Louisiana Agent MAY 2018 A publication of the: Independent Insurance Agents & Brokers of Louisiana
116th IIABL ANNUAL CONVENTION & EXPOSITION JUNE 17—20, 2018 DESTIN, FLORIDA
Louisiana Agent May 2018 IIABL STAFF Jeff Albright Chief Executive Officer jalbright@iiabl.com
In this issue: 116th IIABL Convention
Agency Management Systems Attract Millennials
Francine Berendson Director of Communications & Events fberendson@iiabl.com Mike Edwards, CPCU, AAI Director of Education medwards65@aol.com
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Commissioner’s Corner
................ 12-14
The Future of Flood Insurance in Louisiana Ask Mike Host Liquor Coverage in the CGL
............................. 15-20
ACT Releases Texting Resources
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Membership Has Its Privileges
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Big I Louisiana/Mississippi Young Agents Conference
Karen Kuylen Director of Accounting kkuylen@iiabl.com
Contractual Liability: The “I” Request
Ed O’Brien Marketing Representative eobrien@iiabl.com Rhonda Martinez, CIC Director of Insurance rmartinez@iiabl.com Jamie Newchurch Insurance Services jnewchurch@iiabl.com Lisa Young-Crooks Executive Assistant lyoung@iiabl.com
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Combat Cybercrime & Protect Your Agency Rule & Rate Filings
.. 22-23
............... 26-32
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How Stupid Agents are Ruining Insurance Education & Events Calendar
................. 33-36
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IIABL Partners .................................................................. 39 2017-2018 Officers & Board of Directors ............................. 40
IIABL 2018 CONVENTION
Looking forward to our rockin’ convention!!! Below is a sample of our cool program:
Sunday, June 17, 2018 Registration Center Start Me Up Exhibit Exposition Walk This Way Opening Reception You Ain't Seen Nothing Yet
Monday, June 18, 2018 Opening Session We Will Rock You IIABL Beach Tailgate The Tide Is High Cocktails & Companies Just What I Needed
Tuesday, June 19, 2018 Breakfast of Champions We Are The Champions Golf Tournament Fly Like An Eagle Tuesday Night Dance The Night Away
Wednesday, June 20, 2018 Closing Session The Final Countdown
Click here for additional information, registration, etc. Louisiana Agent 5
Agency Management Systems This is one broad topic that we will dice down into several components.
•
Will you expand into new markets and/or geographic territories?
First: 5 Steps to Choose The Best Agency Management System
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Do you expect a change in ownership or management?
Second: Is It Time For A New Agency Management System Third: Participate in the Agency Management System Selection Summit webinar series to be hosed by Steve Anderson.
The 5 Steps to Choose The Best Agency Management System Step 1: Strategy—Why do you want a system? Take these questions into consideration for you and your staff.
The agency must consider all these things to make decisions on how to manage your technology infrastructure.
Step 2: Establishing System Requirements Choose a system selection team, a small group that will coordinate the review process and offer insight on which system best fits the requirements of the agency. Determine which system features are most important currently or in the future.
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What is your strategic direction?
Step 3: What are your options?
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Is the agency growing or stable?
Create a RFI (request for information)
This will act as a formal statement of the agency’s
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expectations and plans for the system. It will also provide direction to the vendors as to the system requirements. Most agencies are familiar with Applied Systems or Vertafore products but there are about 35 products from 24 different vendors that should be explored. Step 4: Managing Vendor Demonstrations It is very important for the agency to manage the demonstration process carefully. There are two different types of demonstrations that the system selection team will need to sit through. Vendor Controlled Demo’s: This is the initial demonstration from the vendor. During this demonstration the team will be able to get a good overview of the product and the features contained within it. For this demonstration you should allow the vendor to do their standard review of the system. Agency Controlled Demo’s: This second demonstration process will be controlled very specifically by the agency. This is accomplished by providing the vendor with detailed written scenarios on common functions performed in the agency that you require them to accomplish using their system during the demonstration.
Is It Time For A New Agency Management System? What are the signs that the agency should start looking at the management system options available to them? How does an agency owner evaluate when it is time to evaluate a new system? Several new management system platforms are very interesting. And, existing vendor platforms continue to develop new capabilities. There are some “indicators” that your agency should at least look at the current management system platform options. Any of these items by themselves is not sufficient reason to make a move. However, the higher the number that applies to you the more likely your organization needs a new system and should begin the evaluation process. Following are a few indicators. Please note: these items are not listed in any particular order. •
You have been using your existing system for more than ten years.
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You have an in-house system
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Existing in-house Servers Need to be Replaced
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Your Desktop workstations are more than five years old
Gather the information from the selection team into an organized fashion using the items below:
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Don’t use / can’t handle all industry carrier communication options
System functionality. Functionality is the ability of the
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Paper is everywhere
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Staff complains about backlog and that they “can’t get caught up.”
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Training takes too long for inexperienced staff
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You are not able to easily support remote staff and additional locations
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Does not support automated marketing and sales pipeline management
Make sure every team member uses a checklist to take notes during the demo process. After a few demonstrations it will become very confusing which system did what. Step 5: Making the Decision
system to help the agency perform its everyday routine tasks.
Evaluating vendor direction. The vendor is not just a
seller of software. For the agency, the vendor is a long -term business partner. Therefore, the team needs to determine the vendor’s direction.
Talk to the vendor’s user group: Either with individual members or by attending group meetings.
Talk one-on-one with other agencies that use the system. Another agency can tell the team about their experiences with specific functions.
This list will help you evaluate if your agency is getting the most out of your existing system.
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The Agency Management System Selection Summit IIABL is proud to partner with Steve Anderson to offer IIABL members a significant discount to participate in this important webinar series. The Summit will kick-off Monday, July 16, 2018, with an introductory webinar hosted by Steve on how to select an agency management system. A schedule will be developed for a 90-minute webinar with each participating vendor. Two demos will be held per day ending on Friday afternoon July 27. Each vendor demonstration will be recorded. Access to the recording will be available online for approximately nine months following the last live webinar. We are putting a time limit on access because vendors are constantly updating their systems and we do not want agencies to view demos that are out of date. There are currently 20 vendors participating in the Summit. Each vendor will follow the agenda below: 5 minutes
Introduction
Brief introduction about the company
25 minutes
Personal Lines
A brief overview of how the system handles personal lines business. New Business Process Vehicle Change Process
25 minutes
Commercial Lines
A brief overview of how the system handles commercial lines business. New Business Process
Certificate Process
5 minutes
Accounting
How does the system handle insurance trust and general
10 minutes
Benefits
Why should an agency use your system? A brief discus-
5-10 minutes
Q&A
The webinar series will be offered at a member price of $299 and $349 for nonmembers but IIABL members will receive an additional 25% discount and can register for only $187.50!. This is a one-time fee and provides access to all the live and recorded webinars for one individual agency location. Registration will be opening within the next week so be on the lookout to register for this important webinar series or check out the Agency Management System Selection Summit webpage here.
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Louisiana Agent 9
Insurance Agencies Aren't Doing Enough to Attract Millennials Work-life balance, opportunities for advancement, and a stable career path – who wouldn’t want to land a job with these qualities? And yet, millennials are still not entering the insurance industry in the numbers needed to replace a retiring workforce. “It’s a great field, but I really don’t believe that the industry does enough to promote just how good a field it is,” said Robert Pettinicchi (pictured), executive vice president and chief lending officer at InsurBanc, which specializes in insurance agency perpetuation, acquisition and debt consolidation transactions. Agencies especially aren’t grabbing the attention of students graduating from risk management programs who often end up being quickly picked off by carriers. It’s a lost opportunity, says Pettinicchi, because a young agent knows their demographic well. “What the young agent can bring to an agency is how to market to a young person or to younger people,” he told Insurance Business, adding that stats show the world of agencies is populated by employees from older generations. “There’s a tremendous opportunity if the right talent is brought in to step into those roles.”
ing, working in groups, and working in teams, but when it comes to that one-on-one sales process, that’s where they’ll need the development and there’s no greater place than an insurance agency to do that and learn that,” said Pettinicchi. For young people with an entrepreneurial drive, working at an agency can open doors for business ownership later on. Many probably don’t set out with a clear goal of starting their own insurance agency, even though this doesn’t necessarily require a high capital cost of business, but that first job could be the start of a long and rewarding career that eventually leads to owning an agency. Nonetheless, that journey can’t start if young agents aren’t walking in the door to begin with. “You’ve got to get your feet wet and see how it’s done, and be in a position where you could model some behaviors from people who are real top performers,” said Pettinicchi.
Robert J. Pettinicchi is chief lending officer of InsurBanc, a division of Connecticut Community Bank, N.A., a community focused commercial bank with a specialty in providing banking products and services to independent insurance agencies. He can be reached at rpettinicchi@insurbanc.com/ www.insurbanc.co m.
Getting exposure to the work done at an agency is key in the development of a young person’s sales skills, which are crucial to succeed as an agent. Though insurance is something that everybody needs, it does involve a sales process, says the executive VP. It takes people who can present well, work collaboratively, and, when all is said and done, make the sale. As new entrants to the industry, millennials need a hand in cultivating those skills. “They’re good with problem-solving, collaboratLouisiana Agent 10
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Commissioner’s Corner
The Future of Flood Insurance in Louisiana As we move into the 2018 hurricane season, it helps to look back on last year and the costs that are still being incurred in the property and casualty markets. According to the National Oceanic and Atmospheric Administration, 2017 was the most expensive year on record for natural disasters in the United States. From Hurricanes Harvey, Irma and Maria to the wildfires in California, there were 16 major weather and climate disaster events across the country last year. The cumulative damage of all 16 weather events is estimated to top $300 billion, more than the previous record of $214 billion of damage in 2005 due to the impacts of Hurricanes Katrina, Rita, Dennis and Wilma. Insurance regulators nationwide are keenly aware of the devastating effects of floods and know that it is critical that flood insurance is available and affordable. Competi-
tion is one way states can make flood insurance available to consumers. A 2017 report by actuarial consulting firm Milliman studied National Flood Insurance Program (NFIP) policies in three states – Florida, Texas & Louisiana – that account for 56 percent of NFIP policies nationwide. They found that although 69 percent of Louisianans could see cheaper flood insurance premiums with private insurance, private insurance would cost over twice the NFIP premiums for 21 percent in Louisiana. We began receiving annual statements from insurers for the first time in 2016 that provide us with information on the amount of private flood insurance written in Louisiana. Previously, insurers reported the total of federal and private flood insurance combined. There are surplus lines companies writing private flood insurance and admitted carriers writing excess flood insurance coverage. The statements show 30 companies wrote $17.8 million in direct written premiContinued page 12
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um for private flood insurance in 2017. That includes first dollar and excess flood coverage written by both admitted and surplus lines companies. There was an increase of 12 companies in the private flood insurance market in Louisiana from 2016 to 2017. The direct written premium increased by $6.3 million year over year. This is an increase of 55%. The statements also show more than $250 million in direct premium for federal flood insurance in 2017. And that increase couldn’t have come at a better time with the severity and frequency of major weather events on the rise. Our state has been repeatedly struck by severe rain and flooding events that have caused property damage and loss of life. Over the last 2 years, federal Major Disaster Declarations have been issued for 59 of our 64 parishes as a result of severe storms and flooding – and 24 of those parishes were struck twice.
FEMA statistics show that Louisiana property owners have filed about 450,000 claims since 1978, for more than $19.5 billion in damages with claims coming from each of the state’s 64 parishes. The next closest state in terms of payouts is now Texas with more than $15 billion in payments inclusive of last year’s Hurricane Harvey-related flooding. Rounding out the top five are New York, New Jersey and Florida, which have each received between $5 and $7 billion from the NFIP. Florida reached the $5 billion threshold after Hurricane Irma made landfall in September 2017. Following Hurricane Katrina, the NFIP saw a significant increase in the number of flood insurance policies in Louisiana – from about 380,000 policies in 2003 to nearly 500,000 policies by 2006, an increase of about 30 percent. Continued page 13 Continued page 11
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However, the number of NFIP policyholders had been on the decline in recent years. That is, until the August 2016 floods in the Baton Rouge and Lafayette areas. The number of policies had dipped back down to about 450,000 policies prior to that event – but it’s increased again to just under 500,000. In March, the NFIP received funding for four months as part of a federal spending bill. The influx of funds extended the program, but lawmakers now face a July 31 deadline to decide what to do with the program. The extension was the fourth time this Congress has enacted a short-term solution for the critical program. In addition to the uncertainties about funding, there have been important changes to the program. As announced last year by FEMA, on April 1, 2018 key changes went into effect including updated insurance policy premium increases conforming to the premium rate caps established by Congress. The average increase was approximately 6.9 percent, including surcharges and fees billed to the policyholder.
The future of the National Flood Insurance Program is uncertain. Major changes, including the possibility of dramatically increased rates for high-risk properties, are being discussed as the July 31 deadline moves closer. The worst possibility would be for the program to lapse during the peak of hurricane season. The National Flood Insurance Program is vital to Louisiana and I will work diligently with our representatives at the national level and here at home to ensure that it is available for Louisiana consumers.
Continued page 14
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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: “Host Liquor” Coverage in the CGL
Q.
My daughter is hosting an event for a close friend from college next month, and I would like your thoughts on a coverage question I’ve somewhat stumbled into. Her friend is turning 30, and just got a big promotion at work. My daughter and a few friends are having a get-together at a salon and spa I insure. As she was describing the things she’s got planned, I was reflecting on how proud I am of her, and what a fine young woman she has become. But I was jolted out of that momentary reverie when I heard her say, “And the salon’s group package includes wine and cheese.” So in a flash, I went from proud papa to panicked insurance agent, since the salon doesn’t have a liquor liability policy. I asked my daughter how long
the salon has been serving wine, and she said for about 6 months. Worse still, their insurance renewed about two months ago. I’m hoping that this falls within the CGL’s host liquor coverage, but I’d appreciate your comments.
A. As unsettling as this situation is, just be
thankful you aren’t learning about it in conjunction with a claim! And if you’ll forgive a little tough love, this is a textbook example of why it is so important to contact insureds at each renewal.
Continued page 13 Louisiana Agent 15
For the discussion below, assume the salon and spa is called ChillOut. Comments and excerpts are from coverage forms issued by ISO (Insurance Services Office). Proprietary forms may be different. Commercial General Liability (CGL) Excerpts:
Commercial General Liability Coverage Form (CGL) CG 00 01 04 13
Section I – Coverages Coverage A – Bodily Injury and Property Damage
or "property damage", involved that which is described in Paragraph (1), (2) or (3) above. However, this exclusion applies only if you are in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. For the purposes of this exclusion, permitting a person to bring alcoholic beverages on your premises, for consumption on your premises, whether or not a fee is charged or a license is required for such activity, is not by itself considered the business of selling, serving or furnishing alcoholic beverages. Comments:
c. Liquor Liability
(1) From an insurance nerd’s viewpoint, it is important to note that the CGL makes no reference to the term “host liquor.” I mention that because on occasion, I see requests for certificates of insurance which require that coverage for “host liquor” be shown. E&O experts advise that certs should not refer to generic terms such as “host liquor,” “cross liability,” “blanket coverage,” “Fire, EC & VMM,” etc., unless the coverage form, or an endorsement, actually uses such terms.
"Bodily injury" or "property damage" for which any insured may be held liable by reason of:
“2016 Changes to Certificates of Insurance Statute in Louisiana”
(1) Causing or contributing to the intoxication of any person;
Certificates of Insurance Resources
(2) The furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or
(2) Most liability coverage forms, including the CGL, are drafted to cover specified types of losses (bodily injury, property damage, etc.) which are not excluded, and for which an insured is legally liable. In that contractual construct, much of the coverage is actually provided as exceptions to exclusions. The CGL liquor exclusion is a perfect example. Nearly all the language in the exclusion lays out what types of liquor-related losses are excluded. But in the last paragraph (beginning with “However,”) the first sentence limits the exclusion to those who “...are in the business of manufacturing, distrib-
1. Insuring Agreement a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. 2. Exclusions This insurance does not apply to:
(3) Any statute, ordinance or regulation relating to the sale, gift, distribution or use of alcoholic beverages. This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in: (a) The supervision, hiring, employment, training or monitoring of others by that insured; or (b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; if the "occurrence" which caused the "bodily injury"
uting, selling, serving or furnishing alcoholic beverages.”
(3) For ChillOut to have host liquor coverage, their activities must be outside the exclusion. In Louisiana Agent 16
this case, they must not be “in the business of” “selling, serving or furnishing” the wine. (4) In recent years, it has become very trendy for many businesses to provide wine and cheese at certain functions. ChillOut is clearly “serving or furnishing” the wine. The key question is whether or not that is a part of their “business.” Given that the single glass of wine per person is included in the group package that Jill has arranged, it seems quite plausible to me that an injured party would name ChillOut in any lawsuit. And trying to dodge the “in the business of” legal bullet would be a challenge, I believe. (5) What about BYOB? Could ChillOut avoid the liquor exclusion by foregoing the one glass of wine per person, in order to sidestep the “serving or furnishing” provision, by allowing customers to bring their own? Given the frequency and severity of drunk driving accidents and subsequent litigation, I wouldn’t want to bet the farm on it.
(6) In the 04 13 edition of the CGL (see excerpt above), ISO added a reference to the BYOB issue. It is the last sentence of the last paragraph. ISO’s intent is widely debated, and the new language is so recent that case law is sparse, at present. The phrase fueling the debate is the statement that BYOB “is not by itself considered the
business of selling, serving or furnishing alcoholic beverages.” (7) A few days ago, I read an article in an industry publication where a representative of a major national insurer offered the following advice regarding the BYOB exposure:
“Pay close attention to your client’s approach to liquor sales. Recently, even BYOB restaurants have been found liable for overserving patrons who were later involved in a drunk driving incident. The thought process in the decisions that have been coming down from the courts is that if you can charge a cork fee to the customer to take the cork out, then you have the ability to Continued page 16
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put the cork back in. What that means is that BYOB restaurant owners need to start considering liquor legal policies and insurance coverages.” (8) This is an informative article posted on the IIABA’s Virtual University: “Is Liquor Liability Needed for a BYOB Establishment?” (9) As my friend and colleague John Eubank, CPCU, ARM, often quipped when asked about the need to offer liquor liability coverage, “If you smell it, sell it.” (10) IIABL article: "Louisiana Liquor Liability Law"
The changes to the liquor exclusion have generated some interesting discussion among experts. The CGL “host liquor” coverage has been revised in two ways. The first change expands the exclusion to include additional claims which are alcohol-related, but which some courts have held are outside the current exclusion for
“manufacturing, distributing, selling, serving or furnishing alcoholic beverages.”
One of the cases cited by ISO in the CGL filing involved a bar where two visibly intoxicated patrons started an altercation with another patron and were ejected. They subsequently drove off and caused a fatal auto accident.
The ISO 2013 ISO CGL Filing Below is a discussion of the changes to the CGL liquor liability exclusion in the ISO 2013 filing. This excerpt is from a recent IIABL article on ISO’s 2013 Commercial Property and CGL Changes
Coverage was denied by the insurer under the bar’s CGL policy (the court case makes no mention of the status of any separate liquor liability coverage the bar may or may not have had). The Plaintiffs argued in court that the bar’s em-
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ployees were fully aware of the state of intoxication of the two patrons, and should have either called the police or arranged alternative transportation, rather than simply ejecting them from the bar. Therefore, the subsequent fatal auto accident was caused not only by the bar over-serving the two patrons, but also by the failure of its employees to take appropriate measures to prevent the intoxicated patrons from leaving the premises and driving. The court ruled that the CGL covered these types of negligent actions, as they were not within the CGL liquor exclusion. Other cases referenced by the ISO filing include one where an establishment which ejected patrons who were so visibly drunk that employees had to assist them getting into their car. The intoxicated driver drove a short distance and caused an auto accident which killed the pregnant driver of the car he hit, as well as his own passenger. Another case involved a bar whose employees helped a heavily intoxicated patron into his
car. He was too drunk to drive, fell asleep, and eventually froze to death in his car in the bar’s parking lot overnight. In these and other cases, the courts found merit in the argument that these establishments committed torts in addition to the mere serving of alcohol, such as failure to call police or arrange alternative transportation, improper supervision or monitoring of employees and guests, etc. Given the adverse court decisions which have held that these various types of alcohol-related claims are beyond the scope of the liquor exclusion, and therefore covered by the CGL, the 2013 edition of the liquor exclusion will include the following additional language:
(a) The supervision, hiring, employment, training or monitoring of others by that insured; or
Continued page 16
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(b) Providing or failing to provide transportation with respect to any person that may be under the influence of alcohol; In fact, similar litigation has arisen over the years under the auto exclusion in the CGL, where plaintiffs successfully argued that an auto accident was due in part to “negligent supervision, hiring, employment, training or monitoring of others.” Following adverse outcomes to such cases, the 2001 revision to the CGL broadened the auto exclusion to include such allegations. The second change deals with whether or not establishments which allow patrons to “bring your own” (BYO) alcohol are considered to be “in the
business of selling, serving or furnishing alcoholic beverages.” This is a perennial gray area, given the practice common in many businesses that provide wine and cheese functions and similar social activities, where guests bring their own alcohol.
In the CGL filing, ISO states the impact of the BYO change “may be considered a broadening of coverage in that it contains an express exception to the exclusion with respect to allowing a person to bring alcoholic beverages for consumption on their premises.” However, some experts caution that the “broadening of coverage” is not a blanket exemption from the liquor exclusion. The revised language says that BYO activity “is not by itself consid-
ered the business of selling, serving or furnishing alcoholic beverages.” One common scenario put
forth by some experts is when an establishment is conducting or sponsoring a BYO event, and employees are circulating among guests with platters of cheese, crackers, etc. An employee notices that a bottle of wine is almost empty, and offers to pour the last small amount into the glass for a customer, so the bottle can taken off the table and disposed of. The concern is that this might constitute “in the business of serving alcohol.” The language is just now being court-tested yet, so time will tell.
ACT Releases Texting Resources Tools help agents comply with FCC requirements. The Independent Insurance Agents & Brokers of America's Agents Council for Technology (ACT), in conjunction with the Big “I" Office of the General Counsel, has released a sample text messaging optin form and sample terms and conditions to help agents meet the requirements of the federal Telephone Consumer Protection Act (TCPA). Text messaging gives independent agents a quick and simple way to communicate with clients, on an individual or aggregate basis, regarding policy reminders, new product offerings, and risk management tips. The Federal Communications Commission (FCC) has broadly interpreted the TCPA to regulate nearly all text messaging. The FCC's interpretation of the TCPA appears to cover all commercial text messages even if they are sent to one person rather than multiple recipients. Additionally, unlike the rules for some other commercial communications, the FCC has ordered that an existing business relationship does not provide an exemption to the TCPA requirements of obtaining prior express written consent before sending commercial text messages. Therefore, agents should ask clients to opt in to text messaging and provide messaging terms and conditions, even if the agency communicates via text only with existing or prospective clients or when texts are initiated by the client or prospective client. Agents also need to understand the capabilities of their agency management system for text messaging. “Consumers want to choose how they communicate with their independent agent, and for many consumers texting is at the top of the list," says Ron Berg, ACT executive director. “We are giving agents the guidance and tools necessary to ensure they comply with the legal requirements for text messaging." Agents need to log in to access the sample opt-in form and terms and conditions documents, which are a free member benefit.
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. Louisiana Agent 20
MEMBERSHIP HAS ITS PRIVILEGES The question is with any membership, is it worth it?
Big I.
Ultimately, the value of anything depends on how much you use it. Here at the Independent Insurance Agents & Brokers of Louisiana we would hope every independent agent in the state sees high-value in belonging to the
A lot of what we do is difficult to place a specific dollar value on, for example, what is a good regulatory climate for agents to operate in worth to you? How much better are things financially because we are here in the state and are active at the Federal level lobbying for your interests? How mush is it worth to you to have reasonable licensing fees and requirements to have an agent’s license...or even a better question is how much worse would it be if we weren’t
here? Does our presence and the fact that we are here create better contracts between agents and their business partners? Does ownership of expirations help make your agency assets worth more? Do our newsletter, bulletins, education opportunities, conference, conventions, website, Virtual University Ask the Expert and technical advisories and review of coverages and policy forms help make you better at what you do? Is errors & omissions insurance more affordable? Is the branding campaign where we communicate with consumer, the media, regulators, legislators and insurance companies the value that independent agents bring to the marketplace worth something to you? We hope you find great value in all things that IIABL does on your behalf. Most important is the strength in numbers that helps us make a difference. Thank you for your support!
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AUGUST 2—5, 2018 RITZ CARLTON—NEW ORLEANS The Independent Insurance Agents & Brokers of Louisiana & the Independent Insurance Agents of Mississippi invite you to attend the 15th annual joint Young Agents Conference. This conference is designed to help young agents succeed through education, motivation and networking opportunities among fellow agents and company personnel. Who Should Attend: This event is designed for young insurance professionals who are looking to expand their skills, network and share information with fellow agents and strengthen relationships with company representatives. (Those who are young at heart are welcome too!!)
Venue: This year’s conference will be held at the beautiful Ritz Carlton in New Orleans. The room rate for the conference is $149.00. Reservations can be made online here or by calling 1/800-826-8987.
Group Rate Code
VLOVLOA (Deluxe King Accommodations - $149) VLOVLOB (Deluxe Double Accommodations - $149)
TENTATIVE AGENDA: Thursday, August 2, 2018 12:00pm
Golf Shotgun Bayou Oaks @ City Park South Course
Friday, August 3, 2018 1pm—4pm 6pm—7pm 8pm—12am
How Your Agency Can Leverage the Big Social Disruptors Aubie Knight Welcome Reception Hospitality Suite
Saturday, August 4, 2018 9am—12pm 12pm—1:30pm 5:30pm—6:30pm
Young Agents Roundtable Discussion Meet the Sponsors Luncheon Cocktail Reception Louisiana Agent 22
Badge Name
Name Agency/ Company
Spouse/ Guest
Address
City/State/ Zip
Phone
Registration Fees:
□ □ □
Agent/Company Representative
$140.00
Spouse/Guest
$ 90.00
□
Thursday Golf
$135.00
First-Time Member Young Agent Attendee
Method of Payment:
□
Check
FREE
□ Credit Card (click here) □ Invoice
Mail registration form and payment to: Independent Insurance Agents & Brokers of Louisiana (IIABL) 18153 East Petroleum Dr. Baton Rouge, LA 70809 Phone: 225/819-8007 Fax: 225/819-8027
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Contractual Liability: The “I” Request Bill Wilson, CPCU, ARM, AIM, AAM
In the title of this article, the “I” in “The ‘I’ Request” represents your choice of: a. b. c. d. e.
Ignorant Incredible Incompetent Idiotic All of the above
A Texas agent shared this with me today. It’s the insurance requirement from a lease his customer is entering into: INSURANCE. At all times during the Term and during any time when Tenant or its agents, employees or contractors may enter or occupy the Premises regardless of whether rent is payable thereon for any purpose, Tenant shall carry and maintain, at its sole cost Commercial General Liability Insurance applicable to the Premises, its appurtenances and Tenant’s actions and conduct of its business within the Building and Common Areas, providing, on an occurrence basis, a minimum combined single limit of $1,000,000.00, with a contractual liability endorsement covering Tenant’s indemnity obligations under this Lease…. Indemnification provisions in contracts are notoriously broad, many (if not most) being virtually limitless, and almost all of them being uninsurable. The contractual liability coverage in most CGL policies (usually provided as a limited exception to a contractual liability exclusion) is subject to the insuring agreement, exclusions, and limits of the policy. No CGL policy I’ve ever seen insures ALL contractual indemnity obligations. One of the most onerous indemnification agreements I’ve seen is this one: “To the fullest extent permitted by applicable law, Contractor shall insure and defend, indemnify, and hold harmless Owner and Agent and their respective officers, directors, members, employees, agents, shareholders, partners, joint venturers, affiliates, successors, and assigns from and against any and all liabilities, obligations, claims, demands, causes of action, losses, expenses, damages, fines, judgments, settlements, and penalties including, without limitation and without
regard to the cause or causes thereof….” Note that this contract provision also requires, in addition to indemnification, that “any and all” liabilities, obligations, etc. be INSURED by a policy with an infinitely broad insuring agreement (“any and all”), no limits (“without limitation”), and no exclusions (“without regard to the cause or causes thereof”). It can’t be done. It’s unclear whether the attorney (or risk manager, or agent, or underwriter, or whomever) who wrote this is unaware of that or simply follows the premise that it never hurts to ask for the impossible. Make sure that insureds understand the importance of vetting the contracts they enter into and the reality that they will be asked to insure the uninsurable. Bill Wilson, CPCU, ARM, AIM, AAM Founder & CEO, InsuranceCommentary.com Bill@InsuranceCommentary.com or InsuranceCommentary@outlook.com
Com•men•tar•y … an expression of opinions or offering of explanations William C. Wilson, Jr., CPCU, ARM, AIM, AAM is the founder of InsuranceCommentary.com. He retired from the Independent Insurance Agents & Brokers of America in December 2016 where he served as Assoc. VP of Education and Research and was the founder and director of the Big “I” Virtual University for over 17 years. He is the former Director of Education & Technical Affairs for the Insurors of Tennessee and, prior to that time, he was employed by Insurance Services Office, Inc. He is a graduate of the Illinois Institute of Technology with a B.S. degree in Fire Protection & Safety Engineering.
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Combat Cybercrime and Protect Your Agency With Simple Security Steps What is Cybercrime? Like traditional crime, cybercrime covers a broad scope of criminal activity and can occur anytime and anyplace. What makes it different is that the crime is committed using a computer and the Internet. You may recognize some of its most common forms such as identity theft, computer viruses and phishing, and at a corporate level, computer hacking of customer databases. Most people are aware of these and protect themselves and their PCs with anti-spyware and antivirus software such as Norton or McAfee programs. As an agency owner, you should be alert to the fact that cybercrime is becoming more and more sophisticated and not only targets consumers and large corporations, but small to medium sized businesses as well. Single programs against these intrusions are not enough.
Online Security Practices While no tools or automated software is 100% effective, the best solutions to protect your agency are to be well informed and use common sense. Using a multiple vendor, multilayer approach to system design can significantly reduce your chances of being a victim of cybercrime. To assess the risks associated with a cyber intrusion of your agency’s online systems and critical client data, ask yourself the following questions:
1.
Does your agency have a hardware based firewall at the network level? 2. Does the network firewall include antivirus, anti-spyware and anti-spam services Continued page 29
An alarming cybercrime now affecting small to medium sized businesses is “corporate account take over.” This involves cyber criminals penetrating the computer network of a business and spreading malicious software, such as a “keylogger” which records the words typed, Web browsing history, passwords and other private information. This in turn allows them access to programs using your log-in credentials. If they steal your password and breach your online banking system, the cyber criminal can begin an online session to initiate funds transfers, by ACH or wire transfer, to their accomplices. The accomplices withdraw the money almost immediately. Take the first steps to prevent fraud at your agency – become aware of the latest cybercrimes and how they can access a business’s computer network. An agency should also employ the most up-to-date online security practices on a pro-active basis. Agencies can also take the opportunity to present these online security practices to their clients, as many are also instituting internet-based online programs at their businesses. Louisiana Agent 26
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Company
Coverage Type
Overall % Impact:
Overall $ Impact:
Number of Policyholders:
Changes
LA Farm Bureau Casualty Ins Co
19—Private Passenger
+7.44%
$18,019,922
227,969
New: 6/1/2018 Renewal: 6/1/2018
GoAuto Insurance Co
19—Private Passenger Revised Rate Only
+5.3%
$5,193,417
62,053
New: 4/23/2018 Renewal: 5/23/2018
St. Paul Fire & Marine Ins Co
19—Commercial Auto Revised Rate Only
+10.0%
$503,336
209
New: 10/1/2018 Renewal: 10/1/2018
Encompass Property & Casualty Co
4—Homeowners
+5.7%
$260,490
1,166
New: 6/9/2018 Renewal: 6/9/2018
Encompass Insurance Co of America
4—Homeowners
+5.7%
$274,386
1,125
New: 6/9/2018 Renewal: 6/9/2018
State Farm Mutual Auto Insurance Co
19-Private Passenger Auto
-2.9%
-$45,729,091
1,026,725
New: 7/9/2018 Renewal: 7/9/2018
Safeco Ins of Oregon
19—Private Passenger Revised Rate Only Recreational Vehicle Program
+25.0%
$493,982
3,293
New: 5/31/2018 Renewal: 7/10/2018
Allstate Property & Casualty
19—Private Passenger Revised Rate Only
+5.7%
$18,981,357
126,754
New: 7/2/2018 Renewal: 7/2/2018
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along with content filtering and intrusion prevention, detection and real-time reporting? 3. At the individual PC level, does each computer have centrally updated and monitored antivirus, anti-spyware and anti-spam software loaded? 4. Are your computers set up to automatically update your operating system and applications for the latest available security and critical updates? 5. Do you consider your browser security setting to determine how much or how little information the browser can accept from, or transmit to, a website? 6. Does your agency have a security policy in place that includes such policies as disaster recovery, use/storage of passwords, use of social media on work computers, etc.? 7. Does your agency back-up critical files in case of an issue that disables your systems? 8. Has your agency identified an individual to review security policies and practices on an ongoing
basis? 9. Are you aware of the laws governing the protection of personal information in your state? 10. Do you have cybercrime insurance to protect your data and liability exposure in the event of an intrusion? 11. Does your agency have a training program to educate employees on best practices to avoid becoming a victim? 12. Does your online banking system provide multiple layers of security tools to prevent intrusions into the system such as token-based authentication? Agency principals should consider the types of transactions they conduct within online banking and check with their banking institution for available security enhancements. These are just some of the basic steps an agency can implement to assess and protect itself from cybercrime. Your agency should have a network
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security assessment and review conducted by a certified information technology firm that specializes in network security. This evaluation will help you to identify the “next steps” in securing your network and data from unauthorized access and distribution. If Your Agency Becomes a Victim
mation including Internet surfing habits. It can redirect web browser activity and change computer settings. Spyware is typically hidden from the user, and can be difficult to detect once installed without proper antispyware tools. •
Keyloggers, as with spyware, are installed on your computer without your knowledge. It is the action of tracking (or logging) the keys struck on a keyboard, typically in a hidden manner so that the person using the keyboard is unaware that their actions are being monitored. Keystroke logging can record the words typed, Web browsing history, passwords and other private information. This is extremely dangerous in all aspects of computer usage.
•
Drive-by downloads describes how malware can infect your system simply by you visiting a website that has been infected with malware and is running malicious code. In many cases, the owner of the website is una-
If you discover, or even suspect, your agency has fallen victim to corporate identity theft, you should proceed as follows: •
Immediately cease all online activity and contact your IT administrator.
•
Remove the affected computer from the network and any other computer stations involved.
•
Contact your financial institution to disable online access to the accounts and close affected accounts. You can then open new accounts and reset passwords.
•
Consult your counsel and your state’s data breach notification law and regulations to ascertain the process you need to follow.
•
Notify other business partners that may have been affected, such as your insurance carriers.
•
File a report with the police department.
Continued page 30 Continued page 26
Common Online Fraud Definitions •
Malware refers to software programs designed to damage or do other unwanted actions on a computer system. Common examples of malware include spyware, keyloggers, and viruses.
•
Ransonware is a type of malware that is gaining in both popularity and unfortunately in frequency and damage. It can affect and infect any type of computer including an alarming increase in mobile devices. Once this type of malware enters your system it encrypts all the data on your system.
•
Spyware is a type of malware installed on your computer without your knowledge. It collects small to large pieces of personal inforLouisiana Agent 31
ware that their site has been compromised. Once discovered it can still have infected thousands of computers. •
•
Viruses are an ever changing and constant threat to all systems. Based on their digital makeup they can deliver malicious content to your data and systems in an effort to either collect data, destroy data, or turn your systems into a machine that spreads the virus or other malware. “Phishing” is the act of obtaining personal information or spreading malware using emails, calls, text messages or pop-up messages from what appear to be friends or legitimate banks, retailers, government agencies or other organizations.
All of the security tips presented here are simply guidelines to aid agencies in not becoming a target for cybercriminals. However, none can be guaranteed 100% effective. Editor’s Note: Please also refer to ACT’s “Security & Privacy” page for a prototype agency information security plan and recorded webinar which will help
agencies fashion their written security plan and implement their security program. Go to www.iiaba.net/actand click on “Security & Privacy” in the gray shaded area on the left side of the page.
Danielle Johnson is the VP, Director of Information Technology at InsurBanc, which IIABA and the W.R. Berkley Corporation established to assist independent agencies, businesses and consumers with their specific banking needs. Danielle prepared this article for ACT and she can be reached at technology@insurbanc.com. This article reflects the views of the author and should not be construed as an official statement by ACT.
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How Stupid Agents are Ruining Insurance for Everyone by Chris Burand Here’s a true story: A close friend asked me about her auto insurance. Her daughter, who does not live with her, was still on her auto policy. Her daughter’s car was on her policy too. She had no insurable interest on her daughter’s car. Moreover, her daughter is married and she is not a driver on her husband’s auto policy, even though she has an insurable interest on her husband’s auto. My friend’s agent advised it was just easier to leave her daughter on her policy.
When I explained the issues involved and the simple solution, my friend asked, “But will it cost more?” Cost more than what? Currently she’s paying for partial coverage and all kinds of headaches in the event of a claim involving her daughter. What is a few dollars more or less for real coverage? What is the difference between a fake policy and a real policy? No price comparison exists. It is not even apples to oranges. It’s dog food to caviar. The insured is a smart, well-educated person. She trusted her either stupid/imbecilic or cheating agent to take care of her insurance. She trusted because like 99% of consumers, she is not educated in insurance. The dreariness of reading an insurance policy dissuaded her from wanting to learn more. While this cluster wreck is especially egregious, such incompetency is not uncommon. It happens so often that some company underwriting offices probably have weekly contests for the stupidest agents. Sometimes they probably have the equivalent of photo finishes. If potential E&O claims or actual claims could be published, the title might be (think Jeff Foxworthy “You might be a redneck…”), “You might need your license revoked if you’ve done…”
being direct. They ruin lives when insureds need coverage but do not have the right coverage because the agent was too stupid/deceitful to even offer the right coverage. I am not writing about some unusual gap or even the occasional mistake. I am writing about the obvious and continuous. These agents ruin it for the good agents because they’re the epitome of one bad apple. One reason commoditization occurs is the public begins believing all agents/ insurance companies are incompetent. What is the price difference between one bad policy and another bad policy is really what my friend was asking. The solution: The good agents need to find a stronger voice to point out the mistakes of the incompetent. Quit asking for decs to compare prices. Instead, understand the client’s exposures and build an insurance policy that is speContinued page 32
I am not throwing all agents under the bus by any means. The industry has many excellent agents. I am only throwing the idiots under the bus. Readers up to this point likely fall into one of three categories. The first will not believe other agents can be that stupid/lazy/incompetent. Another category is upset with me and their fellow agents. They are upset that I’m writing about the problem and they’re upset with their fellow agents for being so poor at their jobs. The third group has not a clue that I’m pointing out their incompetency. Their incompetency ruins lives so I have no problem
Continued page 33
cific to that family/business. A coverage checklist is a foundational rock upon which to build the exact and correct coverages each individual needs. Even better though, use the coverage checklist in the exposure language. People care and understand about exposures. They do not care about coverages. In other words, coverages are the insurance industry’s language. Translate the coverages into exposures because exposures are the language of all but the most sophisticated consumers. If you must ask for the expiring dec, point out the mistakes and errors boldly. However, point them out in the language of exposures rather than coverages. While I appreciate why antidisparagement rules exist, these rules are now dampening the good agents and good carriers’ voices. The fear of being sued for simply pointing out incompetency is usually overblown, but stick to the facts and not conjecture when pointing out errors and omissions. The maleficent companies and agencies take advantage of the better agents/ companies’ fears. Disparagement only applies as I understand it, and I’m not an attorney, to opinions versus fact. Be factual. Incompetence is usually
easier to diagnose factually anyway.
Another option, one that I encourage, is to push for tougher licensing especially if combined with more realistic disparagement laws in some states. Clearly the CE requirements to maintain licenses is being used and abused through online programs. Taking a three-hour online course while doing something else the entire time, does not improve one’s insurance education. Commoditization and incompetence hurts the best agencies the most because the value of their brand is diluted unless a bright line of differentiation is drawn. The industry and regulators are not going to draw this for you. Some courts are helping draw this line but most agencies are seeing this advantage as a disadvantage. Some courts are truly differentiating through the standards of care the difference between peddlers and professionals. Unfortunately, I see most agencies looking at the rulings and feeling sorry for themselves rather than recognizing the advantage being handed to them. These courts are saying, publicly, that some agents are incompetent. The courts are Continued page 34
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classifying these agents and they are clearly stating these peddlers’ standard of care is low. They are telling consumers, caveat emptor because these agents are so bad, the consumer better beware. Sadly, better agents see this and always ask the same question, “Why do those agents get the advantage of having such a low standard of care?” BECAUSE those agents are so bad! You too can join the race for the bottom if you choose. Alternatively, the bright line these courts are providing can be an excellent marketing tool if you will fully accept a higher standard of care (odds are if you are an independent agent you are going to be held to the higher standard or an effort will be made to hold you to the higher standard anyway so why fight it?). By accepting the higher standard of care and advertising it, you get the opportunity of proving to consumers/businesses that you are a professional per the courts and therefore, you are worth more than a peddler. My clients that use this to their advantage fully often make 20% more than their peers. The only way to beat incompetence in this market
in today’s environment is to advertise your competency and professionalism, then be the absolutely most competent and professional agent you can be. It is your brand, your value, and your livelihood. I can put my hand on a bible and testify that my clients who sell professionalism this way enjoy better client relationships, enjoy more referrals, and take better vacations. Most importantly though, they go to bed each night knowing their clients’ lives and livelihoods are much better protected. For those readers with a strong conscience, this is the greatest reward.
Chris Burand is president of Burand & Associ-
ates, LLC, an insurance agency consulting firm. Readers may contact Chris at (719) 485-3868 or by e-mail at chris@burand-associates.com. NOTE: None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.
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Webcasts E&O Risk Management June 5, 16, 26, 28
Ethics June 21, 22, 25, 26
Flood June 21
Available on Demand
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Virtual University
Virtual University
June Webinars
Live webinars
June Lightning Learning: Personal Auto Policy
June 13 Executive Liability: Current Trends in D&O
June 5 Understanding the HO's Three Trust Endorsements June 21 How Does a "Person" Become Legally Liable
Commercial & Personal Lines Courses Click above for courses & dates for 2018
5 Current Trends & Changes: The Homeowner & Auto Marketplace 13 Flood Insurance 20 Catastrophe: The Coverage Expertise You'll Need When it Matters Most 26 Tricks to Fix: Closing Coverage Gaps in Home, Work and Auto
Seminars E&O Risk Management 10/16/2018 –Shreveport 10/17/2018—Lafayette 10/18/2018—Kenner 10/19/2018—Covington
Events Big I Louisiana/ Mississippi Young Agents Conference August 2-5, 2018 New Orleans
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Click here for the course catalog of all of the on-demand webcasts. Reminder– all of the IIABL online courses do not require a test for CE Credit
Online prelicensing 3 optional study packages Click here for additional information
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GOLD LEVEL
SILVER LEVEL
BRONZE LEVEL
ACCIDENT FUND
AMERISAFE
AMERICAS INSURANCE
BANKERS INSURANCE
EMC INSURANCE
EMPLOYERS
FCCI GROUP
FOREST INSURANCE
GULFSTREAM P&C
HOMEBUILDERS SIF
IROQUOIS SOUTH, INC.
LANE & ASSOCIATES
RPS COVINGTON
STONETRUST INSURANCE
LUBA WORKERS’ COMP
MARKEL FIRST COMP
SUMMIT CONSULTING
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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 40