Mandatory Registration by Producer Agencies
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IIABL STAFF
ACT Work Group on eSignature
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Jeff Albright Chief Executive Officer jalbright@iiabl.com
LABI Release Summary of New Taxes
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 Karen Kuylen Director of Accounting kkuylen@iiabl.com E. Lee Mowe Marketing Representative lmowe@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
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8 Trends in Insurer Digital Modernization
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Exposure Discussions/Checklists
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What would you do if you had a data breach?
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Is the New .INSURANCE for you??
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NCCI Regulatory Digest
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Tech Tips
30
Ask Mike
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IIABL Calendar
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Rate & Rule Filings
27
IIABL Partners
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Mandatory Registration by Producer Agencies LDI Advisory Letter 2016-02 The Louisiana Department of Insurance issued Advisory Letter 2016-02 on July 7, 2016 to advise all insurance producer agencies to register, under its agency license, every member, partner, officer, and director as well as other individuals that are personally engaged in the solicitation and negotiation of policies of insurance in the State of Louisiana. La. R.S. 22:1546 (B) requires producer agencies to register, under its agency license, every member, partner, officer, and director as well as all other individuals personally engaged in the solicitation and negotiation of policies of insurance in the state of Louisiana. Due to the recent enactment of Act 315 during the 2016 Regular Session of the Louisiana Legislature, every person who controls directly or indirectly ten percent or more of the producer agency must be registered under its license. Please also be advised that producer agencies are required to notify the Louisiana Department of Insurance (LDI) within thirty days of the change of status of any registrant. A fine of $100.00 is mandated for each violation of these
requirements. Advisory letter 2016-02 shall serve to advise all producer agencies of their obligation to comply with the registration requirements of La. R.S. 22:1546 (B) by either filing through the LDI Industry Access Portal and associated modules located on the LDI website at www.ldi.la.gov or, as an alternative, by filing a written Affiliations Form with the LDI. The Affiliations Form may also be found on the LDI website. Click HERE to view LDI Advisory Letter 2016-02: Mandatory Registration by Producer Agencies.
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ACT Work Group Spotlight on eSignature On August 16th at 2pm EST the ACT Work Group Spotlight webinar series will continue on eSignature – ACT's Commitment to Drive Adoption. Join the ACT eSignature work group co-chairs Joyce Sigler and Nick Khamarji along with ACT executive Ron Berg to briefly learn about how implementing eSignatures into your work flow not only saves time and expenses, but delivers the exceptional service our customers expect. We'll also talk about how the work group is driving acceptance of eSignatures across the industry, and how they are creating education and consistent workflows for independent agents.
Register here. If you have any questions please reach out to Ron Berg, ACT Executive Director.
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LABI Releases Summary of New Taxes on Employers More Than $1.3 Billion in 2017 Will Be Removed from an Already Struggling Economy to Fund State Programs The Louisiana Association of Business and Industry (LABI) released a summary report of the impact on employers of new laws passed in the second special session of the Louisiana Legislature, which adjourned on June 24 after a record-breaking 19 weeks in 2016. The summer gathering was also the third fiscal legislative session in a one-year period – June 2015, March 2016, and June 2016 – focused again on raising taxes in an effort to close what has become a perpetual deficit in state government. In the most recent fiscal session, the Louisiana Legislature passed roughly a dozen new tax bills that primarily targeted business income taxes and related credits, totaling more than $90 million annually for state programs and services.
LABI President Stephen Waguespack notes: “The newest changes to the tax code come swiftly on the heels of more than $1 billion raised on employers for Fiscal Year 2017 in the prior two fiscal sessions over the past year. Despite more than $4 billion in new taxes on both individuals and employers that the state is projected to take in over the next five years, state officials consistently declare that still more revenue is needed to fully fund government.” For the Louisiana business community, the combined impact of taxes raised in the 2015 and 2016 legislative sessions are as follows:
$575 million tax increase on employers in Fiscal Year 2016
$1.33 billion tax increase on employers in
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Fiscal Year 2017
$1.35 billion tax increase on employers in Fiscal Year 2018 LABI’s new report calls particular attention to the assault on Louisiana’s manufacturing industry. At a time when Louisiana manufacturers are already grappling with ever-expanding federal regulations, funding new health care mandates, and fighting excessive litigation, state officials have now enacted three rounds of tax changes that take direct aim at this vital sector of the state’s economy.
In 2015, Louisiana’s manufacturers felt the impact of across-the-board reductions to corporate income tax credits, the dramatic re-definition of deductions for Net Operating Losses that now makes Louisiana stand out nationally, and the 25 percent reduction to the refundable inventory tax credit. In March 2016, sales taxes were reinstated on business utilities and manufacturing machinery and equipment – again making Louisiana one of small minority of states to impose these taxes on major manufacturing inputs. In June 2016, a critical sales tax exclusion on ma-
terials for further processing was limited, and manufacturers that participate in the Industrial Tax Exemption Program (ITEP) are no longer eligible to utilize the refundable inventory tax credit. Finally, Gov. Edwards acted within hours of the adjournment of the Legislature to administratively constrain the ITEP itself and will now require multiple levels of local approval of contracts, which is expected to severely curtail the program. “The impact of these tax changes number in the hundreds of millions of dollars annually for Louisiana manufacturers who represent one-fifth of the total economic output of the state and employ nearly 150,000 workers in Louisiana with an average salary of $82,150,” Waguespack said. “With over 19,000 jobs lost in the past year, state officials should be working overtime to improve conditions for manufacturers to create more high-skilled, high-paying jobs – but the wants of state government have clearly prevailed over the needs of the Louisiana economy.” Other new laws passed in the second special
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session will reinstate the full inventory tax credit for certain small businesses while removing refundability above $1 million; change the apportionment formula for corporate income tax; enact market-based sourcing; create a tiered system at a reduced level for net capital gains deductions; and decrease the interest owed to taxpayers by the state in refunds for overpayments. (LABI’s report details every bill and the fiscal impact on employers.)
While some major new tax laws affecting employers are permanent, the new sales taxes and the reductions to some corporate income tax credits will sunset on 30 June 2018. The Legislature is scheduled for a fiscal session in the spring of 2017, at which point officials will need to decide if they will extend these temporary taxes, increase other taxes, and/or overhaul the tax code entirely. Waguespack concludes: “The time for short-
term revenue quests with little regard to the real-world impact must end. Getting the long-term solution right is absolutely critical as the Louisiana economy struggles through a recession. A predictable and stable tax climate and state budget is in the best interest of both the public and the private sector. In 2017, comprehensive tax reform with lower rates, fewer exemptions, and a broader base must accompany comprehensive budget reform with fewer dedications and better prioritization of limited dollars.” In addition to the summary of recent laws, LABI’s new report illustrates how the numerous tax changes have contributed to an uncompetitive tax climate and made Louisiana an outlier in tax policy. For example, only three states cap carry-forwards of Net Operating Losses, only nine states tax manufacturing machinery and equipment, and only 10 states levy an inventory tax. Louisiana has the highest corporate income tax rate in the South and the second highest corporate
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franchise tax in the nation. Furthermore, the Tax Foundation ranks Louisiana’s business tax climate at No. 37 overall and dead-last specifically for sales tax due to high rates, a poor base structure, and administrative complexity – even before the new laws passed in 2016.
Download LABI's related reports on new taxes on employers: Another Round of New Tax Burdens on Employers: Outcomes from the 2016 Second Special Session New Tax Burdens on Employers: Outcomes from the 2016 First Special Session The Cost of New Tax Burdens on Employers: An Overview of the Impact of New Louisiana Tax Laws Opposed by LABI in the 2015 Legislative Session
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8 Trends in Insurer Digital Modernization By Jayleen R. Heft, PropertyCasualty360.com
The technology needed to support the property and casualty industry isn't always a sexy topic, but software platforms and information technology systems are essential for insurance company success, as well as the success of insurance agents and brokers. A basic understanding of technology modernization trends are needed for planning and decision-making that directly impacts your customers and your bottom line. "Insurers’ Core Systems Buying Trends," a research report by Karen Furtado with Strategy Meets Action, investigates patterns in insurers’ core modernization decisions, including: Which core components are being purchased. What core-adjacent functionality is included (e.g., data and analytics tools, portals). Which lines of business will be supported. How the capabilities will be deployed. This research gives insurers insight on industrywide core modernization efforts through the lens of insurers' core buying decisions in 2015. Core systems 101 Here are some basic concepts you need to understand: Single-component core systems include: Policy administration system. Billing system. Claims administration system. Multi-component core systems include: Policy-plus: The purchase of two core systems at once. The most typical configuration is policy and billing, followed by policy and claims. A single billing and claims deal is also included in this category but is not a common purchase type. Suite: Purchase of policy, billing and claims in one transaction. Insurer tiers: Tier 1: Direct written premium (DWP) over $5B. Tier 2: DWP between $1B and $5B.
Tier 3: DWP between $250M and $1B. Tier 4: DWP under $250M. Strategy Meets Action has identified the following eight key insurer software platform trends that have continued to grow in the past year:
1. Core system suite buys continue to increase.
Over the past five years, there has been an increase in the purchase of core system suites, surpassing the single-component buying pattern that had previously dominated the market. Suite deals rose from 37 percent of the 2014 market to 43 percent in 2015.
2. Most of the core systems purchased in 2015 support personal lines. Of all suite transaction in 2015, 78 percent support personal lines. New core systems purchased to support personal lines only are particularly likely to be suites (83 percent). One out of every three core transactions in 2015 was a suite purchased to support personal lines. Many of the personal lines core systems that the 2015 core purchases are replacing were implemented 10-15 years ago, during the first core modernization wave. Today, the capabilities and functionality of a modern core system are well beyond that of a 15year-old system. Consumers’ changing expectations for their interactions with insurers have a more direct impact on personal carriers today. These insurance companies face a greater pressure for more advanced capabilities, from the ability to incorporate telematics and emerging technologies to accelerated product development that can compete with insurance startups.
3. The smaller the insurer, the more likely they are to purchase a suite. Tier 4 insurers are purchasing suites at a staggering rate: 72 percent of all core transactions by Tier 4 insurers are for suites. One out of every four core purchases in 2015 was a suite for a Tier 4 insurer. Louisiana Agent 12
4. Core purchases are distributed evenly between transactions for a single core component or for multiple components. Although suite purchases represent a significant — and increasing — number of insurers’ buying decisions, SMA’s research indicates that purchases of stand-alone core systems still make up just over 50 percent of the 2015 core market activity.
5. Insurers are increasingly purchasing core systems to support both personal and commercial lines. Strategy Meets Action research published in "Policy Administration: P&C Plans and Priorities" found personal lines on the verge of a major transformation push, one which had already affected commercial lines. The volume of 2015 purchases that support personal lines shows this push in action. All personal lines core purchases made up a slight majority of the market (52 percent), while they accounted for only 40 percent of core transactions in 2014. The increase is due to a higher volume of core systems purchases that support both personal and commercial lines: these transactions rose from 23 percent of the market in 2014 to 35 percent in 2015.
6. Rise in cloud hosting.
The core systems most frequently deployed in the cloud in 2015 are suites and claims. One reason that suites and claims are so frequently hosted in the cloud is the interest of noninsurers (municipalities, self-insureds, state Fair Access to Insurance Requirement plans, etc.) in cloud deployment. Related: Cloud deployment has reached a tipping point in insurance
7. On-premise deployments on the decline. Strategy Meets Action has found that 2015 was the first year a minority of new core systems were deployed on premise versus hosted elsewhere. On-premise deployment made up only 42 percent of core transactions in 2015, down from 54 percent in 2014.
8. Hosted core systems include more functionality than on premise core systems. Extended capabilities in core systems that complement core functionality, such as data and analytics, underwriting rules management, and document management/ imaging, are much more likely to be found in hosted deployments of core systems than in on premise deployments. The capabilities and integrations that insurers acquire in core modernization purchases will support their ability to compete in the future. It's critical for insurers to be aware of the rise in cloud deployment, enhance functionality and software suites.
Core systems that support both personal and commercial lines are contributing to a rise in cloud hosting. The proportion of these transactions hosted in the cloud shot up from 17 percent in 2014 to 37 percent in 2015. By comparison, 24 percent of all core systems purchased in 2015 will be hosted in the cloud, an increase of 5 percentage points from 2014.
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Exposure Discussions/Checklists By Chris Burand Coverage checklists are the single best tangible tool for minimizing E&O exposures. Even better, my clients that use coverage checklists correctly and consistently ALWAYS increase their sales, ALWAYS are perceived as being more professional, and ALWAYS prove to the client they are earning their money. 90% of all agencies fail to use coverage checklists consistently, if at all, so the opportunity to clean the competition's clock is wide open.
They are buying manure not because they want manure but because they want good crops and pretty flowers.
The one true weakness of coverage checklists, which is a small criticism given the value they deliver, is that the focus is on coverages. Clients do not know and often do not care about the arcane, sometimes Kafkaesque, world of insurance coverages. Insureds care about whether their EXPOSURES are covered. In other words, it is like a gardener buying manure.
To deliver then what clients really want, I have developed the first of its kind Exposure Checklist coaching program. This program is available in person or long distance. The program focuses on teaching producers AND CSRs how to develop, learn, identify, explain, and discuss exposures. Here's a good personal lines example:
This is why an Exposure Checklist plays such a valuable role. It is even better than coverage checklists. An Exposure Checklist is not a tangible list. Exposure checklists are conversations and even scripts built around coverage checklists. Exposure checklists are conversations regarding the client's exposures which contrasts with coverage checklists which are conversations regarding coverages.
The standard agency procedure is to match liability
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limits with UM/UIM limits. The average middle class American carries something near $100,000/$300,000 limits up to $500,000 limits. A key catch (though not the only catch) is this reasonable scenario: A parent is carpooling and has four kids in their car when an uninsured driver blows through a stop sign. Uninsured drivers are often the worst drivers and hence uninsured so they blow through at a high rate of speed. Is $250,000 or even $500,000 UM coverage enough to restore five lives? It's questionable and yet the agency would have followed procedures. Exposure Discussions/ Checklists
If you want to become a pro and take your game to a higher level, get started today! Contact me at chris@burand-associates. com to learn more!
Following standard procedures and using a standard checklist misses the point if we don't focus on exposures. By focusing on exposures, helping the client understand that $500,000 is potentially not enough coverage to restore five lives, an agent can do even better work by selling the insured an umbrella with drop down UM/UIM coverage to cover the exposure. Covering exposures, after all, is what agents are paid to do.
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What would you do if you had a data breach? By John Immordino CIC, CRM, RPLU, CIPP/US
According to recent Symantec research, 60% of small businesses will close within six months of a cyber-attack. Are you prepared to handle a breach? What would you do if you had a breach?� The response is usually along the lines of a glazed over look, followed by eyes rolling into the backs of heads. 60% of businesses fail to recover from a breach. Why? Because those businesses are not familiar with state data breach notification laws, the costs associated with a breach, and the reputational harm that the business will incur. The majority of business owners consider reputation one of their most important assets. Small business owners work in the same communities that they live, shop, go to church and where their kids go to school. When clients provide their private information, they expect the business to keep it safe. If the client suf-
fers a breach of this information, the client, and, by extension, the local community, lose faith in the business. As a matter of fact, 38% of clients will leave after a breach and 46% of them will advise friends and family to be careful sharing information with that local business. This is why the number one concern is to protect sensitive information and prevent a breach from happening. Many insurance carriers will offer risk management web portals as part of their insurance policy. These are excellent resources for companies that need assistance in identifying and protecting the private information they have. These portals also provide useful tools in training the business employees on the importance of privacy. Some of these same carriers will provide the insured with a public relations firm to help them announce the breach in a way that will mitigate their reputational harm. When it comes to discussing privacy laws, the best
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approach is to keep it simple. There are numerous state and federal privacy laws that business must comply with. There are currently 47 different state notification laws. In a general sense, these laws state that if a business collects private information on state residents, they are required to protect that information. If the business fails to protect the information and there is a breach, they must notify the affected individuals within a certain time frame. If the residents are not notified within that time period, the business can be assessed civil money penalties. The challenge is determining when the business has to notify the affected individual and when the clock starts ticking. Most states specify that they must notify “without unreasonable delay.” Some states will actually provide a number of days that can range from five to 45 days. The new national legislation being proposed will be 30 days. So, to keep from getting fined up to several hundreds of thousands of dollars, the business must notify the residents as soon as possible. The notification will consist of three steps: forensics, legal and mailing. The first step is to find a forensic investigator to assess the breach. Forensics will determine what happened and identify the individuals whose private information has been compromised. This list will then go to a legal counsel specializing in privacy laws. Counsel will determine which laws are applicable to the situation, and suggest compliance methods, including how to structure the notification letter.
Instead, the cost associated with each breach has to do with the type of information compromised, the regulatory climate and how the information was compromised. According to a 2014 NetDiligence report on 111 actual cyber liability insurance claims, the average claim payout is $733,109. This amount is inclusive of forensics, notification, legal guidance, public relations, legal defense, legal settlement, regulatory defense, regulatory fines and PCI fines. Because the notification costs can vary so greatly, we usually recommend carriers that will respond to the notification obligation on the basis of a record count outside the limit of liability, instead of a set, static dollar value limit. It has often been said that it is not a matter of if you will have a breach but when. Educating, training and insuring are the key components to helping your organization be part of the 40% survival rate. The Independent Insurance Agents & Brokers of Louisiana (IIABL) has partnered with Beazley Insurance Company to offer their members the Big “I” Agents Cyber Secure Program. This program was developed for insurance agents to provide them with the tools to reduce their exposures and the insurance to respond to a breach. For more information on this product, please contact Rhonda Martinez RMartinez@IIABL.com or Jamie Newchurch JNewchurch@IIABL.com at the IIABL office (225) 819-8997.
All states have specific requirements on how these letters need to be written. After the draft is completed, the letters are then mailed to the affected individuals. This is a complex process that must be completed in a certain time period. Because of this, clients that do not have a formalized response plan are best served by being placed with a carrier that will provide one for them. Several carriers will offer turn-key breach responses or otherwise assist an insured through the breach response process. The costs associated with handling a breach can cripple any business. Depending on the report being reviewed, these costs can range from $1,000 to $13,700,000. The important thing to remember is that the cost of the breach is not relative to the size of a company. Louisiana Agent 17
IIABL Director of Education, Mike Edwards is your source for technical questions. Contact Mike at medwards65@aol.com or 678.513.4390
Subject: CGL “Fire Legal” – Looking for Higher Limits
Q. I have hit a brick wall with a nice commercial account I am quoting on.
One of the insurance require-
ments is for limits of “fire legal” coverage higher than the standard $100,000 provided in the ISO CGL. The contract my insured must comply with requires $1,000,000 limit. So far, the highest limit any of my markets will write is $300,000. In addition, no excess/umbrella market I have contacted will include the coverage. Any suggestions would be greatly appreciated. A. Insurance policies are essentially tools designed to solve problems (exposure to certain types of losses). In situations like yours, it’s unfortunate and vexing when the choice of the insurance tool(s) needed to address the problem is predetermined by a contract or bid spec, which are often not written by insurance experts. Ironically, this provision in the lease, probably inserted for the benefit and protection of the landlord, is actually an impediment to procuring the best coverage for the exposure. Fire legal coverage in the CGL is not the best tool for the exposure contemplated under a typical landlord/tenant arrangement. B. This problem is frequently seen with Certificates of Insurance. It is not uncommon for a certificate request to stipulate a certain coverage form or endorsement by name and/or edition date (the CG 20 10 11 85, is a prime example). CGL Fire Legal The fire legal coverage in the CGL is very limited and narrow. Broadly speaking, fire legal only covers: (1) fire damage to a rented premises; (2) if the insured is legally liable for the fire under tort, but not due solely to a contract; and (3) the coverage limit is $100,000. Some insurers will increase this limit. It is possible that an umbrella carrier might drop down over a higher underlying limit in the CGL.
Fire legal coverage likely grew out of lease provisions decades ago, where requirements placed on tenants was minimal, as illustrated in this excerpt from that era:
“Lessee will keep said premises in good repair, and upon termination of this lease, in any way, will yield said premises to Lessor in good condition and repair (loss by fire and ordinary wear and tear excepted).” As early as the 1950’s (possibly earlier), litigation developed as to whether or not the exception for fire applied to any fire damage, even if caused by the tenant. Case law was mixed. Where fire damage caused by the tenant was not deemed within the “exception for fire,” a need arose for insurance coverage for fire damage to a rented premises by negligence of the tenant.
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And while the term “fire legal” is commonly used, the ISO CGL has called the coverage “Damage to Premises Rented to You” since the 1998 edition.
Here is a quick example. Coverage form excerpts and comments below are based on Insurance Services Office (ISO) forms and endorsements. Proprietary forms may be different.
Assume Jill Smith is the owner of Smithco Services, Inc. Smithco rents one 5,000 sq.ft. unit of a 3-unit, $1,000,000 warehouse building. If the entire building burns because of the negligence of a Smithco employee, Smithco does not need $1,000,000 of fire legal coverage. Smithco’s ISO CGL covers any BI/PD under Coverage A for which Smithco is legally liable, subject to exclusions, terms and conditions of the CGL. Exclusion j. provides the following:
j. Damage To Property "Property damage" to: (1) Property you own, rent, or occupy, including any costs or expenses incurred by you, or any other person, organization or entity, for repair, replacement, enhancement, restoration or maintenance of such property for any reason, including prevention of injury to a person or damage to another's property; Comments: (1) While Smithco is legally liable for the $1,000,000 loss, their CGL excludes damage to the unit Smithco rents [see j.(1) above]. This provision is often incorrectly described as the “ccc exclusion,” meaning that any property in the insured’s “care, custody or control” is excluded. However, the “ccc exclusion” in the CGL is actually found in Exclusion j.(4), and only relates to personal property:
Commercial General Liability Coverage Form
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j. Damage To Property
"Property damage" to: (4) Personal property in the care, custody or control of the insured; (2) Smithco’s CGL does provide coverage for the parts of the warehouse that it did not rent, so theoretically, that could mean the other 2/3 of the building, or $666,666. (3) However, while the damage to the rented unit is $333,333, the amount payable under the standard ISO CGL fire legal coverage is only $100,000, leaving an unpaid gap of $233,333. (4) If Smithco rented the entire $1,000,000 warehouse, the entire building would still be subject to the $100,000 limit for fire legal. On the surface, this would clearly indicate a need for $1,000,000 of fire legal coverage. (5) In reality, most commercial leases these days place far greater responsibility on tenants than just fire damage they cause to the portion they rent. A common requirement is that the tenant is legally
responsible for “any and all damage to the building.” As we saw with Smithco, their CGL Coverage A, plus their fire legal coverage, would not fully comply with this “any and all damage” requirement.
Legal Liability Coverage Form CP 00 40 A much-needed companion to the CGL for commercial tenants is the Legal Liability Coverage Form CP 00 40. This coverage form provides tenants with coverage as follows: CP 00 40 10 12
A. Coverage We will pay those sums that you become legally obligated to pay as damages because of direct physical loss or damage, including loss of use, to Covered Property caused by accident and arising out of any Covered Cause of Loss. We will have the right and duty to defend any "suit" seeking those damages. Continued page 22
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1. Covered Property And Limitations
CP 10 20 1012 Broad Form
Covered Property, as used in this Coverage Form, means tangible property of others in your care, custody or control that is described in the Declarations or on the Legal Liability Coverage Schedule.
CP 10 30 1012 Special Form
Comments: (1) Although the CP 00 40 is a commercial property form, it provides the insured tenant with legal liability coverage for damage to tangible property in their care, custody or control, if caused by a Covered Cause of Loss. (2) At the same time, just as in the CGL fire legal coverage, the coverage is only provided if the insured is legally liable through tort, and does not apply if the liability arises solely from a contract.
This restriction is not found in the CP 00 40, but is included in each of the three ISO Causes of Loss Forms, one of which would be attached to the CP 00 40.
CP 1010 10 12 Basic Form
B. Exclusions Special Exclusions The following provisions apply only to the specified Coverage Forms: c. Legal Liability Coverage Form
Comments:
(2) The following additional exclusions apply to insurance under this Coverage Form: (a) Contractual Liability We will not defend any claim or "suit", or pay damages that you are legally liable to pay, solely by reason of your assumption of liability in a contract or agreement.
(1) The CP 00 40 is frequently recommended by many experts as a necessary addition to the CGL in the insurance program for tenants. It helps fill the large gaps that CGL fire legal coverage leaves exposed for the insured tenant. (2) But as noted, the CGL fire legal, as well as the
Continued page 24
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CP 00 40 Legal Liability Coverage Form, both exclude losses that arise solely from contractual liability. In addition, the CP 00 40 only covers the insured’s tort liability that arises from Covered Causes of Loss.
their negligence. Virtually all leases today make the tenant responsible for ANY damage to the premises in their care, custody and control, probably most without regard to fault.
(3) Therefore, an alternative preferred by other experts is to write a straight building policy, using the CP 00 10, or a Businessowners Policy (BOP). These provide coverage on a cause of loss basis, with no distinction made between tort liability and contractual liability, vs a contractual exclusion in both CGL fire legal, and the Legal Liability Coverage Form.
So, it doesn't really matter how much FDLL coverage you have if vandals cause $50,000 in damage to the premises or HVAC equipment or plate glass that the lease requires the tenant to return at the end of the lease with no damage beyond normal wear and tear.
Lastly, while researching your question, I contacted several colleagues who are experts in this area. Here are some comments.
My understanding is that most excess/ umbrella policies don't make excess FDLL coverage available. The reality is that FDLL is an obsolete coverage that had some usefulness many, many years ago when tenants were responsible for fire damage due to
Even the CP 00 40 won't work for liability for damage for which the tenant has no liability outside the contract (which is excluded), such as vandalism, lightning, theft, windstorm, etc. As a number of VU articles outline, FDLL coverage and probably the CP 00 40 simply don't cut it. You need a CP 00 10 or BOP coverage written with the broadest available perils, likely including flood. Continued page 26
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Continued page 14 Continued page 14
In this case, the agent is correct that "there is a large hole in coverage that most agents are not aware exists." The hole is probably larger given that he may not be aware that ANY limit of FDLL coverage still leaves a large hole of uncovered exposure. Additional information “CGL Fire Damage Liability – Is It Obsolete?” “CGL Fire Damage Legal Liability Coverage vs the CP 00 40 Legal Liability Coverage Form” “HO and CGL Coverage for Water Damage to a Hotel Room” “Is Fire Legal Coverage Primary or Excess?”
Special thanks to Bill Wilson,CPCU,ARM, John Eubank, CPCU, ARM, and Jim Mahurin, CPCU, ARM, for their assistance with this article. 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.
Is the New Domain an Opportunity for Your Agency? As of today, the new generic top level domain (gTLD)—what you see to the right of the dot in a website URL, such as “.com” or “.org”— dotInsurance is now available, opening new online real estate to the insurance sector. The beauty of the dotInsurance string is that in addition to providing a level of security and regulatory scrutiny that is unavailable elsewhere on the web, it also works for everyone, from major global insurance companies to the smallest independent agencies. While large carriers and agencies may seem like an obvious target for dotInsurance, the TLD is available at reasonable rates to organizations and individuals at all levels of the insurance spectrum, including:
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Webcasts E&O Risk Management August 2, 9 & 18
Ethics August 2,9 & 18
Flood August 4
E&O Risk Management October 11th—14th
Free Flood Seminars November 8—10, 2016
Big I Louisiana/Mississippi Young Agents Conference August 4-7, 2016 Ritz Carlton New Orleans
North Louisiana Education Conference—Shreveport 3 Hours Ethics 3 Hours Flood October 20th
CSR Training: The Customer Service Representative is key employee in every agency and is a difficult commodity to find.
Environmental Strategists (eS) Becoming a certified environmental Strategist™ (eS) will equip you with the knowledge to identify, manage and transfer environmental exposures impacting everyday business.
Commercial & Personal Lines Courses Click above title for courses & dates for 2016
Seminars August 2,3 & 4 John Eubank AM Session: Drones—Unmanned Aerial Vehicles PM Session: Cyber Exposures & Insurance Registration Brochure
Events
On-Demand Webcasts Masters Series: The Master Series are unique agency management courses from industry experts. in the Masters Series.
Cyber Risk Manager (cyRM) Completion of the Cyber Exposures & Insurance – Training for Agents & Brokers course qualifies you to register for the cyRM certification for FREE.
Pre-Licensing Online prelicensing 3 optional study packages available Click here for additional information
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Company
Coverage Type
Westport Ins Corp
Professional E&O Liability
FCCI Insurance Co Monroe Guaranty Ins Co National Trust Ins Co
Workers Comp
Overall % Impact:
Overall $ Impact:
Number of Policyholders:
Changes
-0.5%
-$19,934
186
New: 10/1/2016 Renewal: 10/2/2016
-0.7
-$27,175
182
New: 11/1/2016 Renewal: 11/1/2016
Continued page 29
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NCCI Regulatory Digest Issues Report Now Available NCCI’s Issues Report examines the most important matters facing the workers compensation system. Topics in the 2016 report include: sion on the sustainability of physician-dispensing reforms -demand" economy and how it might disrupt workers compensation
agement in workers compensation from CompPharma's Twelfth Annual Survey Report
for future analysis of the effects of the Affordable Care Act on the workers compensation system Visit ncci.com to view the 2016 edition of NCCI’s annual workers compensation Issues Report.
improved in 2015. NCCI estimates the year-end 2015 reserve position is a $7 billion deficiency— down from $10 billion in 2014. Estimated reserve redundancy in Accident Year 2015 accounts for much of this reduction. -time claim frequency across NCCI states declined by 3% in 2015. year average indemnity cost per lost-time claim increased by 1% relative to the corresponding 2014 value. For medical, the preliminary average cost per lost-time claim decreased by 1% relative to 2014. pool premium volume remained flat between 2014 and 2015, and the average residual market share remained stable at 8%. The latest NCCI data shows that total residual market premium declined in the first quarter of 2016 compared with the first quarter of 2015. View the State of the Line Report video and presentation and the State of the Line Guide on ncci.com under Industry Information.
Positive Results in State of the Line Report NCCI’s State of the Line Report reveals that the workers compensation Calendar Year 2015 combined ratio for private carriers is 94%. This is a six-point decline when compared with the 2014 combined ratio. Total market net written premium increased by almost 3% to $45.5 billion, driven primarily by an increase in payroll.
“Overall, 2015 was another positive year for the workers compensation industry,” NCCI Chief Actuary Kathy Antonello said. “The combined ratio improved, claim frequency continued to decline, and operating results were strong. While the 2015 results are encouraging, we hope for continued diligence of workers compensation system stakeholders to ensure a strong and competitive system.” Other market indicators and trends highlighted in NCCI’s 2016 State of the Line Report include:
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By: Steve Anderson
How to Find Out and Manage What Google Knows About You Google provides some of the best tools for searching the Internet, managing your email, writing documents, keeping track of your calendar, and watching web videos. Millions of people use these tools every day. And Google keeps track of everything you do. Tracking data about how you use the Internet can be a good thing. It allows the company to customize and personalize your experience. This personalized data should also be something you have the ability to see and manage. Google has recently launched a new dashboard that consolidates the data it has on you into an easy-to-use interface that allows you to find, browse through, and delete your digital history with the company. This dashboard provides you with more control and transparency over the information Google has collected. You can find your search history, location timeline, Google services you use — such as Gmail, YouTube, or Google Drive — along with a lot of other details. The amount of data collected about you may be a bit alarming. You should always weigh the potential personalization benefits that the data collected about you provides against the cost of losing some privacy. To see your information, head to the Google dashboard. Even if you are already signed into your Google account, you will need to enter your password again. You can view information and/or edit the settings for a particular account simply by clicking the name of the product. You can also see your most recent activity on the product, such as the last email you read in the Gmail section or the last search you did in the Web & App Activity section. Some products (your Google account, Calendar, Web & App Activity, YouTube) will also include a summary of how you used that product over the last 28 days. For example, if you use Google Calendar, you can see whom you met most over the last four weeks. To help protect your Google account, you should review your recent activity to make sure you remember taking the actions listed. You can sign up to receive a monthly email reminder to visit your dashboard by just clicking on the checkbox provided under the “Personal info & privacy” section. Making an informed decision about how data collected about you is used is a great first step in helping protect your privacy. What steps do you take to manage your online information? Let me know
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Is the New Domain an Opportunity for Your Agency?
• Main Street independent agencies • Large agencies representing several carriers • Captive agencies • Adjustors • Claims processors • Wealth managers and retirement advisors • Actuaries • Marketplaces and exchanges Any organization, no matter how big or small, can apply for a dotInsurance URL. But they must first undergo a stringent verification process, which ensures that only verified members of the insurance community use the domain name. For insurance companies, agents, agencies, brokers, brokerages and other intermediaries or representatives, this includes verification of licensure and approval or certification with the registrant’s government regulatory authority. The registry running dotInsurance, fTLD, also manages dot Bank, which has successfully launched and carries one of the most secure technical infrastructures in the world. The levels of pre-verification and authentication are complex to ensure that only businesses genuinely involved in insurance can apply. Levels of ongoing verification will continue long after the initial registration period has ended.
Registering in the dotInsurance TLD space is an opportunity for insurance firms of all sizes and branches of specialty to register the most relevant domain names available. Some companies that missed out on registering in the dot Com web space now have the opportunity to register their brand name with a highly relevant TLD. This should be attractive both to brands and digital agencies. And because “insurance” and “insure” are two of the most expensive existing cost-per-click listings, it could also mean lower pay-per-click opportunities for brand holders. The main purpose of dotInsurance is to gain search traffic. As of yet, using a new gTLD offers no inherent advantage in organic search ranking, but that could change in the not-too-distant future. Eventually, search engines may give websites using dotInsurance a higher ranking than those only containing the word “insurance.” Because it is a highly restricted TLD, the risk is lower of a brand infringer applying for a specific dotInsurance term and using it for fraudulent or defamatory purposes. If your agency is contemplating a new website or expanding your current online presence, you may want to consider acquiring a highly relevant and easily searchable URL ending in dotInsurance.
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GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL AMERISAFE
AMERICAS INSURANCE
AMTRUST GROUP
BANKERS INSURANCE
CNA INSURANCE
EMC INSURANCE
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
LANE & ASSOCIATES
MAISON INSURANCE
MARKEL FIRST COMP
ASI
LUBA WORKERS’ COMP RPS COVINGTON
SUMMIT CONSULTING
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IIABL 2016—2017 BOARD OF DIRECTORS & OFFICERS Richard D. Jenkins President Moore & Jenkins Insurance—Franklinton Neil Record President Elect Record Agency, Inc.—Clinton
John L. Beckmann, III Secretary/Treasurer J. Everett Eaves—New Orleans H. Lee Schilling, Jr. National Director Schilling & Reid Insurance—Amite David Dethloff Past President Dethloff & Associates—Shreveport Derek Canchola Young Agent Representative Blumberg & Associates—Baton Rouge Byram H. Carpenter, III Moreman, Moore & Co—Shreveport Brenda Case Lowry-Dunham, Case & Vivien—Slidell Joseph Cunningham, Jr. Cunningham Agency—Natchitoches Donna DiCarlo Riverlands Insurance Services—LaPlace Morris Funderburg Reeves, Coon & Funderburg—Monroe
Ross Henry Henry Insurance Service—Baton Rouge Bret Hughes Hughes Insurance Services—Gonzales Philip McMahon Paul’s Agency—Morgan City Joe King Montgomery Thomas & Farr Agency—Monroe Joseph A. O’Connor, III The O’Connor Insurance Group—Metairie Paul Owen John Hendry Insurance Agency-Zachary Martin Perret Quality Plus—Lafayette David T. Perry Arthur J. Gallagher RMS—Baton Rouge Robert Riviere Riviere Insurance Agency—Thibodaux
Armond Schwing Schwing Insurance Agency—New Iberia Michael D. Scriber Scriber Insurance Services—Ruston Donelson P. Stiel David H. Stiel, Jr. Agency—Franklin
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