs to Be Covered Too Does your agency have an EPL policy in place? If not, your Association can help. We offer EPL policies through Swiss Re and other markets, and can help you find the best coverage for your agency. Don't overlook this important coverage. Please contact Rhonda Martinez at rmartinez@iiabl.com or 2255.236.1352 for more information.
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NFIP Reauthorized Until Feb. 8, 2018
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1-Per "Sexual misconduct accusations in Hollywood summed up in one shocking infographic" at https://www.yahoo.com/entertainment/sexual -misconduct-hollywood-summed-one-shockinginfographic-220323215.html 2-Per EPLI Definition via https://www.irmi.com/
online/insurance-glossary/terms/e/employmentpractices-liability-insurance-epli.aspx
NFIP Reauthorized Until Feb. 8, 2018 The U.S. House of Representatives, Senate and President have approved a continuing resolution for the federal budget that includes reauthorizing the National Flood Insurance Program (NFIP) until February 8, 2018. Selective’s dedicated underwriters and sales staff are here to assist you with any questions you may have.
Please note: We are awaiting information as to the effect of the reauthorization on any new business submitted during the period Jan. 20-22, 2018. For any questions, please contact Cassie Masone, Vice President of Selective’s Flood Operations.
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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: Does HO Policy Cover Neighbor’s Property Stored in My Insured’s Garage?
Q.
My insured’s neighbor bought her dad a riding lawn mower for Christmas. She asked if she could keep it in my insured’s garage for the last few days before Christmas. On Christmas Eve, my insured left his house to meet friends at a local restaurant, but forgot to close the garage door. When he returned, the riding mower was gone. The adjuster’s initial indication is that there is no coverage because of one or more the following reasons: (1) The policy excludes property in the insured’s care, custody, or control. (2) Our insured is not legally liable. (3) The mower was personal property not owned or being used by our insured. (4) Coverage for a riding lawn mower only applies if it is used to mow the insured’s own grass. (5) Our insured has no insurable interest in the riding mower. In addition, the adjuster mentioned that even if there was coverage, our policy is excess over the neighbor’s policy. We have not seen a formal written statement from the adjuster yet.
A. Wow! It looks like the Christmas Grinch has
paid your insured a visit. And it’s unfortunate, since your insured was simply trying to be a good neighbor. As they say, “No good deed goes unpunished.” Here are my thoughts. Assume that Jack is your insured, Jill is his neighbor. Jack has a Homeowners Policy based on the ISO (Insurance Services Office) coverage form. Proprietary forms may be different. Jack’s HO
HO 00 03 05 11 Section I – Property Coverages C. Coverage C – Personal Property 1. Covered Property We cover personal property owned or used by an "insured" while it is anywhere in the world. After a loss and at your request, we will cover personal
property owned by: a. Others while the property is on the part of the "residence premises" occupied by an "insured" Comments: (1) Jack’s policy covers personal property that is “owned or used” by him worldwide [C.1.], as well as personal property of others that is located at his residence [C.1.a.]. Clearly, the riding mower that Jill bought for her dad is covered under Jack’s policy, while it is located at his residence, even though he wasn’t using the mower. (2) Jack must make the request for coverage for property of others. Jill cannot submit a claim under his policy, if Jack refuses to do so. [C.1.]. (She can certainly make a claim under her own policy.) (3) The adjuster’s reference to the mower being in Jack’s “care, custody, or control” is an issue for Section II – Liability (discussed later).
4. Property Not Covered We do not cover: c. "Motor vehicles". This includes a "motor vehicle's" equipment and parts. However, this Paragraph 4.c. does not apply to: (2) "Motor vehicles" not required to be registered for use on public roads or property which are: (a) Used solely to service a residence; Comments: (1) Whether or not Jack’s policy covers riding mowers depends on the edition date of the cov-
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erage form. Refer to [C.4.c.(2)(a)].
(2) The last four editions of the ISO Homeowners Program (2011, 2000, 1991, and 1984) provide an exception to the "motor vehicle" exclusion for a service vehicle (such as a riding mower) which is: HO 00 03 05 11: Used solely to service a residence. HO 00 03 10 00: Used solely to service an insured's residence. HO 00 03 04 91: Used to service an insured's residence. HO 00 03 04 84: Used to service an insured’s residence. (3) However, in this situation, where the riding mower has never been used by Jack (or anyone else), I cannot fathom that [C.4.c.(2)(a)] would apply. For example, what if Jack had bought a riding mower for his own use, purchasing it right after Christmas, and kept it in his garage until Spring. Regardless of which of the four editions Jack’s policy is based on, it seems implausible that an insurer would deny coverage based on any of the limitations for usage, until the mower has ac-
tually been used. As an extreme example, Jack would have no coverage for damage to the mower even in transporting the mower home from the dealer the day he bought it, should it fall off the trailer, or roll out of the back of his pickup truck, etc.
Section I – Conditions G. Other Insurance And Service Agreement If a loss covered by this policy is also covered by: 1. Other insurance, we will pay only the proportion of the loss that the limit of liability that applies under this policy bears to the total amount of insurance covering the loss; 2. A service agreement, this insurance is excess over any amounts payable under any such agreement. Service agreement means a service plan, property restoration plan, home warranty or other similar service warranty agreement, even if it is characterized as insurance.
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Comments:
ablanca, “This could be the end of a beautiful friendship.”
(1) Under the Other Insurance provision, where a loss is covered by two policies, each insurer pays in proportion to the amount that their limit of liability bears to the total limit available. [G.1.] A common example would be if Jack owned a primary and secondary residence, each covered by a separate insurer. On vacation, his luggage containing an expensive camera, jewelry, and personal electronics is stolen from the hotel room. Assume the Coverage C limit on the primary residence policy is $100,000 and $200,000 on the secondary residence policy. The proportional payment by the two insurers for the loss is one-third and two-thirds, respectively.
(3) Some experts believe that this application of the Other Insurance provision in Jack and Jill’s situation is not only counterproductive, but is probably not what was intended or contemplated by the forms drafters. Accordingly, some insurers elect to pay the entire claim under Jack’s policy, and chalk it up to goodwill. To many, this seems consistent with the clear intent of Jack’s policy covering property of others.
(2) In Jack and Jill’s situation, assume that Jack has $100,000 Coverage C, and Jill has $200,000 Coverage C on her HO policy, and the riding mower is valued at $3,000. Under the same procedure described above, Jack’s policy would pay only $1,000 of the loss. Jill would now have to make a claim under her policy for the other $2,000. To paraphrase the closing dialogue in the movie Cas-
(4) One underlying principle of insurance contract interpretation is, “The forms stand as written.” However, in situations like this, where the outcome does not seem logical or fair, another principle holds, “If you can’t argue the form, argue logic. If you can’t argue logic, argue the form.” And so it goes in insurance. (5) A possible alternative is to seek coverage under Jack’s Section II – Liability, which is discussed later. (6) If the theft to the mower was covered by a service agreement, then Jack’s policy is excess. [G.2.].
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J. Loss Payment
Coverage E does not apply to:
We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment.
3. "Property damage" to property rented to, occupied or used by or in the care of an "insured". This exclusion does not apply to "property damage" caused by fire, smoke or explosion;
Comments: (1) Jill cannot make a claim under Jack’s policy for a Section I claim. Jack makes the claim, and his insurer adjusts the claim with him. Given the circumstances of this loss, Jack probably feels obligated to file a claim, so he can reimburse Jill. On the other hand, if lightning had struck Jack’s house, destroying the house, garage, and Jill’s riding mower, Jack might not feel moved to make a claim for Jill's mower.
Comments: (1) If Jack’s insurer elects to prorate payment for the mower under their interpretation of the Other Insurance provision on a 1/3 – 2/3 basis, Jack may elect to submit the claim under Section II – Liability. Alternatively, Jill could threaten to sue Jack for the balance.
(2) Under Section I of Jack’s policy, whether or not he is “legally liable” for the damage to the riding mower is irrelevant. His Coverage C applies to personal property of others that is located at his residence, if damaged by a covered peril, whether he is legally liable or not.
(2) Jack’s Section II – Liability coverage applies for his legal liability for bodily injury or property damage, except as excluded. It could plausibly be argued that by allowing the riding mower to be stored in his lockable garage, Jack assumed some degree of liability for its safe keeping. Failure to close the garage door could therefore fall within the scope of coverage.
Section II – Exclusions
(3) However, Exclusion F.3. would likely apply, since the mower would seem to have been in his care at the time of the theft.
F. Coverage E – Personal Liability
Continued page 13 Louisiana Agent 12
(4) The principle that liability coverage excludes damage to personal property in the “care, custody, or control” of the insured is a standard exclusion in liability insurance, although not every liability policy uses that exact phrase. The CGL policy (Commercial General Liability), and BAP (Business Auto Policy) use it, but the HO policy PAP (Personal Auto Policy) have a slight variation. [F.3.], but with the same result. (5) However, Exclusion F.3. exempts damage caused by “fire, smoke or explosion.” This provision is often referred to as “fire legal” coverage.
(3) The ownership, maintenance, occupancy, operation, use, loading or unloading of aircraft, hovercraft, watercraft or "motor vehicles". This Exclusion e.(3) does not apply to a "motor vehicle" that: (a) Is designed for recreational use off public roads; (b) Is not owned by an "insured"; and (c) At the time of the "occurrence", is not required by law, or regulation issued by a government agency, to have been registered for it to be used on public roads or property.
Section II – Additional Coverages C. Damage To Property Of Others
Comments:
1. We will pay, at replacement cost, up to $1,000 per "occurrence" for "property damage" to property of others caused by an "insured".
(1) The Damage to Property of Others (DPO) provision can pay up to $1,000 in several situations where there has been a loss to personal property of others, which is caused by an insured. First, the damage might not be covered under Coverage C in Section I – Property, such as breakage of a fragile object which has been borrowed. In addition, the Section II – Liability exclusion for personal property “in the insured’s care” [F.3.], does not
2. We will not pay for "property damage": a. To the extent of any amount recoverable under Section I; e. Arising out of:
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apply to DPO. (2) However, the DPO provision does have exclusions. Unfortunately for Jack, coverage for damage done to motorized vehicle belonging to others only applies to certain “recreational vehicles.” [C.2.e. (3)]. (Many have tried to argue that mowing with a riding mower is “recreation,” but I’ve never heard of an insurer buying that proposition! Too bad Jill didn’t buy her dad a golf cart instead.) Additional information. “No Coverage for Riding Mower Until It’s Actually Used?” “Is It ISO or Is It Memorex Insurance Company?” (Discussion of edition dates.) 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.
Cyber Security Made Simple: ACT Agency Cyber Guide 1.0 The Independent Insurance Agents & Brokers of America’s Agents Council for Technology (ACT) has released the ‘Agency Cyber Guide 1.0’ which addresses cybersecurity regulations and provides corresponding compliance resources. “ACT has created the ‘Agency Cyber Guide’ to help address one of the highest priorities for every agent and broker: keeping customer data protected,” says Ron Berg, ACT executive director. “Having to communicate to customers that their private information has been breached can cripple a business and incur thousands of dollars of costs and penalties. With such high stakes in mind, the ACT Security Issues Work Group has complied this resource for Big ‘I’ members.”
ulatory resources listed are also free, such as an updated Agency Cybersecurity Policy template which agencies can download, brand and be in compliance for having a written security policy. ACT will monitor the changing cybersecurity regulatory environment and update the guide as needed. To help Big I members address cybersecurity issues, ACT has also recorded the Cybersecurity Made Simple webinar, which outlines 3 steps to make your agency cyber secure and compliant. The seminar discusses federal and state laws which regulate cyber security, the ACT Agency Cyber Guide 1.0, and steps your agency should take to be compliant. Here is a link to the webinar recording.
Cyber Liability for Agents IIABL offers two cyber liability programs through Beazley and Chubb. These programs provide IIABL members with coverages designed especially for independent insurance agencies with significant discounted pricing. As independent insurance agents, we handle a lot of sensitive personal customer information. We upload, download, email and use websites which handle all of that personal information and are potential targets for data breach and cyber liability. Do you have insurance coverage to protect your agency against these cyber risk? Beazley Data Breach Information Guide Data Security Risk Management Chubb CyberSecurity: Insurance for Data Security Breach & Privacy Losses CyberSecurity: ForeFront Protfolio 3.0 For additional information contact: Rhonda Martinez, rmartinez@iiabl.com or Jamie Newchurch, jnewchurch@iiabl.com
The Agency Cyber Guide is offered at no cost to independent agents and brokers. Some individual regLouisiana Agent 14
Continued page 16
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Do You Have Great Google Business Cards? Joey Giangola Agency Nation
Did you just hand out your last business card and decide maybe it’s time for something new? Great, change can be refreshing, possibly even rejuvenating. Now, you just need a super fantastic creative idea that will be sure to mesmerize anyone who touches it. Before you kill too many brain cells trying to conceive this idea, think about this first. Why are you so concerned with a tiny piece of almost cardboard that you hand out maybe once a day and only helps people you already know find you again? Sure, a business card should exist somewhere on the scale of things you need to do for your agency. However the disproportionate attention it receives
over a much more visible and effective business card is a little silly. That business card is the search results people get when they try to find you. Either your agency or you personally, the agent. Because even if they are lucky enough to hold on to that overweight piece of paper for more than five minutes, they’re still just going to type your name into Google. It’s more likely that they lose the card within that five minute time period and barely remember your name, making it even more important they can find you with fuzzy information. What Should Be On Your Google Business Card? The great thing about this business card is that it can be very avant garde and frequent the local hipster coffee shop.
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At its core, your Google Business Card is a collection of things people want (see need) to see before deciding to do business with you.
Now the best part about this problem is it’s one of the easiest things to fix. The only reason it’s awful now is because of neglect.
Whatever you think is important to that process should be considered. The problem is, sometimes it feels like you’re hiding on purpose.
Let’s start by breaking down my Google business card list one-by-one.
I find myself looking up a handful agents every week, occupational hazard, and normally what I find is… Nothing. Because it’s search engine silence.
Here’s my list of what should be considered for your Google Business Card.
Agency’s website? A highly complementary bio you’ve written about yourself on that same website. A blog article where you teach me about the type of insurance you sell A video. (I’m even going to be picky here) More than one active social profile Another place on the internet where you’ve shared ideas or been asked to say something important? Possibly a third or fourth place where you’ve been spotted online. Someone else telling me what it’s like to do business with you (see testimonial)
1. Agency Website All you simply have to do is have one and it should be the first thing that shows up. Please have an “about us” page that lists everyone at the agency with a picture and with at least three highly complementary sentences you make them write about themselves. Bonus points for video. 2. A highly complementary bio you’ve written about yourself People want to get to know you without actually knowing you. I know, sounds creepy, but you do it too. Think about it like this, not having this information on your website is like inviting someone
If you’ve been keeping score at home, that’s eight different things I’m hoping to find every time I look up an agent. There are 10 results shared on the first page of Google. Would you like to take a guess, on average, how many of those eight I find? One. If I’m lucky. If you’re not telling me who you are, you’re not telling the people trying to do business with you either. How to Fix Your Google Business Card The scary part about this problem is that you have one if you want it or not. As long as you’re in business people are going to try and find you (hopefully, I mean that’s the goal anyway). Google is definitely going to keep giving people answers (results) when they do.
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over to your house and not speaking to them. Pretty weird right? You could cut the awkwardness with a knife. 3. An Educational Blog Article What better way to get someone to call you back then to already tell them what they want to know. Make it easy for people to see how awesome and smart you are. Yeah, it doesn’t matter the guy down the street would probably tell them a slightly different version of the same thing. You’re just giving them the option to not wear pants and still hear it. 4. A video Just take all the benefits of number three and multiply it by 1,000. 5. More than one active social profile It’s perfectly fine to be a real human being. Most people trying to do business with you won’t hate you for it.
In fact, for reasons they aren’t quite sure, they’re infatuated with it. Dogs, kids, perspectives are all welcome to help flesh out the story of “you” that people want to hear. 6. Another place on the internet you share ideas or say important things? The fancy word for this is social proof. If someone else isn’t concerned for their safety around you then that lessen the chance the person trying to do business with you won’t be either. Letting people know other people think you’re cool, smart and maybe even a little funny helps take the edge off. 7. Possibly a third or fourth place where you’ve been spotted online. Honestly, you can never have enough of this stuff. The more validated places you show up the more attracted your prospect becomes.
Continued page 19
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Do you ever get tired of seeing Robert Downey Jr. show up on different talk shows? I know that’s a sizably exaggerated example, but you can be the off brand insurance version of that if you want. 8. Testimonial Let’s save the best for last. Having someone tell someone else what it’s like doing business with you is about as good as it gets.
day’s environment. Wasting time and effort to improve it over any one of these items is probably not the most effective use of resources. Your Google business card should be your most interesting man (or woman) in the world moment. Instead, the only thing interesting is if they can find anything at all.
It’s even more powerful when you have the other seven items on this list to support it. The Bottom Line Someone wanting to do business with you shouldn’t feel like they’re in an episode of Homeland trying to find an Al-Qaeda terrorist. They should get tired of learning about you because there’s so much available. You need to knock your traditional business card down the list on how effective it actually is in to-
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Insurance Agency Financing Options by: Robert J. Pettinicchi
Yes, maybe and no. While these responses might sound like loan decisions you might expect to hear from a lender, they represent my response to the often-asked question of where to seek financing for loans to facilitate an agency acquisition or perpetuation. I will start inversely with the “no” response. Avoid the temptation of obtaining a loan directly from an insurance carrier you represent. While their offer of financing may be appealing due to a favorable interest rate and long repayment term, this option is fraught with both ethical and business issues. Interestingly, I have observed a resurgence of carriers offering such financing. All cases are similar — the carrier is more than willing to provide financing to your agency provided the level of business you currently produce with them is maintained. There is an obvious problem here: As an independent agent, you are looking out for the best interest of your client and providing the best service you can
give them along with choice of carriers. This can compromise your ability to truly be independent. It is a question best left to ethics scholars, but looks untrustworthy to me. Further, there is no assurance that the particular carrier will have the same products, pricing and risk appetite to best serve your clients through the repayment of the loan, which may run over several years.
From a business perspective, you will be giving up your most valuable asset — ownership of the client relationship as security for the loan — to the carrier. You also close out any opportunities you may have to sell or merge your business because that same carrier may not provide consent unless even higher levels of production are promised. You may be restricted from rolling a book to a carrier that may provide better coverage and rate for your clients. You may give up opportunities for contingencies. At the very least, keep in mind that the carrier will be taking the loan payment directly out of your direct bill commission payments, causing a nightmare for any of you who like to reconcile these receipts. For the most part, the recent financing offerings have been from the carriers that are feeling less certain about their ability to compete for your client’s business and prefer to compete unfairly, placing a thumb on the scale to protect turf. The better carriers that are stronger and more focused on the value and importance of the independent distribution channel have not been actively providing direct financing. However, they are willing to provide advice and counsel for acquisitions and perpetuations by referring you to specialty insurance lenders and reputable consultants. Small Business Administration (SBA) The “maybe” response is for financing guaranteed by the Small Business Administration. The SBA plays a valuable role in expanding access to finance for businesses. Their charge is to help Louisiana Agent 20
make credit available when a bank is uncomfortable about an aspect of the loan, often the collateral position. For your local community bank, this likely means that the banker does not feel that your years of hard work have generated something of lendable value and so needs the guarantee of the SBA to make the loan. While SBA financing is generally longer term (up to 10 years), the rules attached to the program are quite rigid and can’t easily accommodate incomplete ownership transitions, rendering them not helpful for many perpetuations.
Also, the longer term and rules potentially make it difficult to build equity should another opportunity come along or if you need to make a change in the loan such as the release of a retiring owner. Anyone can afford a Lexus if they can get 10-year financing — but hope you don’t need to sell it in two years because you will be upside down. Another thing to consider is the provider of the SBA loan. This financing program has been a great source of income to lenders because of the opportunity to sell the guaranteed loan to investors. As a result, these lenders may structure the loan with a particularly high variable rate to maximize their profit on sale. While the prospect of a long term may have appeal and the SBA may make a deal work that otherwise might not be feasible, I suggest you seek a lender that utilizes the SBA program as a financing option, but not the only option offered. The “SBA-only” option is the norm for the largest players in this field. You are likely better served by your community bank if this is the only way the loan can work for you. Agency Finance Specialists The “yes” response is for the very small group of lenders that specialize in agency finance. These lenders understand the value you have created in your book of business and can be flexible, making a loan to your agency with your book of business as acceptable security. These lenders will help you compete with bigger players by providing capital for acquisitions and assisting you by keeping your options for growth and value building wide open.
LOUISIANA CITIZENS PROPERTY INSURANCE CORPORATION AGENTS’ ADVISORY COUNCIL MEETING – MINUTES December 5, 2017 Attendees:
Council Members: Jody Boudreaux, Jeff Albright, Craig Thomson, Parke Ellis, Kirk Koster, Dave Clements, Don Stiel, Kerk Leblanc, and Mark Fruchtnicht Members not in attendance: Eric Stone, Armond Schwing, Brian Chambley LCPIC: Richard Newberry, Patricia Weidie, and Stephanie Jackson. CEO Update:
1. Richard Newberry updated the Council of staff changes in the company. Both CFO, Steve Cottrell and COO, Vijay Ramachandran will retire in December. Richard will assume a portion of the duties of both roles. Remaining duties will be handled by Stephanie Jackson and Patricia Weidie. 2. Company has shrunk from 74 employees to 59 with $1.5 million dollars in reduction of salary and benefits. 3. Richard is scheduled to attend a joint meeting with Senate and House committees, led by Senator Smith and Rep Talbot regarding Senate Bill 214 on January 9, 2018. 4. Richard provided the council with the following: 2017 budget forecast vs the 2017 budget 2018 budget overview compared to 2017 forecast 2018 projected cash activity if we continue with the current depop process w/ potential hurricane
Reprinted with permission from Insurance Journal Louisiana Agent 21
Company
State Farm Fire & Casualty State Farm Mutual Auto Ins
Coverage Type
19 – Commercial Auto
Overall % Impact:
Overall $ Impact:
+5.700%
$1,178,485
Join Us for the Next ACT Meeting The Agents Council for Technology is excited to host the next ACT Meeting on March 14-15, 2018 at the Westin Gaslamp Quarter Hotel in San Diego, California. Join us for an innovative meeting focused on trending topics within our industry including agency productivity tools, cyber security, chat bots and texting, carrier strategic roadmaps, InsureTech, and interactive breakouts from our ACT Work Groups. There will also be a special session on recruiting tech savvy talent. Looking to expand your network? The ACT Meeting provides the perfect space to connect with some of our industry's top thought leaders.
Number of Policyholders:
11,136
Changes
New: 3/19/18 Renewal: 3/19/2018
IIABL New Member Join us in welcoming IIABL’s newest member! Charles A. Gwaltney, LUTCF Charles A. Gwaltney & Associates 107 Rolling Meadow Lane Bossier City, LA 71102 318.746.0906 charlesg48.cg@gmail.com
Did you know ACT Meetings aren't just for tech experts? Whether you are a Big "I" agent, carrier or vendor you will leave with valuable takeaways you can use immediately – so register today! See you in San Diego, The Agents Council for Technology Committee
*Please note registration for the ACT Meeting is FREE for all Big "I" members and ACT supporting members.
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Tables were used to demonstrate and discuss: 2014-2018 Net income from ordinary operations continue to decrease as policies are inequitably depopulated. The policy reduction has exceeded the ability to reduce operating expenses even after restructuring. Total number of policies from 2012 – 2018. Total policy decrease and the operating cost per policy. Personal lines Expected combined ratioDepopulated vs retained policies. Review of the 2017 Reinsurance Program 100 year return period. 2018 Pro Forma Reinsurance Program-250 year return period. Rationale for purchasing 1-250 Reinsurance coverage assuming storm hits NO using LCPIC’s TIV and an event such as Harvey. Depopulation Round 11- total numbers by company requested/authorized for PL and Commercial lines
Underwriting Update: 5. Re -inspection Program: We have completed the re-inspection of our current book of business. We will begin inspecting approximately 3,000 risks in 2018 using a multi-variant program to select which risks to inspect. 6. Agency visits: There has been several benefits to our recent visits; relationship building, clearing up misconceptions, beneficial feedback with the addition of esignatures and increase in the number of days on Coverage Confirmation Letters. We have actively visited producers in 2017 and will continue to increase the number of visits in 2018. Farm Bureau has a new producer program that will be begin participating in 2018. If there are any producers that the group was aware of or wanted us to visit, just let Patricia
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Weidie know. Claim Update: 7. YTD Claim Activity: Total claims year to date were reported at 1988 of those 56 were from TS Cindy, 119 from Hurricane Harvey, and 11 from Hurricane Nate. 2017 cat season had a nominal impact on LCPIC. Average severity of claims paid for each event were less than $1500 after deductible. Losses were relatively small. Hurricane deductible was only applied in Nate as Harvey never made landfall in LA. LCPIC was prepared and implemented testing through TS Cindy allowing Worley to handle claims as the administrator with LCPIC providing oversight, quality review, and ongoing claim handling of non-event losses. 8. FNOL Usage: Total number of reports submit ted through FNOL by user was provided to agents. Implemented Customer Web portal for claims in January. Currently 89 of 1988 claims were submitted via web by customers. This is Citizens’ efforts to better serve customers by allowing claim reporting 24/7. Agents submitted 454 losses, 19 submitted by Worley through cat testing where Citizens phone lines were transferred seamlessly to Worley for handling, and the remaining claims handled by LCPIC customer service reps. 9. Service Provider contract set to expire March 2018. LCPIC is in the preliminary stages of a Request for Proposal. This should be rolled out and available no later than February so that we can go through the process and issue a new contract in March 2018 for catastrophe services. The RFP will allow applicants to respond to all or sections of the services available including the Administrator, Adjusting services only, or FNOL reporting only. 10. Meeting was adjourned.
Upcoming FEMA Mapping Changes Webinar Presented by: The National Flood Insurance Program February 1 from 10am—12pm
Register Now! (Capacity is limited)
FEMA MAPPING CHANGES This webinar provides insurance agents a practical look at how FEMA flood map changes can affect property owners in their roles as flood insurance policyholders as well as borrowers. Find out how to ease the transition to new flood maps for your clients. Learn how to provide better service to them by understanding how mapping changes affect policy rates, premiums, and the mandatory purchase of flood insurance. This course will also review flood mapping issues related to Letters of Map Change and the Newly Mapped procedure. Enroll in an upcoming session and learn how to best help your clients both before and after map changes occur.
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Steve Anderson
What Technology Will Your Agency Use in 2020?
PropertyCasually360 magazine asked me to write an article about the technology I see coming in 2018 as well as what we might be seeing in 2020.
what technology agent and broker must pay more attention to and what can wait.” You can read the full article by clicking here.
Technology in 2018 I started the article with this: “The pace of technology development and the resulting change in customer experience expectations continues unabated. Investment in insurance technology startups (InsurTech) also continues its record-breaking pace. Technology has always been important to the industry. It is important to watch these trends to see how they will help improve how insurance agents and brokers respond to the changing expectations of prospects and clients. Of particular interest is trying to determine
The article lists several vital technologies I see as being important in 2018. These include:
• • • • • •
Text management Text marketing Fixing follow-up failure Guided conversations Voice computing Augmented and virtual reality
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Because of space limitation, I was not able to add all of the technologies I am tracking that I think will be important for the insurance industry in 2020 and beyond. Following is a list of a few additional items.
and who knows what else.
Spaceflight and Satellites
Quantum What?
Significant progress is being made commercializing spaceflight. Not too long ago sending a person into an earth orbit was solely a government-sponsored activity. Not anymore. The rise of SpaceX (Elon Musk), Blue Origin (Jeff Bezos), and an increasing number of other firms has made spaceflight a commercial activity. The most significant short-term impact is the ability to launch a new generation of satellites.
The end of Moore’s law (processing power doubles every 18 months) has been predicted for quite some time. While doubling cannot go on forever, we have yet to experience an end to the impact of Moore’s Law. Quantum computing will start moving from theoretical and research into practical applications in the next few years. This is especially significant as the processing power required by artificial intelligence systems will demand a different (more powerful) type of computing platform.
The long-term impact could be significant. We are already starting to see the short-term effect with the launching of new Low Earth Orbit (LEO) satellites. These small (size of a breadbox) satellites will significantly alter communications, Internet access, imagery,
If you are interested in more details, then I suggest you listen to the NPR’s Planet Money series on satellites.
A quantum computer is based on the theory of Quantum entanglement. Early experiments have led to a new branch of computer science called quantum information theory. The theory was that it might be possible to build a vastly
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Webcasts E&O Risk Management February 6, 15, 20, 22
Ethics February 15, February 23, February 26, February 27
Available on Demand
Flood February 15
Available on Demand Available on Demand
Commercial & Personal Lines Courses Click above title for courses & dates for 2018 Available on Demand
Virtual University Live webinar February 7 Re-Learning Flood
Virtual University February Lightning Learning: Homeowners’ Insurance 8th "Guaranteeing" Replacement Cost in the HO Policy 15th Special Limits of Coverage in the HO Policy 27th Understanding Dog Bite Rules and Statutes
Seminars E&O Risk Management 5/8/18—Monroe 5/9/2018—Lafayette 5/10/2018—BR 5/11/2018—NOLA
E&O Risk Management 10/16/2018 –Shreveport 10/17/2018—Lafayette 10/18/2018—Kenner 10/29/2018—Covington
Events IIABR Luncheon February 8, 2018 Juban’s Restaurant
On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.
CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.
Pre-Licensing Online prelicensing 3 optional study packages Click here for additional information Louisiana Agent 30
more powerful computer based on quantum information states. That theory is becoming a reality. Both Google and IBM have already developed small-scale quantum computers, and IBM even allows people to access it through the cloud. I don’t pretend to understand this yet, but I am watching and learning as much as I can. Internet of Things Old news, right? Yes, but‌ It has been predicted for quite some time that the number of connected devices will increase dramatically over the next few years. This is no longer a question. The issue will be learning how to utilize the vast amount of data the sensors can gather in a way that will help improve business, homes, cars, and just about anything else. The number of devices connected to the Internet is surging and will reach 20.4 billion by 2020, up from 8.4 billion in 2017, according to Gartner Research Inc. By 2021, 40% of enterprises will have an edge computing strategy in place, up from about 1% in 2017, Gartner says. Edge computing allows data to be processed and analyzed on or near the device where it is generated instead of first being sent to a corporate data center. The Need to Pay Attention Technology has always been important to the insurance industry. The pace of technology development and the resulting change in customer experience expectations continues unabated. Investment in insurance technology startups (InsurTech) also continues its record-breaking pace. It is important to watch these trends to see how they will improve the way insurance agents and brokers respond to the changing expectations of prospects and clients. What technology do you think you will be exploring in the next two years?
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“Just Because It’s an ‘Auto’ Doesn’t Mean the CGL Doesn’t Cover It” What is the value of an insurance agent? Direct sales insurers and many of the current insurtech startups would like consumers and businesses to think that the agent is simply a middleman that adds nothing to the insurance product and certainly doesn’t merit those mythiBill Wilson, CPCU, cal outrageous commissions. ARM, AIM, AAM However, people who understand what agents do to earn their commissions are very familiar with situations like the following claim that came to my attention just last week through the Big “I” Virtual University’s “Ask an Expert” service…. An agent insures a tree removal service on the current ISO CGL policy. They were using a power crane mounted on the back of a truck to lift a downed tree. The boom broke and the tree fell
on a structure. The adjuster denied the claim, citing this provision in the CGL definition of “mobile equipment”:
However. “mobile equipment” does not include any land vehicles that are subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. The problem here is that the adjuster is not familiar with the concept of “entirety of contract.” Coverage in this claim does not lie strictly within the definition…you have to read the entire policy, including the “auto” exclusion which says [EMPHASIS added]:
This exclusion does not apply to…”Bodily injury” or “property damage” arising out of…The operation of machinery or equipment that is attached to, or part of, a land vehicle that would qualify
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under the definition of “mobile equipment” IF it were NOT subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged; An exception to the “auto” exclusion is made for the OPERATION of equipment that is attached to a land vehicle that would qualify as “mobile equipment” IF it were NOT subject to a motor vehicle insurance law. Yes, the vehicle is, by definition an “auto,” but the “auto” exclusion doesn’t apply to the operation of the equipment on the “auto.” In other words, the crane vehicle is an “auto” when being driven on the road, but “mobile equipment” when being operated. This is a good lesson. While the CGL generally does not cover the use of “autos,” that generalization does not always hold up when the contract language is carefully parsed. There are situations where the CGL policy will respond to “auto” claims but in order to determine that, the policy language must be read very, very carefully and in its entirety.
Perhaps the bigger lesson here is the fact that the agent was astute enough to realize that the adjuster’s interpretation was quite possibly incorrect and sought expert opinions in order to contest the claim denial. I’ve spent the last 30 years assisting independent insurance agents who advocate for their customers when claims are improperly denied. If this account was written through a direct sales insurer, who would represent the customer in challenging such denials? No one. Good agents earn their commissions in many ways. This is just one example of one way.
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
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Are You Using the Ask an Expert Service and the Big I Virtual University?? Member Benefit Have a question? Ask An Expert!! The Big I Virtual University has 50 top-notch insurance professionals ready to find the solutions you need when you can’t find it online. It is as simple as signing in and posting your insurance question. Response time is usually 2 to 3 business days. There are 17,000 pages of in-depth and expertly vetted articles, checklists and white papers covering commercial lines, personal lines, life-health and management solutions. Talent recruitment and development within the VU provides resources that can be used for recruit-
ment, training and retention. On Demand Learning Resources include new agent training, Virtual University webinars and webinar transcripts.
The VU offers the following Live Webinars for February: February 7th Re-Learning Flood: Old Myths & New Realities
Lightning Learning: Homeowners’ Insurance 3 twenty minute sessions February 8th "Guaranteeing" Replacement Cost in the HO Policy February 15th Special Limits of Coverage in the HO Policy February 27th Understanding Dog Bite Rules and Statutes
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GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL ACCIDENT FUND
AMERISAFE
AMERICAS INSURANCE
BANKERS INSURANCE
CNA INSURANCE
EMC INSURANCE
FCCI GROUP
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
IROQUOIS SOUTH, INC.
LANE & ASSOCIATES
LUBA WORKERS’ COMP
MAISON INSURANCE
MARKEL FIRST COMP
RPS COVINGTON
STONETRUST INSURANCE
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